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Comment by lukan | Hacker News Reader

In germany, if you see such a abandoned property, you cannot even ask the authority who owns it, if you have the plans to buy it (you would have to rely on local people knowing and telling you).

There are quite some neglected properties around here and the owners are away, do not care anymore and the authorities do not care as long as the low property taxes are paid. There was a case close by, where a buisness wanted to get rid of the old rotting building next to them, but could not. It went on for years. Only after the building burned down (no idea if someone helped with that), the space could be finally cleared.

So yeah, exproptiation should only ever be the last resort, but in some cases it really makes sense.

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The solution is actually simpler, set a property tax that would hurt if the buildings became vacant. For example if you pay 1% of the buildings value as property tax each year, it would make enough incentive to rent it out or sell if you don't need it. The proceeds can be used for building public housing projects or helping the homeless. Property tax was invented for this very reason.

Something like this yes. But the devil will be in the details.

"pay 1% of the buildings value as property tax each year"

A old rotten building might be worth just 10000€. And 100 € a year ain't that much. One would have to tax the property - and who will set up the rates in a fair way in a process that is not vulnerable to corruption?

And old rotten building sitting anywhere in a city is worth way more than 10.000€. Even if the building is not in good shape, the land is still valuable.

Many property tax systems are based around value of the building, not the land.

I think Japan is one of the outliers where pretty much all property value is locked with the land itself, as buildings depreciate not appreciate.

Right, and then the 80yo people living in a centenary house in a gentrified neighborhood suddenly get a 10x tax increase because the next door building got sold to be remodeled as a luxury condo, and drove property values through the roof.

That's good, because if they can't pay, their house is up for remodelling too. /sarcasm

If the 80yo people are living in the house, then it isn't vacant.

That's not how property taxes work here.

Also, you need to figure out how you define vacant, and how to track it.

If I relocated for work, and use the house 3 months a year and every other month for a weekend, is it vacant? How do you tell?

It seems to me that we could start with a conservative approach and adjust from there. For example, define a property as vacant if it isn't occupied for 1 continuous month or a total of three months out of the year.

Yes, we are discussing a hypothetical, from a few parents up: "set a property tax that would hurt if the buildings became vacant"

The definition of vacant is something that would have to be figured out, but it's not impossible. For example, you could do a generous 6-12 months of the year occupation without taxation, and then a sliding scale from there. (So you pay 0% of the new tax at 12 months yearly occupation, 0% at 6 months, 50% at 3 months, and 100% at 0 months.)

I'm open to being wrong but I believe the data shows, old people in the UK are living in houses that are too large and receiving pensions that rise with inflation whilst "young people" are paying huge rents, can't afford to buy and are stuck with huge student debt. Why shouldn't the old couple move to let 10x apartments be built? Or does the data show differently?

"Why shouldn't the old couple move to let 10x apartments be built?"

Imagine you worked all your life and now you just want to enjoy your peace in your home for your last years. You really would not want to move and I am very against driving old people out of their homes, even though I am one of those young people with a small apartment also seeing empty and unused space everywhere.

I think not what parent comment said?

What do you think parent said?

If the property tax goes up by 10x, then that 80 year old couple has seen a 10x return on their real estate investment. They can easily take out a reverse mortgage to pay the property tax for the rest of their lives.

"They can easily take out a reverse mortgage to pay the property tax for the rest of their lives."

Not everyone can do that easily. I would not know how that works and where are the downsides. I can learn it, sure, but for an 80 year old this would be real stress, having to figure unknown contracts out - and not getting cheated. Old people are a prime target for frauds for a reason.

The reality is that the same thing, in effect, happens if you stop paying property taxes. The tax builds up and then when the house is sold after passing the government collects the tax before the descendants receive the sale proceeds.

This is why complaining about rising property taxes is almost never about the elderly people who actually live in the house. It's about their children that want to inherit the house without paying off their parents' property taxes.

> The reality is that …

People in different countries experience different realities.

Not really. By definition if your property value rises by 10x you have enough money to pay the property taxes by leveraging your home. Sure, it means you'll have to sell when you die and won't be able to pass on the house to your heirs. But the meme, "elderly homeowner becomes homeless because his home became super value" is just a fiction. It's not that the homeowner can't pay the property taxes - he's got plenty of value in his home. It's really the children that want to inherit a valuable home but don't want to cover the tax back payment.

Just in case it was not clear, my comment was about

> The reality is that the same thing, in effect, happens if you stop paying property taxes. The tax builds up, etc.

and in many places worse things will happen to you if you stop paying property taxes.

"Even if the building is not in good shape, the land is still valuable."

That was my point, not binding the value just to the building itself.

That's why this scheme requires land tax, not property tax.

That is the very problem we are facing in Turkey :). The municipality determines the value of housing in a neighborhood each year. That is taken as a basis for property taxes and transaction taxes. The municipality assessed value is somewhere near 1/20th of the value of an average flat. So, almost no tax gets collected :(.

Its probsbly hard to reliably enforce it since hard to figure out if bulding is occupied or not. You can have someone registered at the residency but still not live there.

You could maybe try to figure out based on water usage but then someone could just leave water tap slightly leaking since water cost is not that expensive

Probsbly squatters are those cheap solution that can enforce it in the most efficient way

You don't need to know if people live there, just raise tax enough so that the owner feels like renting or selling the building is better than paying the taxes out of pocket.

This also forcess poorer people (including retired people) to sell off the house they are actually living in. This is especially true if the tax is based on the current estimated value which may be much higher than what the house was bought for.

There are ways around this. For example set a property tax from second home on. Do not tax the primary residence. Or set income brackets. If poorer people live in their own homes they don't pay property tax.

Why does it matter if someone lives there or not? Slap a land value tax on it, high enough that if the owner doesn't make use of it they'll feel it.

You do not have to care if it is occupied. Tax the property tax. If the owner does not rent out the property, they'll pay out of pocket.

Having a building vacant is already incredibly expensive; costs and interest add up and the building can get severely damaged (a building has to be heated in winter, ventilated properly and issues like broken pipes have to be found quickly by tenants etc.). Common reasons for vacancies are probate disputes, owners that are house rich but cash poor and can't handle maintenance, issues with building code and permits and similar. Apart from some truly dysfunct situations a scheme that involves vacancy doesn't make much sense. Why not take even a modest rent for a bit?

In general, everything you could propose that puts pressure on landlords leads to transfer of ownership from your (maybe friendly) landlord with 2-3 units, to larger, more professional companies who can handle the paperwork and regulations, with a tendency to tear down and rebuild something that is more expensive to rent or buy.

In countries with high inflation purchasing real-estate and keeping it vacant is an inflation hedge. Plus, you also benefit from low interest rates and get free money if your government allows it.

I live in Turkey. We had 80% p.a. inflation, where the government decided to lower the interest rates even further. Our president said Interest rates are the cause of inflation and if we lowered interest rates inflation would go down. State banks gave out house loans with 12% p.a. interest where the inflation rate was above 80% p.a.

A lot of Turkish people got their free money from the bank and invested in real estate. In Turkey, everyone evades tax and property taxes are not really collected. This in turn fueled inflation even more, sky-rocketed inequality and caused the worst housing crisis.

That is why I am convinced that property taxes are a must.

I live somewhere with ~3% property taxes on properties, including the one you reside in. Not so long ago mortgages were cheaper than that, and mortgages at least end someday. At the same time, short term rentals like airbnb are illegal. Combined, this leads to most landlords either being companies large enough to keep extremely high occupancy rates, or families that flout the law to rent a second property owned due to marriage or inheritance and become vulnerable the whims of neighbors.

I think allowing short term rentals, and giving owners strong eviction rights for damage, illegal activity or non-payment (which we have) need to be paired with property taxes to prevent all landlords becoming large inhuman entities.

It should also be noted that if you tax everything at the value it could make, you distort the usage of valuable locations to exclude housing.

This is not true. You can query the Grondbuch and it will give you all the necessary information of the owner.

Edit: sorry, havent been living in Germany for long. Thought it was the same as the Dutch kadaster. Turns out, it's not and my dealings with it have been unusually easy until now.

The reason why expropriation isn't used a lot is because it costs a lot of resources.

Surely, before considering expropriation, we should tell people who owns a property so that they can offer to buy it. If that's too much a privacy concern, the government could simply relay the offer.

Oh for sure. In the specific case I meant, the owner was known, but lived somewhere else around the globe and did not care, but it was his property. (where stones were falling off from the roof to the street)

Those are cases where I think expropriation would be warranted.

And if it would be easier to buy obviously unused land, less properties would end up in that rotten final state, so less need to even discuss forcing something.

don't you also have the "Grundbuch" (title register) in Germany, like we do here in Austria?

-- snip --

okay, I looked it up. you have, but it's not fully public like ours. Yeez that's messed up!

"Yeez that's messed up!"

Yes it is. You can request information, but I was told "wanting to buy" is explicitely excluded as a valid reason. (The usual solution is knowing someone inside the office, or paying someone who knows)

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