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Comment by mnd999 | Hacker News Reader

You’re forgetting investors who don’t want to rent property. They just by new properties, keep them empty and pristine and profit of the rising market value of the asset. Sounds crazy but it’s definitely a thing in London. It should attract very high taxes to make it unviable but of course it doesn’t.

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These evil bogeymen are something people believe are very common, but I can't find any solid data on their prevalence in London. People also claim these guys are ruining NYC real estate, but our vacancy rates are below 5%, and most of the places that are vacant are not long term vacant.

It’s much more common in commercial real estate but people confuse the two.

Some very select markets may have an actual problem if foreign money laundering is a thing (as I’ve heard is true of Vancouver).

Yeah, I have noticed lots of commercial vacancies in NYC. My understanding is that this is because the leases are so long and thus the prices are not as adaptive.

And commercial loans are VERY dependent on "building income" which is calculated based on lease rates, even if not "leased" in some cases.

Lowering rates can cause loan problems.

Makes a body wonder why buildings don't just sell their ground floor real estate to get it off the books. There must be some reason, otherwise they would, but it seems like a neat solution to the problem.

Yeah. I was looking to rent a NYC luxury apartment recently and noticed that any reasonable deal gets snatched up very quickly. These apartment complexes do feel empty because the residents tend to be childless, so maybe that's where the confusion would come from. It's sad to see more and more people these days are in denial of basic economics. It's strictly better to rent an apartment out because otherwise you're getting nothing from paying management and taxes.

>It's strictly better to rent an apartment out because otherwise you're getting nothing from paying management and taxes.

Renters can choose not to pay rent, can cause untold damage to the property and can use it for illegal purposes to name but a few reasons why it might be rational not to rent a property out, specially if it's an appreciating asset.

I suspect that the majority of these empty properties are owned by wealthy people from countries like China or Russia.

The evidence is all circumstantial because it’s difficult to definitively prove someone owns a property with absolutely no intent to live in it or rent it.

Further, the properties held purely as assets are generally very expensive ones. The effect ripples down, well heeled people move into cheaper housing and those people moving in turn.

This is nearly 8 years old, but generally describes the issue with some specifics:

https://www.theguardian.com/society/2014/jan/31/inside-londo...

> The evidence is all circumstantial because it’s difficult to definitively prove someone owns a property with absolutely no intent to live in it or rent it.

Vacancy rates are extremely low. That puts an upper limit on the amount of people that could be doing that. Is it not easy to tell if a home is vacant?

How are vacancy rates calculated? I have a feeling it's a statistic that doesn't correspond to reality well.

I’m pretty sure vacancy rates pertain to available rentals not owned property that is off the market.

This is a conspiracy theory that financially illiterate people love to parrot. There is no benefit to keeping a property vacant on purpose. It incurs opportunity cost, which is the cost of rent. The only reasons a property may remain vacant is either due to regulations, incompetent management or maybe money laundering (an actual crime) in which case collecting rent would impose a burden on the money laundering operation. By no means is this common, it is an extreme exception and bringing it up in these conversations is a goofy platitude by people who know nothing about real estate. It'd be like talking about the supply of automobiles and bringing up "but what about cars destroyed at monster truck rallies or used on movie sets? it's limiting the supply of automobiles!"

This goes right back to supply. Real estate prices don’t exist in a vacuum; ultimately someone will buy said property who wishes to live there and will have decided so due to it being the best of all options.

Is it actually a thing? When I checked vacancy rates for several cities, all of them were really low.

It's common in my city as well. The reason is tenants can stop paying and are protected by law enforcement from being evicted. That's not even talking about straight up squatters. This makes renting out often non-economically viable, when adjusting for risk.

It surely is already very expensive to leave an apartment empty as it is. There also seem to be special circumstances and laws in London.

But lets assume the worst, that it is all just pure evil capitalist speculation: even that is not necessarily bad. They try to anticipate future demand. So they anticipate that in the (near) future, somebody will need that apartment even more urgently than the people looking for housing right now. So it is better to keep it available for those people in the future. Think about keeping ICU units ready for future Covid patients for an analogy.

So what if the speculators are right, and the future buyers really have a higher need than the current ones?

Also I think if there really is just speculation, especially foreign investors, why not build cheap houses and sell them to the speculators for a lot of money? Nobody will ever live there (according to the anti-capitalists), anyway. Seems like a good way to make money for a country.

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