Empty buildings should incur a tax that increases every month they remain unoccupied.
Not a sensible idea.
So, units in areas of high land value get taxed more and more, incentivising either using the lot for something people want, or selling it to someone who will. Whereas units in areas of low land value get taxed much less, reflecting the higher difficulty in getting good value from it.
Can I assess the value of your house at $5, and then tax you for not selling it to me at that price?
Bizarre.
Local government taxes (“shire rates”) are indirectly based on “Gross Rental Value” (that is, if the rented out the property at market value, how much would you expect to receive per year?).
There is also land tax, which is based on undeveloped property value.
Most commercial leases have the tenant pay the rates & taxes. If you own a property with 10 equally-sized shops, and one of them is empty, then you by law must pay 1/10 of the rates & taxes (and any other outgoings, like repairs). You cannot split the outgoings nine ways. This acts as a vacancy disincentive.
Presumably the local government, they already do this to calculate property tax across North America, and getting only the value of the land is easier than the value of the land plus property on top of it. It really isn't changing much in this regard.
> Presumably the local government
Actually it's an independent agency of the provincial government:
> The Municipal Property Assessment Corporation (MPAC) administers property assessments and appeals of assessment in the province of Ontario, Canada.[2][3][4] MPAC determines the assessed value for all properties across Ontario. This is provided in the form of an Assessment Roll, which is delivered to municipalities throughout the province on the second Tuesday in December. Municipalities then take the assessment roll, and calculate property taxes for each individual property in their jurisdiction. MPAC complains that taxpayers often confuse MPAC's role as an assessment agency for taxes; MPAC responds that it only provides assessments. Municipalities set the tax rates and distribute the tax burden based on the assessed values provided by MPAC.
[…]
> Every municipality in Ontario is a member of MPAC, which is governed by a board of directors composed of taxpayer, municipal, and provincial representatives.[6]
* https://en.wikipedia.org/wiki/Municipal_Property_Assessment_...
This would essentially only happen if you rented in a mega high crime area, which means landlords would be incentivized to do something about crime.
> increases every month
It can't be both things at the same time.
And who's setting this land value? If it's on the market and nobody's buying then we don't know the value.
Not saying I agree with the underlying idea, just confused about why “increases ever month” necessarily means it cannot be “tied to the value of the property” in a `calculateTax(propValue, timeEmpty)` sort of way.
It doesn't seem totally unreasonable. Is there an equivalent of adverse posession (squatters rights) for retail?
There are pros and cons to this idea.
If the state owns the property, they lose the opportunity cost of taxes paid by a private owner. So, they're heavily incentivized to return it to private ownership as soon as possible... Or to consolidate several such properties into something that is sellable, or to repurpose the property into something people need, like more housing.
Penalty for lying would be steep.
I don't think lack of interest would be a big problem in most areas.
Yes--there will be skirters of the tax, but would it be worth a big fine?
Software engineers should understand this. Imagine if it was 10x harder to delete a line than write a new one. Also, no forking and no starting over.
I'm all for churning unoccupied spaces, but there are better ways.
I don't like most property taxes.
That said, an unoccupied tax makes sence now. I would throw residential apartments, homes, into the mix.
(Single owner properties would be exempt. Realestate investment trusts would be targeted with this tax, along with foreign investors--rich people whom are not citizens whom buy our land, and let it sit.)
While I don't necessarily advocate it, I'd say disqualifying empty buildings from insurance would do more to that end, as no bank or lender will take an uninsured asset as collateral on leverage/debt. The ones who do lend against that uninsured asset will impose interest rates on the debt to where it is cheaper for the owner to just rent the space.
It would be anti-inflationary as well, since it would reduce the amount of free money caused by cheap debt in the economy.
When you see empty buildings, you have to ask who benefits, and in the end, it's always the banks.
Unoccupied buildings generally require different insurance than occupied buildings, and it's often significantly more expensive. Although, apparently, not more expensive enough to balance the incentives to leave property empty.
It might not gel with your (I imagine) rightish libertarianish beliefs, but it certainly fits with the general idea of the role of government, especially local government.
And what wound stop the property owner from just creating a “business” that is open “by appointment only”? There would be many ways around it.
There are also a lot of forces pushing building owners to keep rents high, principally because building value is partially determined by the rental rates of that building. So if an owner is angling to sell or get a loan they have a strong incentive to not lower rents so long as the rents are in line with the 'market' rate because it immediately lowers the value of their property if they do, potentially driving them underwater on any loans.
> creating a “business” that is open “by appointment only”
The law could easily address this with requirements about public accessibility. It's disingenuous to pretend the law has to use the broadest, most abusable definition of any word to create loop hole counter arguments.
I've seen this cited a number of places, but I wonder where it originates. Like, could the head could be cut off the dragon by changing the rules on this— maybe creating some kind of system where the rental value is discounted x% for each month that the rent is not actually collected by a tenant using the space for its intended purpose (no "parking" the space as pop up storage units or something).
But yeah, is it banks, lenders, appraisers? Is this an actual rule or just a rule of thumb? As it stands, it seems there's basically no mechanism to push down commercial rents ever— it's an up-only ratchet because of this rent-derived-value thing.
> It's disingenuous to pretend the law has to use the broadest, most abusable definition of any word to create loop hole counter arguments.
Indeed, and usable definitions for a non-pretend business are I expect well-established in the context of things like shopping malls, where tenants have exactly this kind of agreement with the landlord not only that they will maintain a functioning storefront during the mall's operating hours, but that all the other stores will be occupied and operating too— no mall store wants to operate surrounded by boarded up windows any more than a non-mall store does, and it's the responsibility of the management to keep all the storefronts occupied.
Because land is an awful example of a free-market commodity. It's not like you can set up a land factory to drive prices down (outside the Netherlands and Singapore I suppose...), and it's something everyone needs to live an even vaguely decent life.
And even worse, someone who owns land doesn't need to do a damn thing to make it increase in price; it's the businesses and people living around it that do that. So money sitting in real-estate is far less useful to society than money invested into productive businesses.
You don’t have to be able to “set up a land factory” for the free market to work.
So the idea was presented succinctly. I really don’t think I need a long explanation on why it’s an absurd idea to force someone to sell their space at a price lower than they think it’s worth.