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'Dogfight' looms as landlords start suing restaurants over unpaid rent

thisismoney.co.uk

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Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#71

Post by dahdum »

amiga_500 wrote: post #32
dahdum wrote: post #14

Government 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 society is to underwrite the risk then society should collect when times are good. 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.

Reducing the LVT would have been effectively a grant, a real cost to the government that needed to covered by all taxpayers. Issuing them secured loans to carry them through this would not.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#72

Post by jjoonathan »

jandrewrogers wrote: post #56
tomp wrote: post #35

Earlier quoted context omitted.

It's an unprecedented catastrophe, and even if we will weather it, someone (well, many someones) will suffer (we'll all suffer, but some more than others). 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…

One of the largest second-order effects of transferring all risk to landlords is that rents will go up because risk has a real financial cost that must be covered by cashflow. That will remain true no matter who ends up owning the property.

The risk has a cost, yes, but it's far from clear that tenants will be the ones who end up paying it. Not all businesses get to pass all costs to the customer. Sometimes customers win and the business has to live with reduced profitability.

I'm sure that landlords will play the "tenants pay" angle in the media, but the more vigorously they play it the more I will suspect it isn't true.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#73

Post by raincom »

hash872 wrote: post #59
raincom wrote: post #18

This is what happens when people drink the deadly cocktail mix of low interest rates and leverage. A landlord who has paid off mortgage can afford his tenant to not pay rent for a couple of months. That's not how the world is running now: REITs, individual landlords, partnerships, etc--all of them are profitable when there is a cash flow. The moment rents stop flowing under a certain limit, deleveraging starts. That'…

What are you advocating for here- an end to mortgages? Buildings are extremely expensive, and most purchasers need bank financing in order to buy one. They typically have a certain amount of skin in the game because lenders require them to put x percent down, I doubt they're 'highly levered'. They're normally levered- that's how the real estate business works. If you get rid of leverage entirely, the only people who'…

Low interest rate is the major factor in the inflation of real estate, thereby increasing the inequality. Bump up interest rates, and reduce the risk taking.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#74

Post by amiga_500 »

dahdum wrote: post #71
amiga_500 wrote: post #32

Earlier quoted context omitted.

If society is to underwrite the risk then society should collect when times are good. 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.

Reducing the LVT would have been effectively a grant, a real cost to the government that needed to covered by all taxpayers. Issuing them secured loans to carry them through this would not.

Agreed, but there is a real cost to be borne, I don't think we can evade that. However LVT would have provided a quick and relatively fair way to reduce ground rent by N% across the board. Ratcheting it back up if/when "business as usual" resumes would also be easy.

My main point is that as the "underwriter" the state should also be the beneficiary, as society creates the location value, not the landlord.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#76

Post by jonmartinwest »

raincom wrote: post #73
hash872 wrote: post #59

Earlier quoted context omitted.

What are you advocating for here- an end to mortgages? Buildings are extremely expensive, and most purchasers need bank financing in order to buy one. They typically have a certain amount of skin in the game because lenders require them to put x percent down, I doubt they're 'highly levered'. They're normally levered- that's how the real estate business works. If you get rid of leverage entirely, the only people who'…

Low interest rate is the major factor in the inflation of real estate, thereby increasing the inequality. Bump up interest rates, and reduce the risk taking.

And criminals using real estate for money laundering.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#77

Post by DanBC »

FartyMcFarter wrote: post #20
dahdum wrote: post #14

Government 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.

I don't mind rescuing businesses. People need jobs.

I do get a bit annoyed at businesses who've gone out of their way to avoid as much tax as possible by using a variety of weird schemes, and who've gone out of their way to pay their workers as little as possible using a variety of weird schemes, suddenly deciding that The Government isn't so bad after all and asking for a handout.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#78

Post by maxsilver »

jandrewrogers wrote: post #56
tomp wrote: post #35

Earlier quoted context omitted.

It's an unprecedented catastrophe, and even if we will weather it, someone (well, many someones) will suffer (we'll all suffer, but some more than others). 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…

One of the largest second-order effects of transferring all risk to landlords is that rents will go up because risk has a real financial cost that must be covered by cashflow. That will remain true no matter who ends up owning the property.

> One of the largest second-order effects of transferring all risk to landlords is that rents will go up

The opposite is likely. If we finally require landlords to actually take on the risks they already consented to previously, many of them will give up and sell out -- freeing property up to be used productively by real people, and lowering rents.

In effect, if we stop bailing out landlords, landlording will become a slightly-less-lucrative industry, which will slightly reduce cost-of-living across the entire market.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#79

Post by dang »

boznz wrote: post #3

Any form of profiteering in a crisis such as this should result in massive fines and prison time, in war time I believe firing squads were in order.

Please don't post unsubstantive comments and/or flamebait to HN.

https://news.ycombinator.com/newsguidelines.html

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#80

Post by Robotbeat »

FartyMcFarter wrote: post #53
Robotbeat wrote: post #37

Earlier quoted context omitted.

So we just don’t have restaurants (or people working there) for a year even after the stay at home orders end? I think people saying we shouldn’t bail out businesses haven’t fully thought these things through.

People are free to start up new restaurants.

Which is why I said a year after. Depression-level unemployment rates for a good year are not without secondary bad effects even with “haha money printer go brrrr.”
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