People should be able to do whatever they want with their properties
For example, you don't want people doing things that poison groundwater for the neighbors, right?
Anyway, letting property sit idle benefits the landowner but causes issues for neighbors, local government and the free market. It means businesses in those locations get less customers, and local governments less sales tax. If the property is not cared for, there can be additional issues that lower the value of other's homes.
It causes rental prices and home prices for buyers to inflate because of the market distortion, leading to boom bust real estate problems.
Boom and bust effects homesellers and homebuyers, but also, given how often property tax plays a role in government budgets, dramatically affects local and state revenue, (and federal revenue in countries with a federal property tax).
Terminological issues aside, tax is not about fairness. At least not for any one person’s particular definition of fairness, and certainly not mine. Tax, in this case, is about a behavior we want changed, and a means readily to hand by which to change it. Doesn’t really matter if it’s fair.
Can you help me understand this? I've never understood why any property sits idle -- the property would need to increase in value fast enough to counteract property taxes, just for the owner to break even. And that's ignoring the opportunity cost of not filling the property with tenants.
To me, it seems that it would always make more financial sense to try and hit 100% occupancy, even if that means steeply discounting the rent. Wouldn't an empty property be hemorrhaging cash?
Sometimes people lose money, but at the end of the day they can sign a good deal on it (let's say couple of years), and it will compensate their losses extensively. But they will have this "ready immediately" sign all this time.
Another is this: a building nearly full rented has an easily calculable valuable based on its income. A building with a higher price but not trying to rent can, incredibly, claim to have a higher value. Especially if there are several building nearby claiming the same value.
If there is a debt associated with the building, it is especially in the owner's interest to keeping the supposed value of the building high even if they are loosing revenue at the moment.
If a few organizations own a large number of units they can strongly influence a market both of rental rates and building values by doing this. Undoubtedly to a net profit or they wouldn't be doing it.
https://www.citylab.com/equity/2018/11/property-tax-dark-sto...
A great example is rent control. Sure it helps current tenants, but it distorts the rental market such that it disincentivizes putting new homes on the market, and the exact opposite of what you want - higher rents.
Cities are (necessarily) very tightly regulated, because when people and property are packed in so tightly together the possibilities for negative externalities are severe. It's important to optimize the very limited space in a way that maximizes its good for as many people as possible.
You have a lot more leeway to do whatever you want way out in the country if that's what you're looking for, but you should never expect that in a dense city, because you won't find it anywhere.
But to answer your specific question, the most obvious negative externality is increased rents for other people, because an apartment that could be being rented out (increasing supply) isn't being rented out.
Having lots of vacant residences also potentially increases crime, is bad for neighborhood maintenance (we have a huge problem here in NYC of sidewalks not being shoveled in front of vacant properties when it snows), it gives pests a potential home, and increases the potential to damage surrounding residences. Vacant residences are more likely to fall under disrepair and then catch on fire or start leaks, which can damage nearby or underneath residences. If you're touching one then it's bad for your heating/AC bills, because your heat/cold is sapping through the walls into the un-conditioned apartment. Even just simple things like having fewer eyes to watch out for crime and call the police if a burglar or robber is spotted.
There's a huge host of problems associated with having long-term vacant residences in your neighborhood.
What you are describing is not an “externality” in the way that economists use that term.
Owning central land and not using it means that millions of people have to go further to get to their destinations. It also means that construction effort and money is going into a black hole and not turning into supply. Enough of this together makes a powerful negative externality.
Because of high rises and land reclamation, this is a lot less true than you'd think.
Can you create new land?
No. They are completely different things.
https://squattinglondon.files.wordpress.com/2018/01/ominous-...
and it seems obvious to me why that's bad and public policy should not promote it.
As a public policy, along the lines of taxing vacant properties, we could also simply permit any vacant or unused property to be lived in and used by anyone who came along.
for anyone that wants to read further his name is Kawamoto and he was recently arrested for Tax evasion in japan and was forced to sell his Kahala Homes Portfolio
Or you can just pay to make up for the economic damage your wasted space causes. You're not going to get jailed.
I guess it sucks for people that get incorporated against their will or whatever.
What one person does with a property affects their neighbours. This is the theory of why you are not allowed to open liquor stores next to schools.
Until then, all real estate comes with strings attached.
Property rights are not a mere question of geometry.
There is clear social harm to have cities filled with empty homes while there are people who want homes and can't afford to buy any on the market or are forced to commute long distances.
Using real estate to store money and other speculation does harm to people who want to participate in the market to actually use the limited fundamentally necessary resource.
It makes good sense for property owners who actively use their property themselves to have more rights than those who seek to profit from market conditions or others' use.
Having paid taxes is a weak justification for any freedom.
If you are a landlord, you need to rent the place out at the current market price. If you do not want to do that, you can sell the property and get out of the landlord business. Just squatting on it and leaving it empty/boarded up distorts the local property market and should be heavily taxed to discourage absentee landlords from interfering with local markets.
Just to put it in a US perspective, Barcelona as a whole has 10% higher population density than Brooklyn (41,000/sq mi vs 37,137/sq mi).
At night, you walk through that place, its quiet like abandon for very long time, and there won't be any retail stores / business nearby since only ghosts and wondering dogs/cats will be there.
But I also wondering, if the city mayor decided to make this bill work, he need the local city council pass the bill, will this make him lose in next year's election?