[aristophenes]

Please explain how the data provided by the article relates to higher rents. Just because rents are high and oligarchs are buying properties in order to collect rent, it does not follow that rents are high because of that foreign investment. It only makes sense that they are related if they are not renting them out. Which may be the actual case, but was not what was described in the article.

[boombust]

Easy, it is a two-fold problem.

First, if housing prices growing at a faster rate than wages then less people can afford buying and must keep renting. This means that the amount of people seeking rentals keeps getting larger, which increases the demand for rentals (and therefore the price).

Second, and this point is speculative and I have no evidence to prove this, these properties are much more likely to stay empty (or at least take longer to get to market as the goal of the money laundering operation is not the bottom line but the purchase itself). This is completely anecdotal, but the owner of a dog that my dog likes to play with represents a wealthy foreign individual, and this individual owns a really expensive property on Lancaster Gate that just sits empty that would otherwise pull in over 10 grand a month easy. If you live in these cities you see this kind of thing first hand.

[aristophenes]

My point is not about foreign investment driving rents up or down, it is that this is a poorly written article. I generally agree with what you are saying, though your logic is somewhat flawed in your first point. Every property that gets turned into a rental on average changes one home owner to a renter but also adds a new rental to the market so in principle it’s a wash. However as I’ve stated now for the third time, I acknowledge that properties bought as investments without renting them out will increase rents.

What I have been saying is that the actual article doesn’t make that point, and therefore doesn’t make sense. Even if foreign investment drives up rents, a reasonable person without their own experience would not be able to conclude that from the information in this article.

Furthermore, I believe it is HN policy to assume the strongest argument of the person you are debating if you choose to disagree. Instead you are continuing to mischaracterize what I am saying.

Please don’t explain to me how it works in real life again, I am aware. I do agree that over the short and medium term some types of real estate investment will raise rents.

[boombust]

I agree with you that it is not a particularly polished article. However, you were basically saying that rents would decrease as a result of market forces, which is not really true as property markets can't react fast enough to match changing demand year on year.

You do have a point with your criticism of my arguments. I don't think I did a good job making the arguments as the issue that arises with renters not moving onto the properly ladder is closely linked with empty properties. Yes, a sold home becomes a rental in principle. But if it is slow to come onto the rental market or is kept empty then the supply for rentals decreases and the demand for rentals doesn't decrease accordingly, exacerbating the problem. So you are completely right that by itself it shouldn't matter much. You are correct that the problem arises when landlords are not too bothered by renting, which is a common feature in real estate money laundering.

[Supermancho]

Your first answer is in regard to: https://en.wikipedia.org/wiki/Law_of_rent

The second answer was verifiable from multiple markets on my end, in high rent areas like Southern California to Seattle where it was common knowledge that luxury items and land was bought up and left empty...unsurprisingly until China decided to start heavily double taxing foreign assets.

[shawnb576]

I've heard this a lot. Vancouver passed some laws to try to discourage the practice.

That said, I live in Seattle, and have for 25 years. I've lived in some of the nicest neighborhoods (Kirkland, Capitol Hill) and I have not seen or heard of a single actual example of nice places being bought and sitting vacant.

I'm not saying it's never happened, but I've seen zero evidence that it's happening on any scale that effects the market.