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Comment by TekMol | Hacker News Reader

I hope Portugal won't tackle it like my country, with a cap on rent and other market distortions. I think that only makes it worse.

Fun fact: I - as a single - live in a way too big, luxurious and expensive apartment because of this. I rented it, when I was still working for the man and was making a killing. Now I live a much more modest 4-hour-workweek life. It would be better for me to move to an apartment half the size. Then a big family could live here nicely. But no way. No landlord in Germany rents to a freelancer who enjoys a "I'm mainly slacking off for a while" lifestyle.

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Heavily taxing houses that stay empty and limiting short duration rental could be quite effective.

The issue is somewhat the same in Paris. It’s very hard to afford living there because non local use properties as an investment and prefer them staying empty than risking them degraded and people who want to rent make more money on Airbnb.

It’s fine if you want the city to become Disneyland but very depressing otherwise.

This issue of speculation on empty properties would be, if not solved, then at least immensely alleviated with a Georgist LVT (Land Value Tax), a tax on properties equal to the rent for the undeveloped piece of land.

It's easy to implement, the market exists to price that amount, and provides a direct incentive to either put the property to productive use or get rid of it.

Building physical houses to sit empty as a financial instrument has to be one of the peaks of capitalist insanity.

> Building physical houses to sit empty as a financial instrument has to be one of the peaks of capitalist insanity.

I quite agree, and I am therefore very suspicious that this is actually happening in significant volume! I have never seen convincing evidence that this happens, and it, at least superficially, makes no sense as a money-making scheme (Worried about degradation? That just means you should get insurance.) In general, it doesn't make financial sense to keep capital idle, and claims of such should be taken with a grain of salt, especially if the messaging is politically charged as "rich foreigners are screwing the common man over to make money".

I agree that an LVT would be the solution if this were actually a problem. And that an LVT solves many other problems unrelated to evil foreign billionaires.

Indeed. I'm most familiar with the US market so can't speak for European countries which may be different, but here's a graph of estimated vacant units held off-market against total housing units in the US:

https://fred.stlouisfed.org/graph/?g=TiNw

Is this a high or a low number? On the one hand, <5% of units vacant sounds small. On the other hand, this is about 12x as many as there are estimated homeless in the US.

https://www.usich.gov/tools-for-action/2020-point-in-time-co...

4% vacancy is what you get if people live in a house for two years before moving, and it takes a month before a new family moves in. Sounds pretty normal, and with no obvious way of using this idle time to help the homeless.

Are those really making a dent? What percentage of Lisbons apartments stay empty? What percentage is used for short duration rental?

I would think only a small one-digit percentage?

There are tons (like, really many) of empty, closed rotting buildings in Lisbon. My assumption is the owners are waiting for prices to increase or simply demanding unreasonably inflated prices until they find a buyer. I'd like to know the reasons for it. Anyway, whole blocks are empty. Heck, there is a large empty building directly next to the German embassy (and, ironically, part of the German embassy is also abandoned and empty even though it belongs to it).

There is also a substantial number of new luxury apartment buildings in my area with apartments that appear to be empty. Whether they are owned yet or to be sold is hard to determine but you can see when nobody lives there.

Exactly. There should be a tax on vacancy. We've made the 1) mistake of turning a very special need like shelter into a commodity or security vehicle, and 2) this commodity the owner can "hold-out" on in that makes it violate the principles of economics that we all supposedly agreed upon from above that the market is the most fair and best solution for people.

We already tax vacant property up to 12 times the regular tax when located in high demand areas[1] which includes all of Lisbon municipality. It's definitely had some effect as you see a lot less vacant property, but it unfortunately doesn't fix everything.

[1]: https://dre.pt/dre/detalhe/decreto-lei/67-2019-122349221

Hard to understand why anyone thinks gentrification or foreign buyers/renters are the problem if this is the case. Put people in the houses you already have, and build some more if needed, and you will likely find the price drops. But perhaps the people with decision-making power are hoping the price continues to rise.

Even more building were rotting before Portugal liberalized the market, because nobody would or could pay for renovations.

The truth is that real estate is merely a reflection of wealth. Some of that wealth is earned by hard work that others are not willing to put in while other wealth is just inherited and some people work hard and smart and still stay relatively poor.

Therefore we shouldn‘t judge so easily based on what someone has and go back to asking how it came about.

I have an apartment that sits empty, I'd love to rent it, I even have a license to rent it for holiday rental but it took 2 years and an half for the proper permits to be filled for me to renovate the apartment, once that went through, covid happened and it was not possible to find anyone to do the work, eventually the constructors I hired started doing the work but stopped in the middle claiming they can't find employees...

So I now have an apartment that's been empty and useless for 5 years, it did triple in value in the meantime but it's such a huge waste

You can hear a version of this story from apartment owners in many European cities, meanwhile the newspapers attribute out-of-control housing costs to a laundry list of more sensational causes...

Why not sell it?

Because I really like the location and view, I really wanted to renovate it, rent it for part of the year to tourists and stay in it for part of the year.

> Heavily taxing houses

Two wrongs don't make a right.

Cute, walkable cities are the original Disneyland - there's no changing that and in fact it will become more pronounced.

taxing empty - yes

limiting short duration - no, just tax it more. Limits are too easy to hack.

> I hope Portugal won't tackle it like my country, with a cap on rent and other market distortions. I think that only makes it worse.

That's one of the reasons why portuguese renting market is so bad. There were rent control policies for like 40 years. It has been phased out but the market still has the signs of its damages.

There also other contributing policies and the policies change almost every two years.

I'm one that could invest in the market, to bring more houses to be rent, but I can not risk 150 000 euros buying a house to rent (middle income market) and then having problems evicting with a non-paying renter, being forbidden to increase the rent due a new law or god help me if I need to use the court system to ask for renter damages.

So either we preference your 150000 euros (and of course interest and margin on top) or someone having a roof over their head, running water, and even the ability to stay in the same are and building community instead of moving each year due to capital seeking max gains.

But he said he want to do it to help a family, not his pockets. /s

I read she wants security for her investment property.

This is an egregious misreading of the parent comment.

Someone in a position of economic vulnerability isn't going to invest in housing to rent out if there is a non-insignificant chance of damage to the property.

Moreover, this uncertainty has the perverse outcome of pushing the potential small landlord to use his funds to invest in something like a real estate investment fund - which will result in less local control over housing.

Are these 150K being used to build a new house or to buy an existing house?

I think it’s time the English speaking world realised that landlords are not providing a service, they are extracting a tax on people that don’t have 150K to pay a deposit.

Portugal is not part of the "English speaking world".

The down payment would only be 10% of that. Existing or new house would be same, houses that are bought for rent are only available through mortgages which are a pain.

When I was younger I would really like to have more houses to rent... I don't really care if they provide a service or not, it's the cheapest and more liberating option available.

If the neighbors are a hell... I could just move out. Or if the house was not close to a gym I liked... move out.

That's not how that works.

I can have 150000 euros which I can use in an emergency, like being unemployed, long sick leave, needing move out of country due to family reasons OR I can risk not having it available when I needed and earn some money. Without the profit I have no reason for the risk.

Furthermore, me not investing removes a house from the renting market which makes it harder for people with less income, specially young people. To have a place to live because the same house will be available for purchase through a mortgage... and mortgages are not good.

You have to make a 10% down payment and you're almost always tied to a flexible interest rate... so people with less economic freedom are the ones to suffer the most.

You might disagree that things should not be like this which is fine, I'm only arguing over what happens now.

> So either we preference your 150000 euros (and of course interest and margin on top) or someone having a roof over their head, running water, and even the ability to stay in the same are and building community instead of moving each year due to capital seeking max gains.

Unless you are proposing to take his extra 10k euros by force, or let him invest it elsewhere?

If you want him to invest his 150k euros in housing you need to (according to him) lower his risk.

The fact that you can’t evict people at will and that you have to go through courts to seek damages (rather than robbing your tenant’s bank account), is a feature not a bug.

I don't think Germany is a great example at all cause they would rather rent out to a good German girl who's dad has money than to a foreign professional who has a longterm work contract in Germany. I agree that the annoying lifestyle expats are a problem, but bringing up something completely unrelated with a whole host of its own issues is a really weird way to make a point.

It's a combination of things really.

Lack of building when the population is still growing.

Encouraging single lifestyle, both by kicking out kids early and shacking up later.

Cases where sitting on an empty property is risk free.

Infrastructure increases taking valuable space.

Giving early birds great deals compared to today, making them sit on huge housing for a pittance and making moving out a terrible deal.

And politically, there simply is no immediate incentive to solve things when the current population of homeowners does not contain enough people to vote in favor of those that don't own homes.

Everywhere you prefer to rent to a local than to a foreigner, it’s not a German thing.

There are a great many countries where property owners would rather rent to a foreigner, due to foreigners having on average higher spending power.

Had absolutely no problem with it in the UK, US, or Taiwan. Most places you can just pay in advance to make up for lack of credit history. In Germany it makes you suspicious. So no, it's not everywhere. Given how many expats there are across the globe and given that there is 190+ countries on the planet, I'm not sure that Germany is actually in the majority here.

There are other ways to be stuck, I'm in subsidized housing which I would like to give to the less fortunate but buying is impossible and leaving would mean half the space and four times the rent making me have less remaining per month than the less fortunate in my current appartment.

Indeed. Price caps turn an expensive market into a lottery. Hardly an improvement, in my view.

Large amounts of public-built housing (and I mean large, in the order of at least ~20% of the market) have a track record of working amazingly well to lower the cost of housing to acceptable levels and to give everyone a chance at homeownership.

Similar in Vancouver. If you've been renting for 7+ years, you won't move even if the place doesn't fit you anymore. You would be paying close to double.

Youll be happy to learn that every rental property in portugal is under rent control!

Some have been unable to raise rents since the 1910s!

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