Not sure how much of a real change this will make, but man, what a bad deal for taxpayers. They shouldn’t have allowed rampant corporate ownership in the first place, but now they’re going and spending public money on overpriced real estate.
Had they called it „paying out the last decade of profits to corporate landlords to keep the rent of 5% of Berliners instead of building new housing to lower the rents of 95% of Berliners“ (which is what‘s planned), I guess it would have way less support. It‘s a populist market rigging measure just as futile as the failed rent control and I‘m not looking forward to the impact on the city.
Of course more apartments are needed and Berlin needs to grow in height and diameter. But also there is no point in landlords hardly putting any efforts in to keep apartments in good shape. Needed repairs and modern upgrades are labeled as luxury renovations which is just a total distortion of reality. At the same time there are small, non-corporate landlords which put in more effort, are more approachable but who in reality invested in a casino-like asset. IMHO real-estate makes only sense for institutional investors, private or governmental because any single error can be financially disastrous and needs to be averaged out.
That's why I backed the bill but I hope everyone is working towards something better...
Also there has been a general official agreement so far that modernizations justify higher rents. Which is just nuts because why would a one-time investment justify a basically indefinitely going increased rent...
Of course. In a healthy market (low transactions costs and sufficient number of participants leads to sufficient volume and price discovery, and thus competition, which eliminates economic rent seekers) you simply stop using the bad provider and switch to a good provider. Of course people hate moving even more than contracting an attorney.
And that's why advanced economies need consumer protection bureaus/agencies to counteract these inefficiencies. So they should bring the lawsuits to weed out the bad providers and incentivize keeping the terms of the contracts.
Unfortunately in the US these agencies are either non-existent or pretty weak, and their place was taken by class action lawsuits brought by opportunistic law firms.
> modernizations justify higher rents.
Well, a rental unit is like a field in a farm. Or maybe compare it to a greenhouse. If you replace the insulation on the greenhouse to something better now you can cultivate more/better plants, which means you make more money.
Investments (by definition) increase the capital value of the asset. More capital produces more output, so it can be exchanged for more money. For a housing unit the output is hedonistic value (aesthetic value, comfort value, better soundproofing, better plumbing, adding AC).
> Which is just nuts because why would a one-time investment justify a basically indefinitely going increased rent...
... it permanently increases the buying price of the unit. Just like with a house. If you renovate it you can sell it for more. If it's empty you can rent it out for more (in perpetuity).
The simple fact that there's a tenant doesn't change this.
Of course one must also consider amortization, but almost all rental agreements mandate that the owner actively maintain the unit, so its effect should be net zero, but if the market price of maintenance increases (because raw materials, plumbers, painters, etc. become more expensive) then it's not unreasonable for the rent to increase too. (And since the cost disease is especially affecting things manufactured/built/provided locally ... housing is getting a lot pricier. [0])
Also there's inflation. Which just by itself makes nominal rent increases a necessity.
[0] See https://phenomenalworld.org/analysis/the-class-politics-of-t... and http://web.archive.org/web/20191015142434/http://rationallys... ( https://www.stitcher.com/show/rationally-speaking/episode/ra... )
The article mentions a different deal that was struck separately without a referendum. I think there is not much support for buying back apartments for such prices.
Take for example our Federal Printing Office (Bundesdruckerei).
Is there even consent? The referendum (Volksentscheid) hasn't happened yet. I wonder how this haphazard move by the current Red-Green coalition Berlin city administration is even legitimate when the referendum is only due more than a week from now. Unless this was done to pre-empt losing at the ballot box.
So Berlin is in the comfortable situation of that one no-good family member on social security who will always find someone to pay their bills. Why change anything, why stop spending all that money, if more keeps coming without any effort in any case?
I've seen this happen in my city - there's a really renowned developer building high quality mixed residential-buisiness complexes - as soon as they started building a new site the surrounding prices went up, this happened in all of their projects I've looked into.
But they are the most extreme example. I'd guess that most of the neighborhoods that are seeing active development are increasing prices faster than the rest of the market.
[0] https://blocksandlots.com/wp-content/uploads/2020/02/Do-New-...
If you have a busy highway and add more lanes will traffic jams go down?
This is a complex issue.
https://usa.streetsblog.org/2017/06/21/the-science-is-clear-...
Yes, but perhaps in neighboring/older roads instead of the fancy new lanes on the highway.
Three other fruit stores see the demand and open up, offering slightly different fruit and other higher margin products like pies and smoothies. People start coming from all over the city for fruit, and tourists come to try local fruit they can't get at home.
Now you have four busy fruit stores, and they gradually raise prices and focus on higher margin items instead of everyday fruits and veg.
This happens all the time with bars and restaurants, too, as a neighborhood gets trendy. And it can happen with housing, because upscale housing brings rich people to the neighborhood, which makes other rich people feel more at home, even in less fancy housing.
There's no upside _for them_ (remember, they already have apartment, they don't need another), only downsides.
Thankfully it's not really anything like most people who have this NIMBY attitude, just the loudest ones.
This fits perfectly into the recent “eco, socially responsible, ev, wind and solar power, fridays for future, throw the baby out with the water green party support, take from the rich-give to the poor, 100kph Autobahn speed limit, we need to be the best example in the world at whatever cost” mental state of Germany. It doesn’t have to make sense. It is what it is.
https://gentrificationblog.files.wordpress.com/2021/08/ag-so...
Economies of scale are real.
FWIW, I've also had nothing but good experiences in corporate-owned/managed housing.
But I’d much rather nobody invest in housing, and governments handle scaled affordable housing - so that there’s accountability and no profit motive.
P.S. Please no replies claiming anything run by the gov will fail; those are boring and called whataboutism.
Shallow dismissal. Singapore discriminates against LGBTQ couples as a matter of policy. Just because it doesn't affect you doesn't mean it's an anecdote.
https://the-singapore-lgbt-encyclopaedia.wikia.org/wiki/Publ...
In any case, it doesn't change anything, if Singapore is oppressing LGBT people they will do so government owned housing or not.
It's an anecdote for your argument. If the argument was "did Singapore discriminate against people through housing" it wouldn't be. If the argument is "should we have public housing [here]" then it's an anecdote. You'd have to show that this would happen in the place in question. If you want to make a general statement, you'd have to make that clear and make the case that in such countries landlords wouldn't discriminate against you for being LGBT (which they absolutely do).
Your definition of ‘anecdote’ seems way off to me. We’re talking about an objectively verifiable data point. Just because it doesn’t fully confirm some argument that someone’s making doesn’t make it an anecdote. Check the dictionary definition.
The definition of 'anecdote' has nothing to do with arguments. 'Anecdote' isn't a back formation from 'anecdotal argument'.
There's also the Fair Housing Act exemptions, where small private landlords with fewer than about 4 units, or landlords that share buildings with their tenants, can ignore the discrimination limits imposed by the FHA.
These laws could easily be repealed. The root cause of the problem is that Singapore is still a pretty homophobic society. (Also, did Singapore have same sex marriage before British Colonial rule?)
A democratic state is, ideally, controlled by the people who live under its rule. As such, services provided by the state are, to some extent, under the control of these people, who can use their political power to influence those services directly in various ways. In contrast, people don't generally have any right to change the way a private entity chooses to do business, as part of the basic definitions of property rights. Basically, people often want public ownership, and use the idea of state ownership as the mechanism to achieve that.
This difference though changes completely when discussing an authoritarian state like Singapore (and even more so in dictatorial states). The benefit of democratic control that is expected from state ownership in democratic states doesn't exist if there is no democratic control of the state in the first place (this is one of the reasons it is absurd to talk about the USSR as "socialist", when all economic activity was in fact controlled by a state that was in turn controlled by a ruthless dictator). In a non-democratic state, state ownership is just as much private ownership as corporate ownership.
Of course, the problems get even more complex when you have a quasi-democratic state that is nevertheless actively discriminating against certain groups of people.
Sometimes it’s about the personal touch, not “economies of scale.”
When I rented from a personal landlord, when the dishwasher was leaking water across the kitchen they told me it was my problem to replace it with a like model as it must've been my abuse. I barely cook so I have no idea what I could've done wrong.
When I rented from a corporation it was no questions asked, even when I was at fault. They were even proactive with things like filters for the heating/cooling.
landlords. Give me a break..
This isn’t true of services in general. Are you reading the comment you’re responding to, or are you just being belligerent?
When you rent, you basically are buying someone else a house. You don't get any service in many cases, as the landlord can contract our 100% of maintenance and repair and still make massive amounts of money.
I don't' advise eating out too much or renting long term if you can avoid it. I also don't advise living in a major city. You can more easily take the first two pieces of advice if you take the third first.
A landlord is not providing labour. They are acting as a middle-man between you and the bank. They provide no service to society. A restaurant is, as they provide cooked food. One is a zero-sum game, the other is actually producing something.
Your advice is frankly shit on the societal level. There is no way for everyone to avoid long-term rentals unless we do things you are opposed to. Equally it's impossible for everyone to avoid living in big cities, the entire economy would collapse. It's senseless to punish people for doing things that are necessary for our common prosperity and interests, such as living in major cities.
So through market calculation we can deduce that maintenance is only a small part of rent, the majority of rent is derived from being a middleman with the bank.
This is not the case for a restaurant, you'll find that all of the value in takeout comes from the labour and the capital necessary to make that labour efficient.
Would any landlord sign an agreement stating that you would do all the maintenance and then allow you to live there for free? Of course not.
This happens frequently enough that you can find a number of articles on how to approach that very arrangement from a tax perspective[0].
[0]https://homeguides.sfgate.com/record-work-done-rental-proper...
Show me someone who, on the open markets, offers to allow you to live in a property in exchange for nothing else.
> Show me someone who, on the open markets, offers to allow you to live in a property in exchange for nothing else.
Property caretaker
A property caretaker is a person, group, or organization that cares for real estate for trade or financial compensation, and sometimes as a barter for rent-free living accommodations.[0]
Last time I checked kitchens and kitchen equipment are not immune from entropy…
If you are a landlord you face plenty of other risks - time between tennants, you incur all the expenses and none of the revenue. Ditto if your renter stops paying and it takes you months or years to evict them. Or your tennant does damage to your property that their security deposit doesn't come close to covering.
On top of all that, there are real risks of asset decline. Just because that hasn't happened recently in most places doesn't mean it won't happen. I can name 5 plausible scenarios under which my house ends up never being worth what I paid for it.
It seems to me that you and others claiming that being a landlord is free money just have zero idea of what it actually takes.
I guess if you view housing as somehow exempt from market dynamics, then this view holds water. I'm sympathetic to that view, honestly.
And of course there are other risks too; can you imagine being an entity that owns lots of commercial for-lease real-estate right now?! They must be scrambling to stop the bleeding, since Covid has sent demand into the earth.
My point is that being a landlord is not without risk, and it's not always an "I do nothing and make money by leveraging your fear of homelessness" situation (although, granted, this is the ideal state landlord's seek, which is itself kinda gross).
This needs more context.
Around here, it's nigh impossible to get a place. Social housing has waiting lists for over a decade, private renting is more expensive than a mortgage, and buying a house requires you to overbid. There are (plenty) stories of folks overbidding 50k€ and still not getting the house.
If you can afford to buy a house, buy it, divide into subunits, charge 80% of mortgage to each of the 5 subunits.
Anyway, that's what tge housing market looks like here. So I'm guessing your experience is from elsewhere.
Yep, that's the problem, at least in the US. Ideally we'd reduce risk on both sides. Rent control wouldn't have to hurt this - your tenant's rent doesn't go up much, but your mortgage isn't going up much either.
It's not like small landlords are in position to redevelop and increase density anyway, so I'm skeptical of arguments about housing stock if you limit the upside (and downside!) of small private landlording.
It's often pitched as the most productive investment strategy for the middle to lower-upper class. Get one property, leverage it into a second, leverage more rents into a third, etc. Even in tenant-friendly states! Yet it's literally just rent-seeking and landlords riding along a wave of demand that they help create (by leveraging their properties and rent to acquire more) to squeeze higher and higher rents out of people is not particularly economically productive overall.
Covid is the first real blip I can remember that's hit those landlords so hard, but the truth is many of these people are over-leveraged and were in a precarious position to start with given the risk. Let's say there were no eviction bans: they could evict all these folks not paying their rent, and ... try to rent out the units to the people that got evicted by other landlords? Because they couldn't afford the old market rate in the first place? Doesn't that just depress the rental market even more?
That's not the economic definition of rent seeking.
> and landlords riding along a wave of demand that they help create
Demand for owning, yes. But for renting they create supply, not demand, in effect helping lower rents.
No supply is created by person A buying a rental building from person B. Person A paying a higher purchase price does nothing good to the rents charged in that building.
Yes, there is no lobbying or current manipulation of the government, but for small landlords it's often just a game of "I want to take advantage of population increasing over time to make more money over time" coupled with "I want to take advantage of other people improving the economy so that I can charge higher rents as incomes increase." Neither of those are productive, and the latter is hard to avoid calling parasitic. They don't have the ability to redevelop into higher density, or often even do much to change the condition of the property. So you get small mom-and-pop rentals in SF or similar places that charge far higher prices for far shittier units compared to those put on the market from larger developers or management companies in, say, Marietta, GA.
In a free market, pushing up prices of apartment buildings would also cause more apartment buildings to be built. Of course many places like SF are not a free market because NIMBYs block most construction, which keeps supply down and prices up.
I actually think this case is worse for the overall economy than the rental building scenario!
Perpetual rentership is more economically precarious and less stable than ownership. But here we have the folks with assets and income sufficient to purchase properties buying up additional ones to pull ownership further out of reach for more people. So yay, we've converted a property that someone might've otherwise purchased as an asset to yet another rental.
I also don't agree with your claim that in a free market this would cause (much more rapid) increased construction in most cities, given current attitudes about small-landlordship. You can't build there without tearing something else down first, and small landlords are not often going about replacing ten unit buildings with twenty unit buildings! That requires a different level of capital. In SoCal can see this in neighborhoods in places where the current zoning allows, say, 5 story buildings, but those new five story buildings are still sparsely scattered amongst old two-story buildings that are simply too attractive to keep (the dream people are pitched that makes them become small landlords isn't "sell everything eventually to a developer, it's "passive income".) Small landlords made a lot of fuss about earthquake retrofitting, a much smaller expense than "kick out all my current income-generating tenants and rebuild it all." It's been much easier for developers to convert old low-density commercial or industrial property, since the market is more fluid there (and often with much more slack in it, in large cities).
I similarly don't expect a high number of single family lots to turn into four-plexes in the next fifteen years now that CA has changed zoning on them. It's definitely different at four units than two - where duplexes aren't selling for any more than SFH currently, since the qualitative demand for a true single family home is just that much higher - but I don't think it's enough different for a significant number of people to want to cash out or try to play developer.
(NIMBY's exist everywhere, too - acting like they're unique to big expensive cities is self-defeating. The way lower-cost-of-living cities have maintained those costs is a combination of less demand and more land to expand into. If you can build your new mega apartment complex on empty land, you don't have to convince those small-time landlords or property owners to sell all their separate buildings! Dallas County didn't increase in population much more rapidly than SF County because of rapid increases in density - just look at the Dallas city population vs the burbs.)
And no, pushing up the prices of rents don't incentivize building. Building rentals is meh compared to just buying existing housing supply. While house prices are increasing, so will rental prices commensurately, because renting and buying a house are not isolated and independent choices.
In reality, there is no increase in construction, because the increase in housing demand is no different from someone buying a house, and the increase in property costs that follows it doesn't change anything.
They're two separate markets. Increasing rental supply does drive down rents.
If in one location, rents are very low but house prices are very high, then landlords would have incentive to take properties off the rental market in that location and sell them, perhaps using the proceeds to buy investments elsewhere.
Increasing owned housing supply decreases property costs. Decreasing property costs reduce the costs of renting, and they also make buying a house more competitive than renting, which is why increasing housing supply, not rental supply, drives down rent.
Beyond that, increasing rental supply alone will not decrease rent. It's perfectly viable for rents to increase despite more rental units if the alternative of buying a house got more expensive. See the recent increase in rents as property prices increased, despite no change in rental supply.
It is. In fact, the general economic concept of rent and rent-seeking are generalizations of the inherent features of real property rents, which are the source of the name.
(EDIT: Fixed egregious touch keyboard vomit, clarified “land” to “real property”.)
> California
Prop 13. Your friend is doing just fine.
> Economies of scale are real.
Agreed. Try getting google on the phone for support.
So, the average price per flat was € 6,230. That sounds impossibly low. Or were these distressed, dilapidated properties?
Also the old Communist era small apartments were cheaply build and without much value. 6000 euro looks low, but I bought in 1998 from the open market an apartment for $13,000 (the transaction was in USD). These days, that apartment is around 3-4 times more expensive (I don't have it for many years), but it is still small and poorly insulated. "small" means less than 50 square meters, one living room and one bedroom.
This is very simple and well understood economics. If you lower the number of providers of a good or service they gain bargaining power.
Large corporations work very hard to make sure there is as large as possible number of providers of every item they buy and every service they use. But somehow when it comes to ordinary people, we are supposed to pretend it is a good thing. No, it is not a good thing.
Yes, a 100,000-firm marketplace forces participants to be price takers.
Yes, a 1-firm marketplace allows the firm to arbitrarily raise rents.
Why do you think a dozen-firm marketplace "automatically" tends toward the latter?
A dozen seems like a pretty high number. Explicit OPEC-style cartels are illegal (I assume) under anti-trust law so we're talking about about some pretty implicit forms of collusion.
You have a large enterprise giving tenants the advantages you described, while also removing the incentive to rise rents on every possible occasion.
Large corporate landlords are the ones who calculate the legal costs of massive abuses and do it anyways.
It's worth going through the process just to learn. It's also crazy how difficult it is.
If I were a landlord I'd keep every deposit no matter what.
Plenty of individual owners will rent out units they don’t actually own , rent it out while in foreclosure, etc.
That said, always see the unit first. Avoid luxury apartments! Get the cheapest place in the best neighborhood
https://de.wikipedia.org/wiki/Bayerische_Landesbank#GBW-Verk... (German)
It's ridiculous how concerned politicians, especially conservatives, act now.
https://rp-online.de/nrw/panorama/leg-mieter-in-sorge_aid-11... (German)
if you understand german, Rezo [1] did an interesting video last month about similar corruption
The article you linked mentions debt in height of 2.7 billion EUR. Means that the actual purchase price was about 3̶7̶5̶k̶ 37.5k per apartment.
Nowadays the investor makes huge profits despite the 60 year rental agreements the state negotiated for the renters and the required 12.50€/m² per year improvements. How was the state unable to break even? It's a mystery.
Why? Because the problem is lack of political will. You can't expand housing supply if nobody wants to.
It's a piecemeal solution until we figure out something better or that society is willing to support public housing initiative. Otherwise, we would be waiting forever for entrenched political opposition to die or the situation to worsen over time.
I am sure especially in those "hot" areas where prices are spiralling out of control, there is no shortage of entities with the "will" to build.
That is usually the point behind markets, rising prices give an incentive to increase supply.
One thing is for sure: as long as any private housing ownership is allowed, rich people aren't going to be the ones left high and dry.
I'm fine with short term patches to help with the acute issues, but fundamentally unless a lot of housing is built, there are going to be some people suffering in the housing market. Either it will be poor people paying a lot for housing, or it will be poor people who are unable to win lotteries to get into public housing who then cannot afford housing at all. Whether the housing is publicly or privately owned is just pushing sand around the sandbox. It just changes exactly who the winners and losers are, but not the number of people losing.
> I think where we probably fundamentally don't agree is that not all things need to be provided through a market.
I don't hold this belief. There is no fundamental disagreement on this score between us.
Obviously we need more housing but until then we also need to ensure that people with normal incomes can also afford to live _in_ the City.
Whenever people say stuff like this, I wonder if they’ve ever taken a moment to look around themselves and see that it is already that way. The current housing problem is also orchestrated by the same political elite…
I live in a district that was originally working class, and is being very fastly gentrified now (yuppie myself I guess), and it just sucks that people who've lived here all their lives have to move to completely new environments because this is now an area desirable desirable for rich people.
Same with small businesses, one of my favorite bars closed down recently due to some English billionaires wanting to turn the house into higher margin living. Vice did a documentary on it called "Punks vs. Billionaires". For the people living here, who live in small flats and still pay half their income to it, these "living room" bars, where you do not have to buy to be welcome were absolutely essential. But they all get destroyed now.
Almost all new private housing is for richer people, because they are the most profitable, and lots of them move over at the moment. The state needs to step in to make sure that normal people can still live a decent life around here, too, lest we become a horror show like London.
Even if only new luxury apartments are being built, it is more housing that takes pressure off the market. The wealthy people can move into those apartments, freeing their old less luxurious apartments for "poorer" people.
And there is no "free market" for housing here - it is very difficult to build, with lots of regulations.
And who wants to invest, when the government will seize your assets as soon as you are successful? Last year they introduced a hard cap on rents, that applied no matter how much you paid for the house you wanted to rent out, and no matter where it was located.
In two weeks, there will be a public vote to seize thousands of flats at "way below market value" (quote from the voting sheet) from corporate landlords. These are not conditions where a "free market" can do its thing.
As a matter of fact, only big companies have the means to build under such conditions, it is much too risky for smaller entities.
But then, sure, blame the evil capitalists for the issues your socialist government has created.
[1] https://www.tagesspiegel.de/berlin/wohnungsnot-leerstand-in-...
Luxury housing construction can help, but can't really fix the issue on its own because it is also a relatively inefficient and expensive method of increasing the housing supply (since each added unit has high costs.)
This problem is one that a large number of municipalities have failed to solve. It seems very difficult to get the regulatory and tax incentive structure setup just right to get sufficient affordable housing built in large urban areas.
> As a matter of fact, only big companies have the means to build under such conditions, it is much too risky for smaller entities.
I would think that governments have the scale to take on those risks as well. At some point, I think it makes sense to stop struggling to get privately build affordable housing and do it publicly.
London is the poster boy for exactly why you don't do this.
The result is builders and landlords buying up land, "delaying" (often indefinitely) building the homes to artificially drive up the prices of existing housing, or building tiny, tiny, apartments in huge hive-like blocks and towers, with insane prices.
The sales prices in BW and many other areas of Germany are simply ridiculous.
And they are building: a few dozen lots are being offered by the city and there’s dozens of takers per lot.
Resetting taxes to LVT means that improvements on land won't be disincentivized. Buying them out means they get a lot of cash and won't be so opposed to you lowering the value of their owned property.
Also, the government will be able to afford to focus on cheap housing, not what makes them the most money, since their focus isn't private profit.
private entities will only build luxury housing in these conditions
Building codes have become so strict that it's not worthwhile to build affordable housing for private investors. Especially since the government pays incentives (or rather gives out very low interest loans) to build houses of the highest energy standard.
Why build a "cheap" house when you can build a more expensive house with subsidies that has a lot higher resale value later?
What if a kid ran into a balcony glass and broke it, hurting or killing itself? Better demand that balcony glass be reinforced (and more expensive, to a great delight of the glass factories!) just in case. Even in old folks' homes.
No one wants to be known as the child killer, so here is a new demand making the construction a bit more expensive.
The most luxurious housing is single family homes. Is that all they're pitching in SF now?
I don't think there are any new SFH being built on empty lots.
If I could sustain my work from abroad, I would be tempted to move to Wroclaw, actually. Unfortunately I need access to cheap shipping to Czechia, which means being in Czechia or at least going there pretty often.
I agree on the land value tax part of what you said, though.
What would incentivize the building of low or medium income housing, when higher profits can be made from high income housing.
In the US and many other countries, the reason is definitely local government restrictions. Developers would love to build more high-rise apartments - it's very profitable to them - but they're not allowed to in many areas. In the area I'm living in, it is illegal to do it.
The incentive picture is not as you're portraying, and we can look to other industries for counter examples. If there's profit to make, the market will fill those shoes, even if there's "more profit" (which I don't agree is the case always due to volume) serving wealthier customers. Consider the market for low-margin cheap restaurants in poor areas, and the market for high-end dining in rich areas. These are both very well served markets. The market will almost always find profits where they're to be had, especially in an industry like real estate development.
For me, instituting rent controls is towards the less acceptable end of this spectrum. If the city believes it ought to be able to set prices on an apartment, it should own that apartment first. Just my unenlightened gut feeling on this issue.
What do you mean? There are innumerable such taxes, globally. You definitely need to tax various people & businesses differently, it’s the only real solution.
Could you please reread the section of my comment that you quoted and your response to it? I said, "it would clearly be wrong to pass a law that raises taxes on one person by name," and you said, "there are innumerable such taxes, globally." You very specifically did not say that classes of people or businesses are taxed differently. You said single individuals are taxed differently. (You might not have intended to, and if not, well enough, but I set up no strawman in my comment.)
it's wrong to say "nobody" wants to. the problem is that the homeowner class holds all the political power, and so there is no greater political sin than decreasing the cost of housing (or "lowering property values" in homeowner terminology). if anybody cared what non-homeowners thought, there'd be plenty of will to build more housing. as long as so many people's net worth is tied to their housing, there will be no appetite for lowering the cost of housing.
A realignment is going to be due at some point in the future: either rental price will have to catch up faster, which would fuel more discontent, or the real estate will have to "collapse" ...
That way, they cease to be overpriced but the owners avoid negative equity.
Also, where I live, the official inflation is now like 4 per cent, but gosh, so many things are massively more expensive than before (food in restaurants maybe 40 per cent, some construction material even 100 per cent more expensive than before), that it makes people distrustful of official figures.
If it’s not, you’re essentially going to eliminate privately owned rental housing.
Oh, wait, no it didn't. Housing is the only thing miraculously protected from depreciation because making it depreciate would hurt chances at reelection.
Interest rates are near zero and individuals are spending very large portions of their income on housing. Continued expectations for high returns on housing will lead to hard landings/defaults or pathological cases where renters don’t pay rent and can’t be evicted.
One possible answer is interest rates being low. However, the trend in interest rates towards 0 / negative has been going on for over 100 years. I don’t see them going up significantly ever again.
If so, what were these economists thinking? What is the profession even worth if it brings a false sense of knowledge and security?
What gave you that idea? The transaction is explicitly budget neutral, this is entirely financed by loans that will be covered by rental income.
[0] https://www.theguardian.com/business/2021/aug/19/lloyds-plan...
[1] https://www.theguardian.com/business/2021/jul/04/john-lewis-...
My office landlord also has two small flats above (think glorified bedsits) and his partner also rents out a tiny cottage. This is their living (aprox. £3k a month), neither works or has any other business, all from a 'portfolio' of properties that maybe cost £150k twelve to fifteen years ago.
As an example of market inefficiency, multiply this across the country and it's not hard to argue that the housing market is severely broken.
What about instead of shifting from private parasitic landlords to corporate parasitic landlords, we just let people buy the homes they live in (by enacting one of many possible policies to limit the profitability of BTL and thus reduce competition for homebuyers)?
It just doesn't seem to make any sense to try and apply free market principles to housing. There's absolutely no benefit.
I live in Berlin and for the most part, the houses really just sit there. They are not on a rampage or anything.
(of something bad) getting worse quickly and in an uncontrolled way
<https://dictionary.cambridge.org/dictionary/english/rampant>
After the leftists start to fuck up the real estate market with rental cap, statization, and other threats. The real estate investment fled the city.
Now it's almost impossible to find an apartment in Berlin anymore.
This populism is ruin the city, which needs to build new residents for the incoming influx of migrants.