I find this question hard to think about. Who exactly should be pricing in the risk of something like this happening? On both sides there are agents who have taken on risk. Some of the agents paying rent overextended themselves even before the crisis. Some of the agents renting space did the same. So who should take the hit? Nobody (i.e., the government)? Even that solution seems wrong -- do we really want to incenti…
The mistake is the landlord didn't take payment upfront, 6 month / 1 year.
'Dogfight' looms as landlords start suing restaurants over unpaid rent
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Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent
#32Government should take a hit, in my opinion. It's inefficient for every individual and entity to prepare themselves against things like this, especially since government action (stay at home orders) is exacerbating it. The business "bailouts", at least the in US, are mostly just loans anyway. Taking a "too bad" stance and letting businesses cascade fail prolongs the pain and leaves the country worse off when the cris…
If we taxed land, landlords would long get the rent for the building, which would be far, far less, as most of the rent in prominent locations is due to the location.
If we had land value tax the govt could have reduced LVT for the duration of the crisis, leaving businesses only paying for the far smaller amount of the building.
Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent
#33Yes, they hope to sieze all assets and sell the business after the UK emerges from the pandemic. One hopes the law makers in the UK will act to block this. Like snakes, the landlord's teeth point inwards. In mitigation, the landlords may well have their own mortgages to pay, and need to establich their legal position in a timely manner under contract laws, so a full governmental solution is needed.
Please leave comments like this on reddit where they belong.
Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent
#34I find this question hard to think about. Who exactly should be pricing in the risk of something like this happening? On both sides there are agents who have taken on risk. Some of the agents paying rent overextended themselves even before the crisis. Some of the agents renting space did the same. So who should take the hit? Nobody (i.e., the government)? Even that solution seems wrong -- do we really want to incenti…
The mistake is the landlord didn't take payment upfront, 6 month / 1 year.
Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent
#35I find this question hard to think about. Who exactly should be pricing in the risk of something like this happening? On both sides there are agents who have taken on risk. Some of the agents paying rent overextended themselves even before the crisis. Some of the agents renting space did the same. So who should take the hit? Nobody (i.e., the government)? Even that solution seems wrong -- do we really want to incenti…
Besides solving the crisis (to which most of us cannot meaningfully contribute) the main priority is preserving the rest of the society so that we can go on with as little harm as possible when the immediate crisis (virus) is over.
In this specific situation, it's obviously better to prioritize borrowers/renters over landlords, because the former are actually productive. Restaurant fails => no food; landlord goes bankrupt => house remains, it's just gonna be owned by someone else.
What complicates matters, obviously, is second-order effects; first of all, if some / many landlords are leveraged, them defaulting might impact banks, which is definitely something we don't want; if I were the government, however, I'd be saving banks directly in this situation, not landlords. The other consequence is a crash of the housing market, which IMO isn't that much of a big deal, but it's been politically untenable for a while because too much of ordinary people's wealth is tied in housing. It might be a good opportunity for a reset, though.
Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent
#36Earlier quoted context omitted.
Both should be pricing in the risk. If I buy a house as an individual I'm taking some of the risk, but so is the bank that lends me money. We each have different risks (I can lose the house, the bank can lose the money if they can't make it back by selling it), which is fine.
Honest question, how does one factor in risk for a catastrophic decline in cash flow? I'd suggest having a war chest which could cover six months expenses. I'm not a business owner though... I imagine it's probably harder to do than it is for an individual.
Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent
#37Government should take a hit, in my opinion. It's inefficient for every individual and entity to prepare themselves against things like this, especially since government action (stay at home orders) is exacerbating it. The business "bailouts", at least the in US, are mostly just loans anyway. Taking a "too bad" stance and letting businesses cascade fail prolongs the pain and leaves the country worse off when the cris…
> Government should take a hit, in my opinion. Government means "everyone who pays taxes". I'm not sure that's fair. I think it's fine to spend taxes rescuing people (including the business owners if they're in personal trouble), but rescuing businesses feels like a very different story.
Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent
#38Earlier quoted context omitted.
The mistake is the landlord didn't take payment upfront, 6 month / 1 year.
What fraction of renters (companies or individuals) can afford 6months of rent?...
Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent
#39Earlier quoted context omitted.
> Government should take a hit, in my opinion. Government means "everyone who pays taxes". I'm not sure that's fair. I think it's fine to spend taxes rescuing people (including the business owners if they're in personal trouble), but rescuing businesses feels like a very different story.
Businesses exist to serve people—both customers and as employers. In this case the businesses are also the ones being sued, and people only get affected because the business gets sued.