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Dutch cities want to ban property investors in all neighborhoods

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Re: Dutch cities want to ban property investors in all neighborhoods

#431

Post by dragonwriter »

galdosdi wrote: post #400
dragonwriter wrote: post #397

Earlier quoted context omitted.

> Usually mortgages are a fixed rate for the life of the loan (usually 30 years) -- at least here in the USA. Note that the very low share of ARMs is a recent (post Great Recession) phenomenon. Prior to that, ARMs were typically a large minority of loans. https://www.newyorkfed.org/medialibrary/media/research/curre...

Ah, makes sense. Low rates, you want fixed. High rates, you want variable. I just don't understand how the bank puts up with it.

Most of the ARMs were sold with very little downward adjustability. With rates at historic highs, the ones I was seeing when mortgage shopping in 2006ish consistently had wide open upward adjustment and one 0.25% step available of downward adjustment to their minimim rate from the initial rate.

The bank wasn't taking much risk on the adjustable rate.

Re: Dutch cities want to ban property investors in all neighborhoods

#432

Post by imtringued »

refurb wrote: post #216
nmca wrote: post #42

In the long term, the ethically right answer seems pretty clearly to me to be a land value tax [0]. But due to encouragement of home ownership [1], that's not going to democratically tenable in a lot of countries for 20+ years. Unfortunate situation. [0] In 1879, a man asked "How come all this new economic development and industrialized technology hasn't eliminated poverty and oppression?" That man was Henry George,…

It’s a nice theory but it would involve tossing people out of their homes because they can’t afford the tax. If you make an exception for them, then the entire system is defunct because it’ll just be a web of exceptions that just create a “housing elite” that is exempt from the rules. The easier thing is just make is easier to build more housing, denser if needed, to fulfill demand.

Well, you don't have to make "tossing people out of their homes" a horrifying experience. If the eviction process on your primary residence granted you 3 years to pay the tax then it would be exceedingly unlikely that anyone would get kicked out because of a sudden real estate boom or bust.

As a concession the debt can be reassessed at any time during those 3 years. If there is a boom that makes the tax excessive followed by a bust that reduces the value of the land by 50% then your tax bill would also go down by 50%.

>The easier thing is just make is easier to build more housing, denser if needed, to fulfill demand.

That's the entire goal behind the land value tax.

Re: Dutch cities want to ban property investors in all neighborhoods

#433

Post by logicchains »

ModernMech wrote: post #374
nathanvanfleet wrote: post #360

I have thought about San Francisco. It really does feel like this whole city is empty. No stores stay in business, no one seems to be walking around these neighborhoods. I have considered if you can fly around with a plane at night and use something like heat vision to determine who is home?Because I think the stats are just not correct for SF

San Francisco has enough empty homes to house every homeless person in SF many times over. And there are a lot of homeless in SF, so that's saying something.

And at the rate a certain subset of homeless destroy property, in a couple years none of those empty homes would be liveable.

Re: Dutch cities want to ban property investors in all neighborhoods

#434

Post by crote »

IkmoIkmo wrote: post #320
dmje wrote: post #25

Amen to this. Two case studies from the UK I've been thinking about recently: 1) Visiting London and spending time in South Kensington - walking back to hotel at night, only about 30% of houses had any lights on. Suggestion is the others are effectively uninhabited, and a search on RightMove shows properties sell for £20-£30m for a 4/5 bed. This isn't normal Londoners, it's outside investment. 2) Cornwall, where I li…

Not sure why the amen is applicable to Dutch cities. I'll take the local perspective from Amsterdam as an example, but it applies more broadly to the other cities as well here. Regarding point 1: There's no real issues with long-term vacancies (the municipality already has laws in-place which fine owners of vacant homes), typically sits between 1 and 2%. That should obviously go down to 0 as much as possible, but it'…

About point two:

Both supply and demand are incredibly constrained: building new houses is slow and not exactly being stimulated by the government, whereas demand is fixed because people need a place to live.

Property rental is an extremely attractive investment opportunity. Demand is guaranteed and due to the low cost of obtaining money it is basically risk-free. Even at near-zero rent you'll still make a profit - as long as the housing market doesn't crash.

On the other hand mortgages always carry some risk, and banks are aware of this. There are quite strict limitations on the amount you are allowed to borrow. This directly means that individuals will always be outbid by investors.

This directly results in price increases. Individuals are now no longer able to buy a home, forcing them to rent. Landlords, in turn, are happy to let you rent a property which you wouldn't be able to afford because it is way easier to evict you. And because demand is higher than supply, they'll happily increase the price. Rent prices are already in overdrive.

So now you're paying €1200 in rent instead of €800 in mortgage payment - for the same property.

Banning buy-to-let would result in a sale of the properties currently being rented out - which means a drop in the housing price. Rental supply will drop, but those houses don't magically disappear! People who previously were unable to get a mortgage can now suddenly afford to buy instead of rent. This lowers the demand for rentals, which decreases rent.

People don't need landlords - they need homes. With the exception of a very small number of short-term rentals, landlords provide zero value. Removing them from the equation decreases the prices for everyone.

Re: Dutch cities want to ban property investors in all neighborhoods

#435

Post by logicchains »

ianai wrote: post #296

I’m reminded of behavioral studies showing that other primates have an instinctive concept of “fair” and will choose against cooperation if a deal seems unfair to them. I think this was covered in Freakonomics. How about making a civil law where anybody can sue the owner of a home if it’s not occupied in a way that benefits the community around the home - say with a $10,000 plus court fees and 10% of any residual inc…

Then do other citizens have the right to sue the passer of this law for the resulting shortage of rental properties that this incentivises?

Re: Dutch cities want to ban property investors in all neighborhoods

#436

Post by imtringued »

debarshri wrote: post #86

This move is well appreciated. Currently, I own a house in oudegracht, Utrecht. It is very terrible situation here. All the apartments in and around me are all the time rented out as airbnb. During peak of pandemic, it was pretty much a ghost town. The housing prices have skyrocketed due to covid, but all these all-cash investor are jumping and swooping in the apartments, holding it for a while and passing it to the…

It's not just the investors. It's literally everyone.

Re: Dutch cities want to ban property investors in all neighborhoods

#437

Post by brnt »

IkmoIkmo wrote: post #320
dmje wrote: post #25

Amen to this. Two case studies from the UK I've been thinking about recently: 1) Visiting London and spending time in South Kensington - walking back to hotel at night, only about 30% of houses had any lights on. Suggestion is the others are effectively uninhabited, and a search on RightMove shows properties sell for £20-£30m for a 4/5 bed. This isn't normal Londoners, it's outside investment. 2) Cornwall, where I li…

Not sure why the amen is applicable to Dutch cities. I'll take the local perspective from Amsterdam as an example, but it applies more broadly to the other cities as well here. Regarding point 1: There's no real issues with long-term vacancies (the municipality already has laws in-place which fine owners of vacant homes), typically sits between 1 and 2%. That should obviously go down to 0 as much as possible, but it'…

Show your sources. I've read the exact opposite of what you claim.

The CIA even lists the Dutch housing market as the largest risk factor in the stability of the Dutch housing market.

Re: Dutch cities want to ban property investors in all neighborhoods

#438

Post by imtringued »

chii wrote: post #335
debarshri wrote: post #86

This move is well appreciated. Currently, I own a house in oudegracht, Utrecht. It is very terrible situation here. All the apartments in and around me are all the time rented out as airbnb. During peak of pandemic, it was pretty much a ghost town. The housing prices have skyrocketed due to covid, but all these all-cash investor are jumping and swooping in the apartments, holding it for a while and passing it to the…

> People blame the low interest rate it is the interest rate - because the price of property is related to the cost of money (aka, interest rate). Investors are merely looking for returns, with as low risk as possible. When property is priced low compared to the rate, you must expect this to happen.

>it is the interest rate - because the price of property is related to the cost of money (aka, interest rate).

You can manufacture more cars and houses as you get more money. It clearly is related to the fact that land yields a risk free return regardless of what you use to price it.

In that sense money and land is an NRA. A non reproducible asset. Low interest rates break the NRA property of money which is perfectly ok if inflation is also low. Rather than holding onto money unproductively they simply switch to holding land unproductively. The solution is to introduce a holding fee onto land.

Re: Dutch cities want to ban property investors in all neighborhoods

#439

Post by Spooky23 »

imtringued wrote: post #370
Spooky23 wrote: post #339

Earlier quoted context omitted.

We’re in a suicide spiral where fiscal policy has staved off economic malaise by kicking the can down the road. Interest rates have been kept low, which drives real property prices up. Everyone intuitively knows that collapse or high inflation is the endgame, so money flocks to property, which drives up demand. The issue isn’t the coffee shop in the fishing village, it’s that the fishermen are selling real estate now…

Low interest rates have made everything cheap but the supply of housing (specifically land) is extremely inflexible. You can make more cars but not land. The location value of your house skyrockets at the expense of everyone else. However, make no mistake. The problem isn't money. Even if you buy your house with Bitcoin you will run into the same problem. The problem is that location is a a monopoly. You can tax it o…

I’m not making any mistake, cheap money is absolutely the biggest problem that we have today.

My former mentor bought a house on Nantucket for $150k in 1990, sold for $3.5M earlier this year. That appreciation isn’t due to inflation or the constrained supply of homes — it’s always been constrained. It’s due to increased demand fueled by excess capital.

There’s no money in traditional banking. Even with negligible interest, the spread is very tight. The only way to compete is with volume, aggregation and fee for service, and the only way to get volume is to lower standards.

IMO, we’re in an economic time period similar to the 1860’s.

Re: Dutch cities want to ban property investors in all neighborhoods

#440

Post by vwoolf »

734129837261 wrote: post #191
rusteh1 wrote: post #165

I don't understand how this would work. How do people rent? Obviously many people can't or do not wish to own their house for any number of reasons. Who will own houses that are rented? I used to live in Amsterdam as an expat, and rented from a landlord who owned several homes in Amsterdam. Would she not be able to own and rent these homes under this scheme? The social housing system seemed to be abused when I was th…

Designations. That's how. Some houses are built and intended to be rented out to people. These houses are constructed entirely by companies (or people) for that purpose alone. Other houses are meant to be for purchase, and purchase only. If you purchase a house like this and then rent it out, that should be considered breaking the intended designation. So if you as an individual want to own multiple houses to rent ou…

So the solution to government interference in the market (by preventing adequate building from occurring) is yet more interference, and that interference will by fiat somehow lower prices, but without dramatically increasing supply.

What could possibly go wrong??

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