[hokus]

Its really simple. We should tax property AND rent to the point where it becomes unprofitable to hoard it for purposes of unproductive wealth extraction. Then change all rent contracts into lease-buy contracts.

You would accumulate a good percentage of madly overpriced rentals that no one wants then they go bankrupt one by one. You get those delicious market dynamics we [apparently] crave more than any social convention. Buildings should be hot potatoes that you don't want to hold for to long. With this much demand it wont even affect housing prices but even if it did, who cares?

Gradually, (in stead of rent) people pay tax at market rates. We can keep the large scale wealth extraction and continue to force people into productivity only it would be the government doing it.

The same logic applies as with the teachers, taxi drivers, cleaners, garbage men, restaurant employees etc: If you don't like it you can just leave the city. Get some of that delicious mobility going and gtfo. They can just leave for the sake of efficiency and availability. Its that simple: Just go away.

If you have to chose between [say] 1) a corner store OR 2) a land lord it should be obvious which one to get rid of.

If they are contributing to quality of life by selling food and employing people we should consider giving the store a tax cut. One could also extend the tax cut to the people working there and have cheap stores.

Its hilariously unproductive to have a usury scheme of greedy unproductive rent seekers extracting wealth from every transaction that is some how remotely related to real estate.

I just want to pay for the ice cream, pay the people involved in making the ice cream happen. Why would I pay 80% to someone who doesn't do anything I need?

[leereeves]

And who would build new rental properties under those conditions?

[whymsicalburito]

They wouldn't, and that's the point. They would build housing for purchase and make their profit on the sale. Pretty simple.

[leereeves]

That sounds absolutely awful for anyone who wants to rent.

[mc32]

Under those conditions I think only the state begrudgingly would build large blocks of cookie cutter but pragmatic flats. Something ala eastern block country estate housing.

I don’t think we want that. Although some do want that. S better alternative is Tokyo or Singapore (though they had their state built flats too —which inspired state built flats in Brazil.)

[esoterica]

If you tax rent, landlords will pass the tax on to renters. All you are doing is making renting more unaffordable.

[whymsicalburito]

But buying will be cheaper than renting, so it seems just fine that rents would go up.

[esoterica]

A lot of people cannot afford to buy at any price point.

[hokus]

yes, to the point that [say] 10% of the rentals are empty.

[Pyxl101]

Can you clarify what problem you are trying to solve with this proposal?

No one is obligated to rent a property from someone else. You rent if you believe it's in your interest to rent, instead of buy. Why stop two consenting people from entering into rental agreements, both of whom believe it's in their interest?

Some people prefer to rent: they don't want to be obligated to live somewhere for 10 to 30 years. They prefer to be free of commitments and loans (and/or don't have enough cash to buy). I wanted to live somewhere for a medium period of time (a few years) with no significant commitment or risk, then move on. I had just moved to the city and wasn't sure where I would ultimately want to live long-term. Landlords can also rent properties to people who have far worse credit and far fewer assets than would be required to buy the same property. I was able to rent a property much nicer than I could have afforded to buy at the time, since I had income but little wealth and credit. (The landlord in that case is taking on unsecured risk that I will default on our contract.)

Landlords also provide useful services to their tenants: they are responsible for all upkeep associated with the property. When I rented, I was glad not to have to deal with any of that. Landlord takes care of all the yard, or common spaces in an apartment, and if something breaks I just call the landlord. If you own appliances and real estate yourself, then you are potentially on the hook for significant costs if something breaks. Maybe the refrigerator breaks and you need to buy a new one: the landlord needs to budget or purchase insurance for that, while a renter does not. Landlords also assume liability for their property: if e.g. asbestos is found on the land, they may be responsible for paying for the cleanup.

Property owners are forced to tie up their assets in the real estate. Renters don't have to. Let's say that I have $1 million in cash, and I want to live somewhere. I don't necessarily want to have to invest all of my cash in real estate - not even a down payment on a mortgage. Renting might be a preferable alternative so that I can use my cash for other higher-value investments or to fund a business.

Lastly, landlords assume risk. If they can't find a tenant for their property, then it sits idle and they take a loss. When you own property, you can lose a significant amount of money if the property depreciates, as happened during the last recession. When you're renting, your risk is capped - you owe the rent but that's it.

Renting isn't wealth extraction. Like staying in a hotel, it's commerce, an exchange of money (rent) for services (temporary right to occupy a property). If you want to buy a property from its current owner, instead of renting it from them in a landlord-tenant relationship, then make them an offer, and if you both agree then you can do that instead.

[Xylakant]

> No one is obligated to rent a property from someone else. You rent if you believe it's in your interest to rent, instead of buy.

Ok, how does this work. In germany, you usually need to pay 20-30% of the full price from your own saved funds when buying property. 100% financing is rare and usually only available for people that have sufficient assets. So people that have a low income basically never have a chance to buy. They don’t choose to rent. Their only alternative is living in the street.

Rents in Berlin have been rising substantially faster than wages for the last decade or so, turning this into a vicious circle that even the middle class cannot escape from.

[drugme]

No one is obligated to rent a property from someone else.

That's a pretty weird statement to make.

Do you really believe that everyone (or even a majority) of people who currently rent are in a position to buy a place to live if they wanted to?

[Pyxl101]

One of the key benefits of renting, that I outlined in my comment above, is that people can typically rent properties that they could not afford to buy. So yes I agree that people could not necessarily afford to buy the same quality and location of property that they might rent. This is a benefit.

Cities have high property prices because they are extremely desirable. Lots of people would like to live there, but there is limited land, and not everyone can afford to live there. There must be a way of determining who has the right to occupy the scarce resource that is land, and the market is the solution to that problem in most countries.

Although not everyone might be able to afford to buy property in the most desirable cities on earth, such as Berlin, most people can certainly afford to buy property somewhere else. For example, a house that costs $1 million in San Francisco might cost $20k-$50k in Detroit. The further you move away from cities, the cheaper property gets.

I think it is reasonable that not everyone can afford to buy property in literally the most desirable, high-demand places in the world, like Berlin or London. People can still afford to buy property elsewhere.

[hokus]

> Cities have high property prices because they are extremely desirable.

There is scarcity which mean those selling can reduce the set of candidates by pumping up the prices. Its a simple mechanic, not a very sophisticated approach...

> There must be a way of determining who has the right to occupy the scarce resource..

yes! exactly! We haven't attempted to examine the question let alone attempt to answer it.

Lets say we have:

1) renters serving small numbers of customers.

2) renters serving large numbers of people.

3) renters rarely serving the same customers.

4) renters regularly serving the same customers.

Lets say (for sake of simplicity) people spend half their income on rent, lets say we can infinitely increase rent as the bill is (inevitably) forwarded to the customer they serve (everything involving labor becomes more expensive) and lets assume perfect scaling.

Then you can (and we do) have a city where wages are low and everything ("produced" locally) is cheap OR you can have a city where everything ("produced" locally) is very expensive and wages are high.

You somewhat increase productivity by forcing out people who can only do manual labor but it doesn't scale nicely. Eventually the buildings only serve as investment vehicles rather than nurturing the cities productivity.

We should wonder where the money goes really. I have a mental picture where eggs are cheap but if you want a fried egg with a slice of bread it is going to cost you 100 times the price of an egg because the fried egg is mostly made up out of rent.

I think it would make much more sense to have government do the wealth extraction and to configure rent to have the proverbial eggs fried cheaply.

Cities not just import stuff produced elsewhere (because they cant do it themselves) but they also export a lot of valuable services. Those would be a lot more attractive if they didn't scale with rent prices 1:1.

I'm not claiming this is the holy grail, its a rather raw train of thought. It seems to me to have as much economic activity as possible one could force the price of the raw resources down by a whole lot. Forcing people to fry the egg at home doesn't make much economic sense, we can have professionals do it for you at scale.

It could be interesting to run the numbers on room service vs having your own kitchen? Why do we need a million kitchens in our city? They are just sitting there taking up space not being used? It seems as bad as having the empty buildings increasing their own value by making the resource more scarce.

One more thought:

Do we want university graduates or do we want land lords? Why would we want land lords to enrich themselves with money the students don't really have? The student automatically becomes an expensive employee. Education turns into a scarce resource. If it was a game (and it is) the "let the market figure it out" approach is easily defeated.

[hokus]

> Can you clarify what problem you are trying to solve with this proposal?

Say we live in a town where we make all the decisions and our word is law. Our imaginary town needs 2 garbage men, one to pick up the bags, one to drive the truck. We need a truck, fuel, some place to dump, our garbage men need some cloths, a place to sleep and they need to eat.

We take some city land, build 2 house and a garage.

With them serving tens of thousands of customers we can both pay them a nice salary and make the service cheap.

Now we can add a 3rd person who does nothing and pay him a huge sum for his services. We can make fancy documents dressed up with powerful geometry and invent some fancy title for this 3rd person. Say we call them Lords.

With tens of thousands of customers it seems like it doesn't matter. They can pay an extra 100 bucks annually and we could easily finance the 3rd or perhaps a 4th person who also doesn't work. They could live in great wealth without anyone getting upset over it. We could lower the salaries from the first 2 and make room to add a 5th.

Then one day the plumbing starts to leak. It might be portrayed as if the Lords repair the plumbing but the reality is that it requires a plumber.

What I'm trying to say is that however complex we make the bureaucracy, the way stuff works hardly changes. At least not until the bureaucracy becomes so important than there is no more room for the work.

I think that problem can be solved long before.

> No one is obligated to rent a property from someone else. You rent if you believe it's in your interest to rent, instead of buy. Why stop two consenting people from entering into rental agreements, both of whom believe it's in their interest?

In the existing formula our 2 garbage men are obligated to rent a property. The citizens will have to pay whatever the greedy unproductive landlords want them to pay.

That people can afford this only makes the problem worse.

It's consent only if the other voluntarily agrees. Individually they could chose not to be garbage men but that doesn't mean we no longer need garbage men.

Sure, we can have a thousand applicants and the winning one could be someone willing to drive 2 hours to get to work.

On a personal level that might seem like a reasonable way of doing things, as a town or city trying to organize it self its just poorly done. The citizens pay more than it costs and they are not getting anything for it.

We've sacrificed efficiency for exploitation. Or we've collectively done a half ass job organizing our shit and now we have to pay for it.

>Some people prefer to rent: they don't want to be obligated to live somewhere for 10 to 30 years. They prefer to be free of commitments and loans.

There is never any obligation to live some place. That would be inefficient. If rent contracts are replaced by lease buy contracts you don't need credit. You can pay rent 12 months then leave. The land lord would be obligated to buy back your share of the house or he has to sell it.

> Landlords also provide useful services to their tenants: they are responsible for all upkeep associated with the property.

I don't want their services because they are madly overpriced. I want the actual market to do these things.

> Property owners are forced to tie up their assets in the real estate.

no no no, they chose to do this because it makes a good investment. We can regulate it to be highly undesirable to own property which will drown out everyone except those who really need it.

> Lastly, landlords assume risk. If they can't find a tenant for their property, then it sits idle and they take a loss.

This would be the desirable mechanism. Sadly there is so much demand they would have to ask absurd amounts of rent to be able to not find anyone.

> When you own property, you can lose a significant amount of money if the property depreciates, as happened during the last recession.

This can only happen if the market value grows beyond the new value. Don't feel sorry for investors. We are currently forcing people out of their home to satisfy all that greedy exploitation. Investors only risk losing part of their investment. Its not like they are out on the street like tenants during the great recession.

> When you're renting, your risk is capped - you owe the rent but that's it.

I'm perhaps a lot older than you. I've seen many cases where people died and the relatives had to pay rent, clean out the house and return it into the claimed original state in less than 30 days OR pay some truly insane amount of money.

Say the previous owner build a garage, do you want it? Say they moved some walls around, put in a fire place and got a fancy kitchen? Say there are 20 trees in the back yard?

Mum died, you get 30 days. Don't forget to dig out the swimming pool as well.

Greedy unproductive cruel dictators they are AND they own you. Its a much to attractive scheme, it should be heavily discouraged in favor of economic activity, efficiency and quality of life.

I've paid the construction cost of my house 3 times now but every year I have to work more hours per month to live there???

Maintenance involved 1 phone call every 2 years and roughly 0.005% of the value of the place.

Almost every house on the block has the same owner. A decade ago we were allowed to buy it. Now they only sell houses to investors with the tenants still in them. The market value is about 7 times the construction cost.

They take 10 times the value of the house and not do any work.

If rather than me paying them they paid me the rent they would still be making crazy money without lifting a finger.

I work, other people have to pay for my work. Half of their money goes towars lazy greedy unproductive dictators. 1/3 of their money went to lazy greedy unproductive dictators too.

Then add taxes and they have to work 8 hours to get 1 hour of my labor.

And that my friend is ruining economic activity. Cut them all out and you will have an explosion of enterprise. Let the ponzi people take a risk and invest in that.

I didn't start pondering what is wrong until I see people having to pay rent for flooded houses.

Without risk it is not investment, it's pure exploitation and we are forcing people into it.