| A quick CTRL+F shows nobody mentioning it, so I'm just gonna say that Louis has repeatedly stated that "Commercially Backed Mortgages" are to blame. If I understand it correctly, basically what happens is: 1. The owner of the building takes a loan over a period of, let's say 10 years. 2. They fix the rent as such that it will be the thing that pays back this loan plus interest. 3. The bank that granted the loan creates a "Commercially Backed Mortgage" based on that loan, which is a sort of guaranteed-profit thing. Dozens to hundreds of people get in on that. The interest on the loan being the "guaranteed profit". Considering the amount of people buying in, it's gonna be pretty high. But because of this, based on the size of the loan and probably some other factors, rent has to be pretty high. Even unrealistic. And the kicker is: you can't lower the rent, because it's all based on that idea of "You need to produce X in Y years, no matter what". Lowering the rent means getting 100% approval of all the people who bought into that specific mortgage, to say "your guaranteed profit is going to be lower than what you were told when you bought into this". Which isn't going to happen. And if you fail to get the needed amount of money, I guess the bank still pays the people who invested in the mortgage and takes the property as compensation? Perhaps fines too? That's how I understood the explanation at least. |