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Comment by thriftwy | Hacker News Reader

How do you lower rents without add more properties to market or reducing locale desirability?

You add more properties by forcing sale of those owned for investment purposes to the state and operating them on a cost-recovery basis. Simultaneously, abolish most forms of zoning and have the state engage in home building directly.

Landlordism, as Adam Smith himself identified, is a destructive, parasitic drag on economies that should be minimized at all costs. Otherwise, you end up with what we have now, Capital owners chasing after unproductive returns by limiting construction, bribing politicians, and generally making everyone else poorer and more miserable.

A lot of the housing is owned by the pension funds. Effectively, young people paying rent is how the old people eat and pay their rent. If you take it away, old people will starve and won't be able to pay their rent.

Any other suggestions? Remember this is Switzerland, so you can't do anything the population doesn't actually want otherwise they'll vote it out.

I doubt that the state will be more efficient in building houses than private enterprises can if allowed to do so. If they are not being built and added on marked, the effective price will only crawl up.

In case if Zurich, I imagine that supply is limited due to its geography as well, and of course by wanting to preserve the quality of life.

> I doubt that the state will be more efficient in building houses than private enterprises can if allowed to do so

Depends. If the profit is in more expensive housing, than private enterprise will bias towards that and ergo be less efficient at building lower-margin "affordable" housing.

Ideally, in a perfect frictionless economy populated by spherical cows, yes, private enterprise will more efficiently allocate across the entire spectrum of market needs -- so in principle, I'm agreeing with you.

But spherical cows make lousy roommates.

If the Swiss can build train tunnels through mountains on schedule, I’m fairly certain they can build some more apartments in Zurich.

Private companies build the train tunnels.

Not really. Most have been built by subsidiaries of Swiss Federal Railways, which is a state-owned enterprise with extra steps.

> forcing sale of those owned for investment purposes

How?

Expropriation or nationalization is de facto impossible in a developed democracy in 2023.

Any proposal as such will be bogged down in courts for a decade, and the politicians who proposed it will have been voted out of office by the 60-70% of the population that owns some kind of property.

There are a number of ways to do this without nationalization, e.g. the imposition of onerous taxes on investment properties, rental income, or real estate speculation, coupled with creation of state-housing funds to purchase properties that are now not worth it to own. If you do this while simultaneously engaging in widespread state construction of public housing, increase supply will also make investment ownership unattractive and force sales.

> imposition of onerous taxes on investment properties, rental income, or real estate speculation

How? This is vague.

> creation of state-housing funds

How? Who holds the liability and underwrites this?

> widespread state construction of public housing

How? Is there even a trained construction workforce anymore? In the US at least this no longer exists after 2008 [0]

I'm not trying to be dismissive btw. I used to work in the policy space and there are organizational and liability issues that acted as a blocker against a number of the stuff you mentioned.

[0] - https://www.axios.com/2023/02/10/construction-help-wanted

They should give a Russian developer like PIK or LSR a blanket licence to build scores after scores of 25 floor buildings with 20-30 sq.m. units until they plead for mercy.

These will also fly the workforce in from Central Asia.

Government Policy? Maybe a bit crazy for HN...

What kind of policies you believe would affect rents in the short to medium term? Progressive cities have tried all kinds of things, with little in terms of results.

Short and medium? That's probably a tough ask besides subsidiaries. But also allow fast redevelopment of office space. In Germany there was and is the "Munich" effect. Zone too many office districts so office space is cheap and companies move there. So also more mixed use zoning for white color work places for short commutes

In Berlin they did this with the "Mietendeckel" and the result was unsurprising (supply shortages, black markets).

They at least tried, but also it was abbolished bc it was unconstitutional. So the current market is not bc of it.

The current market still suffers from other forms of government regulation. The Mietendeckel still exists in some form via the Mietenspiegel, and basically the entire city under what Americans understand as rent-control.

How does it suffer to make it illegal to charge 10% more or less than the average for comparable housing? It seems to make it more stable and less volatile.

Go look up the Mietenspiegel price for your flat in your neighborhood, then pop open Immoscout and try and find one for that price.

Price controls = supply shortages. Basic principal of market economics.

But how does the market suffer from that? It implies that the Mietenspiegel is a bad policy. It only protects from price gauging or price dumping. If you are living in Berlin I would highly recommend looking up if you're paying too much.

Lines of 50 people to see an apartment sounds like a huge waste of man hours, which cost money to economy. This waste also grows quadratically: more people searching for longer.

Which government policies exactly would you suggest that don't involve building more houses or convincing people to move elsewhere?

Remember, this is Switzerland, so you need to convince the population that this is a good idea otherwise they will block it with a popular vote. So confiscation of property or forced labour or increased taxes are all out of the question.

I agree I should have written a more constructive comment with more details. But I thought it was clear how policy can help in the short/medium/long-term. Please read the answers I wrote to the commenters below/above

So what? government just orders lower rents for current renters? That might work short term, but in the longer one it will simply destroy the local property market. No one will be willing to build housing anymore, as it won't be profitable. The city will slowly gentrify and die.

As I posted below and also public transport as mentioned in other comments

Change zoning rules. Incentives for co-living. Reduce flat sizes. Rebuilt office spaces. Or look to Vienna: a big stock of goverment-owned flats with low prices which makes it hard to charge more than those.

If you give tax incentives for both people and businesses who start somewhere other than a highly desirable place. To the locals who live there as well of course.

I don't think it should be about reducing local desirability, but give the conditions for other places to become more desirable.

There are international migrants as well. How do you make a town in rural Romania or Latvia as desirable and opportunity rich as Zurich? The weather is probably crappier there, for starters.

All you need are business/personal incentives. One extreme example of this is SEZs, Special Economic Zones. You set up a legal structure for region within your territory to be able to offer the sort of benefits one would normally have to seek out tax havens and legal loopholes to achieve. This motivates development and growth in these regions, which drives opportunity and expansion.

The Shenzhen SEZ is one extremely successful example. [1] It was established as an SEZ in 1980 when it had fewer than 30k workers. By 2000 it had a labor force over 3 million. The current population (which is predictable difficult to measure given a massive migrant population) may be as high as 14 million.

[1] - https://en.wikipedia.org/wiki/Shenzhen_Special_Economic_Zone

You reduce demand by letting people live and work where rent is affordable.

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