[HappyTypist]

Without regressing to another ad-infinitum housing discussion, real estate involves two markets: rentals/living, and ownership.

Some people want to own their own home and live in it (owner occupiers); these people however compete with investors who are seeking to rent it out. While investors don't directly affect the rentals market (as you'd expect an owner-occupier to not be a renter), they do push the price of housing, because housing becomes more of an investment (competing against everything else with zero / negative interest rates).

Progressive taxes on investors can mitigate this and make home ownership more affordable. First property, no tax. Second property, 1% of its land value charged annually. Third property: 2% of its land value, etc...

[mnd999]

You’re forgetting investors who don’t want to rent property. They just by new properties, keep them empty and pristine and profit of the rising market value of the asset. Sounds crazy but it’s definitely a thing in London. It should attract very high taxes to make it unviable but of course it doesn’t.

[asdfasgasdgasdg]

These evil bogeymen are something people believe are very common, but I can't find any solid data on their prevalence in London. People also claim these guys are ruining NYC real estate, but our vacancy rates are below 5%, and most of the places that are vacant are not long term vacant.

[antiterra]

The evidence is all circumstantial because it’s difficult to definitively prove someone owns a property with absolutely no intent to live in it or rent it.

Further, the properties held purely as assets are generally very expensive ones. The effect ripples down, well heeled people move into cheaper housing and those people moving in turn.

This is nearly 8 years old, but generally describes the issue with some specifics:

https://www.theguardian.com/society/2014/jan/31/inside-londo...

[anchpop]

> The evidence is all circumstantial because it’s difficult to definitively prove someone owns a property with absolutely no intent to live in it or rent it.

Vacancy rates are extremely low. That puts an upper limit on the amount of people that could be doing that. Is it not easy to tell if a home is vacant?

[TeMPOraL]

How are vacancy rates calculated? I have a feeling it's a statistic that doesn't correspond to reality well.

[antiterra]

I’m pretty sure vacancy rates pertain to available rentals not owned property that is off the market.

[bombcar]

It’s much more common in commercial real estate but people confuse the two.

Some very select markets may have an actual problem if foreign money laundering is a thing (as I’ve heard is true of Vancouver).

[asdfasgasdgasdg]

Yeah, I have noticed lots of commercial vacancies in NYC. My understanding is that this is because the leases are so long and thus the prices are not as adaptive.

[bombcar]

And commercial loans are VERY dependent on "building income" which is calculated based on lease rates, even if not "leased" in some cases.

Lowering rates can cause loan problems.

[asdfasgasdgasdg]

Makes a body wonder why buildings don't just sell their ground floor real estate to get it off the books. There must be some reason, otherwise they would, but it seems like a neat solution to the problem.

[Aunche]

Yeah. I was looking to rent a NYC luxury apartment recently and noticed that any reasonable deal gets snatched up very quickly. These apartment complexes do feel empty because the residents tend to be childless, so maybe that's where the confusion would come from. It's sad to see more and more people these days are in denial of basic economics. It's strictly better to rent an apartment out because otherwise you're getting nothing from paying management and taxes.

[reallydontask]

>It's strictly better to rent an apartment out because otherwise you're getting nothing from paying management and taxes.

Renters can choose not to pay rent, can cause untold damage to the property and can use it for illegal purposes to name but a few reasons why it might be rational not to rent a property out, specially if it's an appreciating asset.

I suspect that the majority of these empty properties are owned by wealthy people from countries like China or Russia.

[proxyon]

This is a conspiracy theory that financially illiterate people love to parrot. There is no benefit to keeping a property vacant on purpose. It incurs opportunity cost, which is the cost of rent. The only reasons a property may remain vacant is either due to regulations, incompetent management or maybe money laundering (an actual crime) in which case collecting rent would impose a burden on the money laundering operation. By no means is this common, it is an extreme exception and bringing it up in these conversations is a goofy platitude by people who know nothing about real estate. It'd be like talking about the supply of automobiles and bringing up "but what about cars destroyed at monster truck rallies or used on movie sets? it's limiting the supply of automobiles!"

[theli0nheart]

This goes right back to supply. Real estate prices don’t exist in a vacuum; ultimately someone will buy said property who wishes to live there and will have decided so due to it being the best of all options.

[Ginden]

Is it actually a thing? When I checked vacancy rates for several cities, all of them were really low.

[leppr]

It's common in my city as well. The reason is tenants can stop paying and are protected by law enforcement from being evicted. That's not even talking about straight up squatters. This makes renting out often non-economically viable, when adjusting for risk.

[notanzaiiswear]

It surely is already very expensive to leave an apartment empty as it is. There also seem to be special circumstances and laws in London.

But lets assume the worst, that it is all just pure evil capitalist speculation: even that is not necessarily bad. They try to anticipate future demand. So they anticipate that in the (near) future, somebody will need that apartment even more urgently than the people looking for housing right now. So it is better to keep it available for those people in the future. Think about keeping ICU units ready for future Covid patients for an analogy.

So what if the speculators are right, and the future buyers really have a higher need than the current ones?

Also I think if there really is just speculation, especially foreign investors, why not build cheap houses and sell them to the speculators for a lot of money? Nobody will ever live there (according to the anti-capitalists), anyway. Seems like a good way to make money for a country.

[qeternity]

It’s not two markets. It’s one market with two different models (like cars: buy vs lease).

There is an arb between the two markets which should hold them in tandem on a risk adjusted basis.

[mattmanser]

Then you just get thousands of holding companies.

[postingawayonhn]

You can just use a simpler land tax system.

Owner occupier properties exempt. Investor owned properties X% per year.

[Ekaros]

I wonder wouldn't it be just simpler to ban private land ownership in cities.

[mattmanser]

A significant number of people need, for various reasons, to rent.

[imtringued]

This idea is slightly better than a land value tax but implementing it is a financing nightmare. You'll have to spend the entire government budget on buying all private plots of land.

[iso1210]

Or just have a simple X% per year no matter who owns it

[postingawayonhn]

That should work to lower prices but will also increase costs for home owners. If the goal is to increase home ownership rates then giving them an advantage in the market can help.

[iso1210]

You could distribute the money raised as either tax cuts to income tax, or just as a flat dividend to every citizen. If a person owns an average house and pays $10k in tax, their dividend would return $10k - so no loss.

If they own 5 average houses and pay $10k per house in tax, they'd pay $50k and their dividend would return $10k, so would have to pay $40k more

[wizzwizz4]

So be really aggressive about associating holding companies with their owners for the purposes of this tax.

[imtringued]

The point of a progressive land value tax is to relieve individuals not corporations. Corporations can simply get the maximum rate.

[sagichmal]

> Progressive taxes on investors can mitigate this and make home ownership more affordable

In Germany home ownership is not seen as strictly positive in the same way it is in the US for example. Many, perhaps even the majority, of Germans go their whole lives as renters.

[sudosysgen]

That's just not true. Many people just want to live. They will rent or buy.

Housing supply is housing supply. There is scarce distinction in real life between rental and occupier owned housing.

[notanzaiiswear]

I don't follow your logic. In both cases, home ownership or rental, you need one house per interested party. Why should one be more expensive than the other?

And why should politics decide for people whether they should rent or buy, I mean, why push them in one direction or the other?

[HappyTypist]

If you make residential investment more expensive (through taxes), you will have less interested investors. This reduces the number of interested parties for home ownership, which means that the remaining parties (i.e. owner occupiers) pay cheaper prices.

Taxes are often used to discourage behaviour society believes to have negative externalities. For example: tobacco excise taxes; and also in the other direction (e.g. concessions for long term capital gains; which is supposed to encourage 'investment').

[imtringued]

Yeah in this case investors are punished for investing into space inefficient single family homes. Multiple apartments on a plot reduce the tax burden of the land value tax. So big investors will primarily invest in multi family housing.

In general taxes are regressive and people want to avoid them. If you tax regressive behavior the most, people will stop doing it.