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Comment by pasabagi | Hacker News Reader

This is crazy. Everybody expects to lose money in natural catastrophes - except, for some reason, if you're in the least productive and most predatory sector of our economy (the landlord), you're entitled to a bailout, for what purpose exactly? What's the human harm that happens if some banks repossess a few over-leveraged rental properties? Compared to the millions who have lost jobs, school years, their health, etc in the pandemic? Making landlords whole should be the last thing anybody is spending money on.

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Because the government put in place an eviction moratorium. Why do the landlords have to pick up the tab? If there was no moratorium and the landlords had the ability to evict, I would agree with you. But in this case, the government forced them to house people so they should pay up.

> Why do the landlords have to pick up the tab

Instead we taxpayers have to.

As we should, since the eviction moratorium was put in place to prevent mayhem during a pandemic that affects everyone.

I don't understand why landlords would be in a class by themselves when the pandemic hurt businesses/ventures across the board. Why are restaurants forced to close not made whole? What about factories that lost productivity? What about people that lost their lives being "essential workers"?

CA is already the biggest landlord/homeowner friendly state by far with Prop 13 screwing everyone else. Not sure why landlords charging $4000 a month for a 100 year house gets off scot free when we have business shutting down permanently from COVID.

PPP ($1T), EIDL ($300B), Stimulus Checks ($400B), Restaurant Revitalization Fund ($30B), EDD/Unemployment ($300 + $600 = $900/week per person) vs $5B ($45B extrapolated to the whole country) for landlords.

And the landlords were the only ones that were required to continue providing service without being paid.

Why are you including federal loan programs and stimulus checks when we're talking about a CA program that benefits only landlords?

These are also programs that landlords would have already directly and indirectly benefited from.

This program benefits the tenants who owe back rent, they indirectly benefit the landlords. Otherwise, the landlords can sue/evict those tenants with the repercussions associated with doing so. California stepped up to prevent this. Other states that don't do this, will have a lot of pissed off landlords and homeless people.

Most landlords are individuals with 1 or 2 properties and would not qualify for PPP, EIDL, Restaurant Revitalization Fund, or the Shuttered Venues Grant.

And even if there weren't programs focused on helping other industries, the way landlords were affected is unique since they had to continue providing service for free.

Were restaurants required to continue feeding people throughout the pandemic with no pay?

This is a similar situation to rent control, it privatizes the costs of a social problem.

The government forced companies to stop work (retail, factories, etc.) but the companies had to pick up the tab. They had people on payroll, leases to pay, depreciating assets to get rid of.

Yes, and there were multiple programs enacted to help business owners (PPP, EIDL, Restaurant Revitalization Fund, etc) and employees (EDD, fed unemployment, etc)

And the landlords already used those.

which one of those helped landlords with mortgage payments?

No, the government didn’t force them to keep people on the payroll. They were free to fire employees.

They didn't force companies to continue employing workers, or continue their office leases, or continue any other expense.

And they certainly didn't make them continue to pay workers who refused to work (from home or otherwise).

Or force them to provide their services/products for free to non-payers.

Presumably the eviction moratorium was in place to prevent large-scale homelessness and social unrest. If 10% of the population was suddenly out on the streets, it would be total mayhem; near societal collapse. In a situation like that, how many good, paying tenants are there to go around, to replace the people that got evicted?

However if the landlords could have evicted non-paying renters they would still have to pay any mortgage payments on the property.

The additional cost of housing the renters is incremental.

If rental demand is anything to go by, they would have fared just fine.

The whole point of evicting non-paying renters is so you can replace them with paying renters. If you're prevented from doing that, you're losing 100% of the rent every month. That's the "cost of housing" the non-paying renters. It's not incremental, it's literally everything.

>you're in the least productive and most predatory sector of our economy (the landlord)

I never really understand this. Let's say I own a 4 unit building on a decent sized lot in a big city. I make housing available to 3 other families in a place they could not afford to own. What is your alternative? I should tear down the apartments and opt to live in a single family home? How does that help anyone?

You shouldn't be allowed to own property, nor should anyone else. We should all own nothing and like it. We should all live in uniform boxes so that nobody can have something nice unless there's enough for everyone to have some. That's the kind of thing that, if people don't already believe it, they'll believe it soon enough based on recent trends.

Sell it at a loss to somebody who does better risk assessment of their leveraged investments?

The comment is about landlords being predatory, not about an underwater investment.

1. I own a 4 unit building on a decent sized lot in a big city.

2. I make housing available to 3 other families

This is the point - the second sentence does not actually follow from the first. The person who built the building, either the actual builders or the investors, make it available. At this point, it is a normal service-provision kind of relationship you see across the economy.

Except, with landlords, it isn't that they provide the building. It's that they provide the land. The land is parcelled out in a manner which, at best could be compared to if we just gave rights to parts of the electromagnetic spectrum to whichever radio stations started pumping waves into it first. Of course, in reality, land ownership is usually rooted in much more brutal and sordid stories in America.

So you essentially end up with a class of people who take no risks, provide no service, and add no value, employ nobody, and often literally do nothing.

>The person who built the building, either the actual builders or the investors, make it available.

The person who owns the land makes it available by deciding to rent to people. The person who owns the land can decide to tear it down or not rent to people.

>take no risks

Real estate is not a risk free investment. It would be much more popular than bonds (when interest rates aren't near zero) if it was.

>provide no service

Maintaining the property in a habitable condition is a service. Maintenance expenses are why a large number of people choose to rent instead of buy when staying somewhere short term.

>add no value

Making housing available in desirable locations for less than the cost of a SFH is adding value. It can reduce people's commute or put them in neighborhoods they want to live in. If that land was instead covered in SFHs (which seems to be the implied ideal for the "landlords should not exist" crowd) the number of people who could live there would be significantly reduced.

>employ nobody

Landscapers, plumbers, electricians, roofers, property managers, cleaners, inspectors. In the case of new construction, a lot more people.

>often literally do nothing

Ha. I wish.

> The person who owns the land makes it available by deciding to rent to people.

No, the state makes it possible for the landlord to charge money for the land, by preventing squatting. The land is already available. It is the ownership that renders it unavailable.

As for the factual side of your argument (maintenance expenses as a motivator, etc), I can't comment. It's starkly different from my experience. I imagine it's actually starkly different from yours - you're just using it to rationalise the inequity.

Obviously, there can be incidental work in the maintenance of a monopoly. If somebody tomorrow gave me exclusive right to the fishing in the north sea, then I rented that out to fishing companies, there would be work involved. But fundamentally, renting out exclusive rights is not primarily about exchanging services for money. When you own land, you have just such an exclusive right, and it is just as predicated on the willingness of the state to back it, and is therefore an entirely political decision whether or not this is actually a good idea.

In the case of California, the state with a crazy unemployment problem, and sky-high property values, it's unarguable that the current system is not working. So questions of what is and is not a legitimate or useful monopoly over resources (land, in this case) should be totally on the table.

The state also makes it possible for me to charge for usage of everything else I own, not just land, by restricting people's ability to use it freely without my permission. For example, my body, my computer, my laundry machine, my bed, ect.

Is your main argument that because of the limited quantity of land it deserves special reconsideration, or do you think all or a vast number of property rights should be abolished?

My main argument is that when you have a limited quantity of something, like radio spectrum, it's normal to have a public conversation about how this should be divided - and ultimately, it's a democratic decision about who gets what, why, and for which uses.

Land should be regulated this way, but it isn't, because of the hangover (in europe) of medieval norms where landlords were essentially gangsters extracting protection money, or (in america) the essential abundance of land available for the taking[0].

If you have an expanding frontier, a fixed quantity (land) behaves like a growing quantity, so there isn't the intense pressure for land reform you got in europe. Except now, the land is all taken, so the regulatory regime which worked for a growing supply of land becomes increasingly dysfunctional, leading to problems with homelessness and tenant impoverishment, where people are paying increasing quantities of their income (50% +) to landlords, not because those landlords provide them with a good service, or because the landlords have high costs, but because it's their only choice.

[0] Obviously, the first nations population massively lost out in this.

>leading to problems with homelessness and tenant impoverishment, ..., paying increasing quantities of their income

I see all of these as problems with zoning. I could also rant about rent control but it has a much smaller effect compared to the prevention of construction and density.

I guess, either way, you need a system that addresses supply and allocates housing fairly. I believe the free market can do that. Saying no land ownership doesn't really address who builds more housing, what incentive do they have, what restrictions are there, who gets to live where. Sure, if you could replace it with a system where the government builds as dense as is safely possible to meet demand, then held a lottery for who got to live there, and those tenants were forced to relocate every 3-5 years to give other people an opportunity to live there, I guess I'd be on board with that.

My hesitation is that would be a total rewrite, and we have a system that works pretty well where we could remove some market distortions and have it working really well. Remove residential zoning restrictions and landlords will build, there is incentive for it. So much of LA is zoned for SFH+ADU, and your neighbors will sue you if you get creative. There is no room in the zoning code for low end housing. I read about these men's hotels [1] and I don't think you can build something like that anymore, something that addresses a need at a price point people can afford. It sounds crass but we need tenements, so someone who is barely scraping by has a bed, an address, and a shower.

There is nothing besides legacy rent control units at the $500/mo price point in LA. There should be. We shouldn't rely on rent control, where we privatize the costs of a social problem and give landlords a huge incentive to get people out. We should just build some livable shit.

1. https://newrepublic.com/article/161808/ewing-annex-hotel-hou...

My gut feeling is that even if you did remove distortions, the problem would persist. If the price for a commodity ultimately stabilizes at material cost + labour, I think rent ultimately stabilizes at 'everything you can afford to pay and some'.

Ultimately, commodity price is driven down by the fact there's always some industrialist who can flood the market with cheaper crap, until there's basically no profit in it. You can't flood the market with 'living in walking distance from work', and a large part of the cost of any building project is simply buying the plot to build on, because each landowner has no direct competition.

>This is the point - the second sentence does not actually follow from the first. The person who built the building, either the actual builders or the investors, make it available. At this point, it is a normal service-provision kind of relationship you see across the economy.

If making it available is such a no brainer, why did they sell the building?

If there was no value in selling the land and building to a new owner, developers would just cut out the middleman. The reality is that developers want to build and take profits today, not over 30 years and then build again with no risk of the previous property turning a loss.

> If making it available is such a no brainer, why did they sell the building?

Rent is incidental to the real profit that you make from owning a building - asset value appreciation. Often developers do cut out the middleman. It's also sometimes a simple matter of where your credit is coming from and what interest you're paying - obviously, high interest rates push you towards a quick sale, etc.

I honestly don't think it should be controversial that rent is a form of rent, that is, a type of income that derives from simple ownership of something, not from any service or product. But you know, here we are.

My alternative would be to establish a land trust to manage the apartment building. Then you can provide housing for 3 other families without also making a profit off of them. Here's an example of a Land Trust: https://www.sawmillclt.org/

The argument is often as you say, that Land Lords add value by giving housing where people couldn't otherwise afford to live. And this is undercut by two points:

1. The landlord isn't the essential part there. If the point is to provide housing without having to buy, that's easily done with land trusts and co-ops. The only downside is that there isn't a Landlord to make a profit, but it's better for society as a whole.

2. If landlords didn't buy up properties for the purposes of turning around and renting them, the property values would be lower because there wouldn't be as much demand on the market. Then a decent portion of the people you're talking about not being able to afford to live there ... would be able to afford to live there.

I appreciate the reply, I hadn't seen these before and I'll do some more research on them.

My initial reaction is how does this address the issue of developing more units in dense urban environments? For example, if we convert all multi family dwellings in LA to CLTs. Housing is more affordable and no residents are being displaced. Now more people want to move to LA. Who builds housing for them?

They would be required for compete over an extremely limited number of SFHs. Unless the CLTs had a provision that every Nth year, they would be torn down and redeveloped for greater density, this sounds like it would cause a city to completely stagnate. That Nth year clause would really go against the non-displacement goal. It could be sustainable if a city had zero growth, but for desirable metro areas that are mostly developed, that is not the case.

Market rents cause healthy turn over. There are other ways to address affordability, such as addressing wage growth, removing density restrictions, or expanding Section 8. Non-profit landlords would just further distort the system by not addressing systemic needs that require capital.

> with land trusts and co-ops

The hardest part with this - as with many other similarly noble undertakings - is to find a person who's willing to do all the job of setting things up and then step aside.

As we empirically see, there are not many people like that, otherwise this country would be full of land trusts.

Many of the land trusts form because the tenants get so pissed at their landlord that they make their landlord's life miserable, until the landlord gives up and sells the building to them for a land trust. Peace is a lie.

Does the landlord sell the property at market price?

>2. If landlords didn't buy up properties for the purposes of turning around and renting them, the property values would be lower because there wouldn't be as much demand on the market.

Why would there be less demand on the market? What you are saying is that without landlords there is an absence of properties that people want to live in. How else does the land lord increase demand? By buying units that he never intends to rent out? That type of owner is no longer a landlord, merely an investor.

>Then a decent portion of the people you're talking about not being able to afford to live there ... would be able to afford to live there.

They would be able to afford to live there because nobody else wants to live there? What? How is that supposed to be a good thing?

I honestly can't grasp the hate of landlords. It literally makes zero sense. Rent seeking is bad but all land owners engage in it. Landlords have at least some incentive to make scarce land available to as much people as possible. All the other types of owners would rather make as little land available to as few people as possible. That is truly perverse and should be punished with a land value tax (the landlord would have to pay it as well but he doesn't care, as he would still make money off of the improvement of the land, not the land itself).

Providing shelter to people is the least productive sector of the economy you could think of?

Why would land owners get a bailout? Because they were mandated by the government to provide their services without payment.

Owning a building that provides shelter isn't providing shelter. Rentiers are commonly considered to be the least productive sectors of economy, whether they rent homes or software licenses.

As a landlord, I expected to loose money during the pandemic. One of the risks you take on is that the rental market changes and you can't get as much money for your property as you planned on. I have no sympathy for landlords who got less rent. Bailing them out means they don't have to sell, which increases the price to acquire rental property, which increases rents, which hurts the renting public at large.

I agree that this policy punishes the responsible - the ones who made other sacrifices in order to not get behind on rent, because they were told they'd eventually owe back rent and didn't want to be in that hole.

> One of the risks you take on is that the rental market changes and you can't get as much money for your property as you planned on

Yes, but you don't expect to be forced to house people for free for over a year.

I didn’t expect a global pandemic either. Nobody expects the Spanish Inquisition.

Nobody is forcing anybody to house people for free. Sure, you can’t evict, but you can sell your property and let that be someone else’s problem. The fact is, the price of rental properties didn’t crash, which means the majority of landlords didn’t mind the situation they were in all that much. I don’t know whether that’s because most people paid rent, most landlords didn’t mind not getting rent, or that there’s lots of money sloshing around looking for investment opportunities; I suspect it’s a mix of the first and third.

> Nobody is forcing anybody to house people for free. Sure, you can’t evict, but you can sell your property and let that be someone else’s problem.

This seems pretty disingenuous. On the surface level it's obviously true, but that same logic applies to anything that people are obligated to do.

Like, I'm not forced to wear a seatbelt, but if I commute an hour-and-a-half from the boonies to my business each day, there's no reasonable alternative for the average person that doesn't completely uproot their life. I could definitely move to a new house or start up a new business closer to home, but I imagine most reasonable folks would say "Yeah, you kind of have to just wear your seatbelt now".

Landlord are holding shelter hostage, not providing it.

Many people would not be able to afford shelter even if there were no landlords. Can someone making $10 an hour afford a $500k house? Landlords are providing shelter to people who otherwise could not afford it.

Homes used to be far less expensive relative to minimum wage or median income. Landlords and speculation are precisely why homes are so much more expensive now.

It may have caused some increase in the price, but it would still be out of price for many people. That is why I said $500k instead of $1m which is quite common throughout California.

There are other issues like zoning laws which causes increases in housing pricing which wouldn't be solved by getting rid of landlords.

Landlords do not provide shelter. They hold it hostage.

To say that landlords are predatory is misguided. Why don't you consider the banks predatory? They will foreclose on landlords who don't pay their mortgages. Did you work for free during the pandemic? Should they?

A few notes:

An active problem in the US' form of capitalism is we don't let businesses die naturally. I think landlords fall under this - if they can't find renters for the prices they are charging, then their business is functionally failing, and it should be allowed to simply die. This is economically healthy at a more macro-level and invites better management practices and reduces people over-leveraging.

In this case, people were still renting, however, and functionally for free. Landlords got screwed due to government intervention - the moratorium on evictions forced landlord's hands - it was the state saying "your business structure must be forced to fail" here, which is pretty ridiculously unfair of the state.

Making the landlords whole seems entirely correct given their over-stepping measures earlier last year.

Here’s an honest question: where do you draw the line?

Government intervention constantly creates winners and losers. New laws are passed, businesses lose licenses, or maybe some other government action causes the business to lose money. At what point do we say “ok you get money because the government destroyed your business” and “too bad for you”?

I think I read somewhere that this specific issue is a legal one, but generally speaking I’m not sure why government action here is so different than other actions. Restaurants for example that we’re doing just fine went under. Why isn’t the government making them whole?

This probably was an easier one to solve too. You could have just said something like “everyone freeze”. No mortgage for the landlord or interest for one year. Tenants don’t have to pay rent for one year. And then you resume payments. You could argue the bank loses out but I’d say you’re just extending the loan a year so they’re not really taking a loss in the long term either. At least this would have been a better and more just solution.

It is categorically absurd that the state is even considering compensating landlords for this. If anything, it is the tenants who should be compensated.

> the least productive and most predatory sector of our economy (the landlord),

Nothing wrong with being a landlord. The least productive and most predatory sector of the economy is the money lender (with interest of course).

It is not just a normal natural catastrophe since the government had an eviction moratorium. If there was an earthquake that destroyed your rental you could rebuild and then rent it out to paying people.

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