The current implementation seems to be causing an issue where it is not in the landlord's interest to offer the units to the market. It is the regulation's fault for creating disincentives for the landlord, so it depends on how you allocate blame for making a judgement based on that.
That doesn't mean we shouldn't try, or that we need to stick to a counterproductive plan because some people think arguing about regulations on free markets is more important than fixing a pressing problem.
No you just made it sound like it was kind of stupid to even attempt such a law.
Similar laws exists in Tokyo and it seems like a non-issue. Find me an empty apartment in Tokyo and I’ll be surprised. Maybe the problem exists elsewhere in society, for example: maybe the cost of living and property in NYC is just too expensive no matter what regulations exist?
I’m saying this because I’d imagine if people don’t think it’s worth renting the apartments, why not sell to citizens so they can buy in them and live there?
I feel like the world is starting to wake up to the fact that while it’s not easy to outlaw properly speculation, it’s going to be one if the major problems that define our time.
How it sounded to you was not my intended tone. If you read what I wrote again you may take away from my response that knee-jerking an argument about regulations in general is not something I find productive, but rather discussion of specific policies. It appears this one is not effective at its goal.
Tokyo has significantly stronger property rights thay make it almost impossible for anyone including the government to stop someone from building something on their land.
Rent control is about as useful as solving climate change by drawing a lower number on the screen of the thermometer.
Rents are a product of market conditions. You have to solve those conditions rather than try to stop the output from changing. Fixing the rent results in supply dropping off so the supply/demand equation is still met.
There is a misconception about private property. People think they work and then the thing they have is private property for free. As if private property only has a physical manifestation in the form of a product. Private property is a physical object plus the services provided from the institution we call private property. This means that private property is protected by the judicial system. It is protected by the police. It is possibly protected by neighbours watching over the neighborhood. It's value may be a function of the value of adjacent property. If you consider unavoidable positive externalities as a positive aspect of private property, then those positive externalities are also a service provided by the private property instituion. In fact, governments build utilities and road networks, they protect the land through a military force. The government does a lot of things to make your land valuable.
Then there is the community surrounding your property, the businesses providing jobs and shops selling products, your neighbors, etc.
When I think of private property I not only think of the object itself but also a stream of public services for which you barely even have to pay something. If you are a landowner you could now come up with the idea of selling the public services. The revenue that this process produces is called ground rent.
Is the market distorted by the landowner who is basically just selling free services from the government or is it the government that makes these blatant gifts paid for with taxes unrelated to land ownership?
Manipulation of rents will not reduce those public services, the value of the land remains.
Elasticity of a market is a scale. Elastic markets quickly adjust demand or supply while inelastic markets require a lot of time if they change at all.
Housing on the supply side is relatively inelastic when compared to other markets. Even if demand is high it might not quickly lead to new construction.
On the demand side the market is also relatively inelastic as moving has a lot of friction compared for instance with not making a luxury good purchase or postponing a holiday.
Yup. You can’t be “half in” the market. You’re either entirely in or not. Otherwise every intervention just squeezes the balloon and it bulges somewhere else.
The problem is a lack of housing. You either live with higher prices (reduced demand) or increase supply.
I mean if you own a parcel of undeveloped land are you going to build a small mobile-home park or expensive condos? One of those two is going to make you a fantastic profit.
They are not predatory. They are entirely market based. Why shouldn't companies be allowed to charge whatever is the market price? Or maybe in general we should start applying price controls to absolutely everything. Let's say only ever allow 5% net profit on any good or service.
Every economist knows price caps never worked and yet you're being downvoted for stating a plain fact. Price controls only make it so that nobody can buy the thing in the first place by exhausting supply. It's way better to let the thing be sold at whatever price it has than to just exhaust it. In this case it means property sits empty which is the worst possible outcome.
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So they are fixing an inefficiency in market by actually charging what market can bear. Should be applauded for the work, as inefficient markets are bad. Now they genera more profit which they can invest in more property thus enabling possibly more units to be build.
Moving all the money into the hands of landlords means that the population has no money to spend on anything else. This is massively detrimental to society.
> Now they genera more profit which they can invest in more property thus enabling possibly more units to be build.
Except that investing in new property might bring the revenues and profits of their current properties down, so there's a direct disincentive not to build more.
Any time you apply artificial price controls you create scarcity. Ask Venezuelans. The same bad policies are applied over and over with the same effects.
Three reasons. It's a store of value asset, a speculative asset, and a real option that the law will get changed.
Also, these kind of things get priced in, leading to lower property values. There will always be a willing buyer as long as the market price is above $0, implying that the benefits exceed the costs of ownership.
Rent controlled buildings are priced in during the sale so they go for lower values. As for why the very original people even bothered to invest in the building in the first place, then the answer is that the regulatory environment was one that allowed of incentivized it back then.
That doesn't mean we shouldn't try, or that we need to stick to a counterproductive plan because some people think arguing about regulations on free markets is more important than fixing a pressing problem.