[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.

[eru]

The land that is 'released' also already exists. It's just in government hands.

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

Yes, there are land restrictions. But that limits land use. Not the total amount of land.

[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?

[eru]

In your scenario, we are enacting an LVT and lowering some other tax (say, income taxes).

The LVT itself will have no impact on rents. However, lowering income taxes will increase rents, independent of LVT. (Eg if they'd just lowered income taxes, because some rich sheikh wrote the government a big check for fun.)

That's assuming all else being equal, eg number of units available for rent.

[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]

> I found humans who valued longevity over pure profit.

LVT does not preclude these precious humans from existing.

[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.