[protocolture]

>they’re set as high as the market allows.

Huge red flag, this isnt the case. It isnt a perfectly liquid market.

>If we implemented a LVT tomorrow, the renters don’t get additional capacity to pay rent as mana from heaven.

No of course not, the process would probably take 12 months, as home owners identify their losses, and instruct rental agencies to end leases and increase prices. Accepting that while the house might be on the market for longer than usual, attracting a higher income tenant and getting them to sign for term is going to long term resolve the new hole in their budget.

>that landlords are undercharging renters en masse. I have never seen evidence in support of such a claim.

I am living this discussion right now. So this is amusing me.

I rented my current property in 2020 for 320 p/w. It was probably worth 400 p/w I had a handshake agreement with the rental agency that they would leave the price where it is, and I would complete as much maintenance myself before raising a fuss.

In 2022, the owners had to sell the property to pay for medical treatment. The old owners had no mortgage, and loved having a fixed stable income. Their biggest risk was having the property untenanted for any length of time. So they left the price alone while the world moved on.

The new owner has raised the rent every 12 months since. The previous owners sold at a massive gain, and the new owner was struggling to pay the mortgage. My calculation based on sale price is that their mortgage payments were in excess of 380 p/w and, considering the sale grandfathered my no maintenance agreement, are looking at considerable maintenance costs.

Current cost to me is ~500 per week.

Issues: Market is currently roughly (we have big discussions about this) permitting 520 - 540 pw for similar properties.

My barrier is that its a substantial cost to move. So I negotiate all the price rises with the real estate in terms of property improvements.

If they saw a taxation increase imposed by an LVT, they would not hesitate to pass it on to me over 12 months. I would have to reevaluate the costs to move. If the same increase occurred roughly evenly across where I want to live, I would probably just have to make it work. I cant go anywhere to avoid the LVT increase, and it costs money to relocate. I would have to further erode my spending in other areas to account for it. And I could.

This really comes back to what the LVT is designed to do. Its designed to enforce the most efficient use of the land. The outcome is intrinsic to the goal. The land is not being used most efficiently (I rue the day that my landlord figures out that we have the exact amount of land required to battleaxe the block, turning my backyard into another property) which for humans, as opposed to spherical cows, is actually fantastic in a lot of cases. Under an LVT my landlord would be required to run the property in the most taxation efficient manner, which is counter to my interests as a renter.

But yeah, the rental market is not liquid. There's costs to move. Costs for having the property on the market untenanted for significant time. Costs to bring a property up to spec between renters etc etc. And lots of people live in that gap. To the point where our local real estate industry body actually issued guidance to real estates that they should raise the rent as frequently as possible because it wasn't getting done very often, suppressing prices.

[eru]

> No of course not, the process would probably take 12 months, as home owners identify their losses, and instruct rental agencies to end leases and increase prices.

Why don't home owners just instruct rental agencies right now to end leases and increase prices? Why do they need to wait for some hypothetical tax to kick in?

[sokoloff]

Because their tenant can just go down the street and rent from another landlord whose costs did not increase by $10-20K/yr.

In a world where LVTs increased taxes on all nearby landlords, that threat is an empty one. Sure, they can threaten to go move 10 miles away or eventually to go move into a beehive apartment that will be built 3 years from now to optimally house humans while not leaving a shred of land under-used.

[eru]

> Because their tenant can just go down the street and rent from another landlord whose costs did not increase by $10-20K/yr.

Well, that only works iff landlords can pass down these taxes. That's exactly what we are discussing. So this is begging the question.

> In a world where LVTs increased taxes on all nearby landlords, that threat is an empty one. [...]

It doesn't matter. Even if only left-handed landlords paid LVT, rents wouldn't change depending on the handedness of your landlord. (However, left-handed landlords would likely sell to righthanded landlords, because the property is worth more to them.)

[sokoloff]

It is not begging the question to identify that a key economic factor would change under an LVT to be different from today. This change would affect the number of landlords who could profitably offer units for rent at today’s prices, which I posit would affect their willingness to supply units at that price, shifting their supply curve.

Your own observation that rents would not change based on handedness of your landlord implies that you understand this.

[eru]

The supply of land is fixed.

(You can change the supply of land on the market, by eg giving a tax subsidy for keeping land off the market. That's what the British council tax does in many counties: you get a rebate, if your property ain't occupied.

But LVT specifically does not depend on what you do with the property. It's due one way or another, thus it has no influence on the supply of land.)

[protocolture]

>The supply of land is fixed.

The supply of land is not fixed, its highly regulated.

In my country, the state governments have land release targets roughly matching population growth, they have never met these targets.

Then there's zoning. We have wild agricultural zoning practices that prevent agricultural land, even shitty agricultural land, from becoming residential.

Zoning and Regulation limit land supply.

[sokoloff]

In 2025, a certain supply of units is available for rent in some relevant market. In 2026 an LVT is enacted shifting taxes onto land owners (and away from income earners).

Do you expect rents at the end of 2026 to be higher or lower than now in that market?

[notahacker]

Fixed term rental contracts in many jurisdictions, and lack of motivation, particularly for landlords buying property primarily for anticipated capital gains who are quite happy with a "reliable" tenant paying no much more than their costs, but won't be prepared to do the same thing when the monthly cost goes up (and most of the anticipated capital gain disappears...)

[eru]

Sure. But how do any of these factors suddenly change with an LVT?

An LVT doesn't change any of the opportunity costs here. Getting more rent is exactly as useful (or not) as without an LVT.

[notahacker]

If you go from covering your costs and expecting to making a capital gain to not covering your costs and not expecting to make a capital gain, you're much more likely to put the rent up

[eru]

Approximately all landlords are already charging the maximum they can. Especially commercial landlords. Otherwise, they would break the fiduciary duties to their shareholders.

[protocolture]

>Approximately all landlords are already charging the maximum they can. Especially commercial landlords. Otherwise, they would break the fiduciary duties to their shareholders.

Assuming all landlords have shareholders is the first clue you aren't on target here.

Your approximation is wrong and dangerous

[protocolture]

Because they dont have a need to risk long term vacancies.

[chgs]

If you live in an in demand area there is no risk. Price can be increased until people move out.

If you live where there’s no demand and r prey houses already you can force prices down just as easily.

Mortgages prove costs aren’t passed on. A landlord with a lot gage doesn’t on the whole charge a higher rent than one without.

[protocolture]

>A landlord with a lot gage doesn’t on the whole charge a higher rent than one without.

Thats literally my experience, the new owner with a mortgage charged me more.

[eru]

You got lucky with the old owner. They gave you a sweetheart deal.

I hope your new landlord will lower your rent, when they refinance to a cheaper mortgage. (Or are only higher mortgage rates pass through? What's the difference?)

[protocolture]

>You got lucky with the old owner. They gave you a sweetheart deal.

I shopped around and found a good deal. It including moving to a suburb with cheaper rents and still making sure I found something good.

But this is the market. Its not full of spherical cows, its full of human beings making human decisions.

I found humans who valued longevity over pure profit. This is not a unique scenario, people use rents as retirement income all the time. They wanted a consistent tenant, and the suburb I wanted to move to is famous for inconsistent tenants.

I valued low prices and outdoor space. We found a price we both agreed on. I know of other examples of this happening near where I live, it isnt unique.

Likewise, costs being passed directly to the renter, not unique.

[eru]

Sure. But how does this change with an LVT?

[protocolture]

Your question that I answered wasn't about LVT, so shoehorning LVT back in here seems irrelevant.

If your question is, AH BUT SOMETIMES THEY DONT INCREASE RENT ALWAYS SO MAYBE THEY WONT INCREASE IT WITH AN LVT. But we are talking about a situation where the cost to supply a rental property has increased dramatically.

Landlords will fit into 2 categories.

1. Landlords who can absorb the cost.

2. Landlords who cannot absorb the cost.

Landlords have 3 options.

1. Try and absorb the cost.

2. Pass on the cost through increased rent (possibly leaving the property untenanted)

3. Sell

Landlords who cannot absorb the cost either need to pass it on or sell. Theres no "absorb it" long term for them. Likely the vast majority will try to pass the cost on before doing so.

The question remains whether landlords who can absorb the cost, increase prices. If enough of the market bites on the rent increases they likely will.

Also, there's another leg here. If significant numbers of landlords remove their properties from market, scarcity will drive up rental prices anyway. We literally did this to ourselves years ago when we removed negative gearing. Negative gearing has a tendency to drive up rental prices, but it also drives up supply of rental properties. We removed it for a year or two and the result was a dramatic increase in rental prices due to lack of supply. Renters cannot become home owners fast enough to ensure elastic demand, that's why house ownership : rentals is often seen as arbitrage. You take a product from one market and make it available to consumers in another market.

[chii]

> If significant numbers of landlords remove their properties from market, scarcity will drive up rental prices anyway.

unless you're imagining they're destroying the property, you cannot "remove" it from the market (or they decide to leave it vacant deliberately - an illogical a choice as destroying the property).

If they sell to a owner occupier, it removes that buyer's original rental demand, by the same amount as the removal of the rental property from the market.

If they live in it themselves, it's the same (just no money changing hands).

[protocolture]

Right but I specifically hung a lantern on that.

Its not that the house is destroyed, its that they aren't spherical cows that immediately exist on the sale market. Renters cant become owners instantly. Landlords cant sell properties instantly. These things take time. Housing is not a perfectly elastic market.

[6510]

Or we could simply see you paying as much rent as possible as the most efficient use of the land. That would simplify the plot considerably.

[protocolture]

I mean yeah it is the most efficient use of the land. One of the reasons most efficient use isnt a good metric for everyone.

[nmhancoc]

This was a long reply and I’d like to honor it by addressing what you bring up, but there’s a lot so forgive me for jumping around.

Let’s start by noting that we’ve now shifted the argument from “100% of this tax will be charged to renters” to, “this will get passed through to renters who were previously being undercharged.”

It’s hard to directly argue with your anecdote because I don’t know where you are or what your rental market is like, so I’ll address the argument more broadly.

Let’s examine how common that arrangement is. To the best of my search small time landlords of the variety you mention own something on the order of 35 and 40% of rental units. The rest, primarily multifamily (apartments) are owned by corporate landlords.

The corporate landlords were sued by the last admin for price fixing using realpage. I don’t know if or how that case was resolved but I think it’s safe to conclude they’re probably not undercharging.

For the small time landlords, probably some aren’t undercharging and some are. After all, how hard is checking neighborhood rents on Zillow once a year? Even if none are, we’re still admitting at least 60% of renters aren’t getting the kind of deals you mention. So this is a minority case, and probably shouldn’t be the basis of policy.

Addressing this point: > Under an LVT my landlord would be required to run the property in the most taxation efficient manner, which is counter to my interests as a renter.

Even granting that that’s true, I’d argue it’s not persuasive. The government needs some amount of money to function. LVT is one source of that money, income taxes are another, sales taxes are another, wealth taxes are another, etc.

So your argument fundamentally resolves down to “other members of society should make up the deficit in taxes I would otherwise pay so that I (and others in my situation) can enjoy a yard or more space than I otherwise would.”

And the basic question here is, why? In what way does it benefit literally anyone else in society that you have a bigger yard? This is a blunt and perhaps impolite way to put it, but it’s true.

Going back to those alternatives, we can counterfactually raise income taxes on some waiter bussing tables or a SWE slinging code at Facebook, on an author with a copyright, or on someone who owns a business. But, if we do, we should expect less of all of those services. That serves as a reason to avoid such a tax.

In contrast, with the yard, I can’t think of a single such service provided or reason to avoid the tax. And that’s the crux of the Georgist argument more than railroads or slumlords. It’s the empty lot, or the lawn as we now call it.

[protocolture]

>The government needs some amount of money to function.

The issue at hand isnt "Does the government need money to function" unless we are going full MMT derp we can all accept a level of taxation is necessary.

The issue at hand is whether LVT is a better distribution of the burden of taxation.

>So your argument fundamentally resolves down to “other members of society should make up the deficit in taxes I would otherwise pay so that I (and others in my situation) can enjoy a yard or more space than I otherwise would.”

My argument is largely that by shifting the burden of tax from a progressive tax regime, that is only targeting those by an amount calculated on what they can afford, to a tax regime thats largely dictated by circumstance and subjective valuation, you will hurt a lot of people who dont deserve it.

If we go too far in this direction we will have to define basic moral principles, because that seems to be where you are heading. I dont necessarily think that earning income should mark you for punishment either. But just as not taxing the homeless is fairly universal, not taxing people who organised their retirement and arent a burden is also fairly universal. Your mileage may vary.