Rent in Cities Skylines 2 was too high, so the devs removed landlords
arstechnica.com
arstechnica.com
Cheap land is available, but it's going to be on a rocky plateau or behind a truck stop or something.
It works in real life too: https://gameofrent.com/
I fleshed that out later into a full fledged policy paper / how-to guide: https://progressandpoverty.substack.com/p/land-value-tax-in-...
Finding all my gamasutra.com bookmarks nuked one day with the rebrand still makes me salty.
Rant aside, this is what it tries to link to about 2/3 through the article:
https://www.gamedeveloper.com/design/how-i-used-eve-online-t...
For instance, In King County, WA, property taxes are 1.1%. If you own one 1 million dollar property then that's $11,000/year you have to pay.
Set land value tax to 1.1% * (number of properties you own - 1). Say you own 2 1 million dollar properties in King County. That would be 1.1% of $2,000,000 property taxes, or $22,000/year. Plus an additional $11,000 for the first one, for $33,000/year.
Fine.
But then if you buy a third one, then it goes $33,000/year property taxes PLUS (1.1% * (number of properties you own - 1) = $22,000 * 2 = $44,000, or $77,000/year to own three 1 million dollar properties.
It would quickly and effectively destroy any rent profit available, and make holding the properties for investment purposes an exponentially untenable position.
If they rolled out this tax over a 7 year period there would be plenty of time for the market to gently deflate as conglomerates and corporations divested their investment properties.
Your application of land value tax only to subsequent homes owned otherwise avoids many of the other issues I’ve seen with land value tax, however. Most naive hypothetical applications of land value tax without your caveat tend to gloss over or ignore my main concern with LVT, that it leads to poorer homeowners being priced out of their own homes by unserviceable tax liabilities, when those same poor folks might otherwise most benefit from homeownership.
I believe that would be straining at flies while letting camels pass.
The issue isn't with groups of people each using their single exemption to own a second property while avoiding land value taxes.
The issue is single corporations using billions of dollars of land value as backing for loans to purchase houses at prices citizens can't afford in order to bilk them out of rent for the rest of their lives.
A land value tax with a single owner exemption would solve the larger problem.
Land is still finite, so there will be competition for portal locations. Connectivity is valuable, so land with easy access to a lot of portals will raise in value: who wants to walk through 20 portals when you could also reach your destination in 1 or 2? This means there is a very strong incentive for the formation of a portal monopoly or cartel.
Anyone in control of a central portal hub is able to make a lot of money by opening a new portal from that hub to a far-off location. That far-off location was previously worthless, but the presence of a portal suddenly makes it extremely valuable. And being able to charge people for portal passage makes it even worse: Not only can you profit from land speculation, you're now basically charging rent on the land you sold too!
The only way to really work around this is to have essentially infinite land, accessible from a single central portal. But as the linked article mentions, that's quite immersion-breaking.
Proves once again Minecraft is the greatest game ever created.
Arguably it came with the expected trade-offs zoning laws have in real-life, in that zones intended for their equivalent of guilds are often empty/dead now since there are not that many active guilds, and "legacy" wards that still have personal housing and guild housing intertwined are a lot more active and diverse.
Or at least a vacancy tax. Maybe one that exponentially increases with duration of vacancy.
A lot of cities constructed their suburbs with one-term fees and subsidies, but are charging extremely low taxes on the houses once constructed. In fact, the taxes are so low that they don't pay for the upkeep of the infrastructure required to service those houses. They are losing money on every house and are trying to make up for it in volume! The sole reason they have been able to continue is because the dense urban core is subsidizing the suburbs.
But it'll inevitably end up with decrepit and neglected infrastructure, and cities going bankrupt. The only way to solve this is to increase the revenue per land area, which means a higher land tax, which in turn means a bigger tax increase per-person for single-family homes than for multi-family dwellings.
If you want to know more, the following NotJustBikes videos are a good introduction of the subject: https://www.youtube.com/watch?v=7IsMeKl-Sv0 https://www.youtube.com/watch?v=XfQUOHlAocY
Also, I remember how these "cheap car" sorts races worked.
The idea was that people were supposed to compete against each other in junkyard cars. The way to keep people from out-spending each other to fix up their car was that any car could be purchased for say $500 after the race.
I wonder if real/virtual landlords could have the same sorts of limits - if someone lived in a rented apartment and liked it, they could purchase it outright for a certain multiple of the rent. I think that could balance out lots of things.
"That means that even if they currently don’t have enough money in their balance to pay rent, they won’t complain and will instead spend less money on resource consumption."
It sounds like the "virtual landlord" was mostly about allocating maintenance costs, and the actual fixes are a) hide the notifications more often b) make citizens spend less on food and c) let buildings deteriorate more rapidly.
Not sure if I would want any strong takeaways from this.
Rent = (LandValue + (ZoneType * Building Level)) * LotSize * SpaceMultiplier
Basically rent never goes down unless land value decreases.
IRL Land Value basically always goes up (barring external events...) but you can help stagnate rents to at or below inflation by subdividing the land value. So the question is like is there a mechanism in the game for that? Doesn't look like it here in this equation (ie. no divisor) but maybe LandValue is modified elsewhere and at the Rent per Person equation the LandValue has already been divided by some amount.
(edit: unless lotsize is the mechanism by which they're creating subdivision/apartments? )
This seems like a weird equation in that land value doesn't have a close relationship to zone type? That seems unaligned with reality, but maybe zoning impacts land value elsewhere via another equation.
Potentially there could be some sort of demand based model implemented on top of this? But the simulation of demand is going to come down to this abstract "how much does the computer like this tile" value anyway - the citizens are not actual people with actual preferences - so I'm not sure how much it would add.
However there needs to be something whereby if the player adds more new properties of equal land value, then this depresses and moderates the land value of existing properties.
Scarcity of high value properties should increase their own land value. Supplying more of them should lower their land value.
If they don't have that sort of system then rent can only ever increase and the simulation is flawed.
But the "high rent" problem drove me bonkers. You can specifically zone low-rent housing. But it didn't matter. They would live in houses and complain of high rent rather than move into the affordable denser housing across the street.
The real question, IMO, is why does all housing in CS2 seem to be rented?
We subsidize landlords and as a result they have effectively unlimited capital to throw at additional properties meaning the price perpetually goes up and they have more assets to loan against to buy more properties.
Then we allow them to take a depreciation value off their taxes on a asset that is appreciating in value.
It's truly insane.
I don't cry about the money I lost investing in startups I just keep investing. Why are you crying about the money you are losing like you are supposed to be absolutely guaranteed to make money?
The reason you aren't selling is because you are lying or you believe the government should bail you out of your bad decisions.
Only someone who would pay less than the same house without tenants, which might not be enough to cover the outstanding balance of the mortgage, which means a short sale, which means you need the lender to approve (which they won’t).
But sure, the GP is “crying”.
What incentive is there to own a negative income asset unless you are lying and you actually are net positive. Unless of course you are the latter and you are claiming that someone should bail you out?
"I'm completely underwater on this asset but if I sell I lose money" yeah that's how that works it's called an investment you can win or lose.
I'm not sure what you want to hear.
God I love Paradox Interactive. They aren't even trying to radicalize gamers against rent-seeking capitalism. They're just putting out games with complex simulations under the hood and inadvertently discovering that landlords ruin the game.
Let's say you wanted to live somewhere for like a year. If there were no landlords, how could you do that? Buy a house? I mean, I wouldn't have been able to afford that when I was in college. And I had different roommates each year. The paperwork would have been a nightmare. Just the closing costs and agent fees can be $10k. Maybe houses would be cheaper, and the whole realtor/title thing can be reformed too. Maybe you could flip your house ownership more like a used car. But if that's the case, where are these houses coming from? Who would build them and why? Or maybe it would be all government housing projects?
Landlords get a lot of hate. I've had a bunch of them, and most of them have been fine, basically. But like, honest question, what's the alternative?
Obviously, renting needs to be an option for those that actually want to rent because they don't expect to be somewhere on a long-term basis.
But rent-seeking (among other forms of treating real estate as an investment) is an absolute and utter cancer. Buying a house for the sole purpose of extracting profit makes you a financial vampire, as far as I'm concerned.
The problem is made worse by banks that don't trust you with a $2,000/month mortgage payment while the landlord will happily let you sign a $2,500/month rental agreement.
Look, housing can either be affordable, or it can be a form of investment. It's simply not possible to be both. Landlords are participating in the investment camp, which causes a negative effect on affordability.
What's the alternative? I don't know. But I don't need to have a solution in mind to point out the problem.
Buying and owning a house is not free - even if the entire thing had zero upkeep and maintenance. The money spend on the house (lets say 1m) has a cost associated with the foregone interest/income it could have earned you elsewhere (opportunity cost, basically)
Buying a 1m house, even if you borrow no money, costs you a net 50kpa (currently) in foregone, zero-risk interest income from a bank or the government. Them renting it out is just trying to earn a return on that investment (which is just putting upfront capital and hoping to earn more than it costs).
Sometimes they lose (I think housing in many places costs significantly more in interest than rental return right now), but largely they've done well because supply is constrained in most places leading to bidding up of prices. It's just a supply issue - not enough housing for everyone. There's no reason housing can't be both an investment and a place to live - Do you think farmers grow and sell food out of the goodness of their hearts?
Most places make it nigh-impossible to just chuck up a building for people to live in - local governments want permits, you have to provide minimum levels of parking, whatever. Even granny flats will get you in trouble in a lot of places. That's the problem, IMO. In few other fields is it so hard to actually invest in building more of something.
Well-meaning regulations that enforce a minimum standard of housing do have drawbacks as well - eg. minimum 50sqm apartments. It means people that might just want a single room apartment to live in have to buy (or rent) more property than they want or need. I think these make sense for things that are definitely net good (eg. insulation, efficiency standards, etc) for everyone as a whole, but less so when they translate into a oversized housing, excessive parking, and so on - things that add expense that might not be used.
What an absolute hogwash non-sequitor of an argument. Farmers growing and selling food are actually continually producing things.
Also, I didn't say anything about it being both an investment and a place to live, I said it can't both and investment and affordable. If it's affordable, then the value isn't going up and it's a poor investment. If it's an investment, that means the value is expected to go up and it stops being affordable.
Here in Tokyo, values generally do not go up, yet there are still plenty of landlords, who seem to use housing as an investment of sorts. Some landlords seem to be people who simply have owned a property a long time and want to rent it out in case they want to return to that house later (this happens when someone gets transferred somewhere by their employer). But the big apartment buildings are owned by large real estate corporations. I don't work in that industry, but I imagine they're making money simply on volume. Even though the building value falls to zero over the course of 40 or 50 years, it does seem to work out, and there are constantly new apartment buildings being constructed.
It's blatant nonsense, which makes one wonder what the real reasoning is.
You would think this area would be ripe for innovative economic models and simulation, but in my entire life I've only heard of one alternative.
To break that cycle you need a fluid market in land and cuffs removed from construction. If I can buy land + build at a rate that's substantially lower than the value of an existing property, I will. If 6 1950s character homes happen to be sitting on a good place to build instead 300 apartments, I will. In the case of low land prices / high land availability its more valuable to be a builder than a rent seeker.
But there are several issues, notably that people in government tend to be people who own property and want their guaranteed unconditional return.
Anecdotally, I know of someone local to me who owns a large hobby farm. They are getting long in the tooth, and went to sell it to fund their retirement. The only evaluations they received came in an order of magnitude lower than the average land sale price locally. This surprised them, as their farm has actually become engulfed by housing. They imagined, quite rightly, that their farm could easily be subdivided. So they set about doing that themselves. The council denied their application because it was over their quota. Bear in mind that the state I live in has a supposed 2% housing growth quota they have never met. The councils quota was an internal policy and not written down anywhere. They simply get the right to refuse rezoning for whatever reason they so choose. Now, at this point the owners were thinking that if they succeeded at getting the land rezoned and parceled out they would be able to sell directly to individuals. 40k per plot multiplied by x plots would certainly be enough for them to live on in retirement. Great idea honestly. They did eventually receive an offer for their land, well under local value, from a large house construction consortium. Turns out their game works like this:
1. Purchase land from someone at a heavily reduced rate. 2. Lean on government to get it rezoned. (often using inducements like agreeing to some maintenance costs, building a park or whatever) 3. Build commercial shopping and other sites nearby and rent those out as permanent assets. 4. Flip the individual lots for a set fee to downstream construction companies.
And ofc, politicians in all levels of government have extremely cushy relationships with these businesses. Taking campaign donations etc.
In effect, housing supply is being limited as a coercion tactic, for larger landholders (and government land release) to sell only to a small subset of land bankers / land arbitrageurs in deep with the government. And controlling such a large portion of new housing supply allows them to ensure that their investments never go backwards. In some instances they will purchase a large lot of land and just withold it from development for a decade until they think introducing that housing suits them.
Sorry for the rant, the tl;dr is that to remove land holding as an investment, the sure path is to move against the land bankers. Release heaps of land, rezone all the things. Just pump new dwellings hard. Crash their investments. Make everyone gunshy of property investment. It should be a market not guaranteed return for life.
Ok, so if you acknowledge that being able to rent is a useful option, it means someone must own a place that gets rented out.
> Buying a house for the sole purpose of extracting profit makes you a financial vampire
You just said renting needs to be an option. But now you say nobody should buy a house to rent out for some profit.
So what's left? Should people buy houses to rent out at a loss, as a personal sacrificial service so renters can have a place to rent? Who do you expect to do that?
What's your actual solution proposal?
I basically acknowledged that my view contradicts itself. People need the option to rent, but rent-seeking landlords are terrible people.
> What's your actual solution proposal?
I literally, word for word, said:
"What's the alternative? I don't know. But I don't need to have a solution in mind to point out the problem."
The onus of finding a solution does not have to lie with the people pointing out the problem.
I don't understand how it advances the conversation to say that, without backing it with some level of analysis (even if minimal, back of the envelope kind) of what you'd do differently.
> The onus of finding a solution does not have to lie with the people pointing out the problem.
It very much does. In most circles it is not considered productive to simply be negative without offering any potential ideas for improvement.
If you really squint, a mortgage is a monthly rent to a bank-owned property. Obviously that’s not what’s happening legally but that’s basically the “UX” of a mortgage. So why have rentals without ownership at all, instead of 0%-down mortgages.
Obviously credit-worthiness seems like an issue at first but everyone needs to pay their bills whether it’s to a bank or to a landlord. Our legal system already has plenty of methods to recoup unpaid debts. When it’s to a mortgage, the bank also has the entire equity of the paid off loan to potentially draw down before eviction/foreclosure is necessary. This could be a huge lifeline for people who have a random financial emergency mid-life to avoid eviction.
In this hypothetical world of no landlords, I could also see a specific provision of renting just for roommates to simplify this too because a rotating cast of roommates would make equity balancing a nightmare.
The problem is that people, unless they can afford to buy, are forced into renting from a private landlord and working to pay off someone else's mortgage. If you have enough livable public housing such that anybody who needs a place to live can get a place on the public system, the power balance changes and private landlords aren't so much of a problem.
The solution to a broken market, is to fix the market. Write the rules / laws to encourage competition and thus the desired outcome. If something is a natural monopoly then make it a utility, regulate it properly, and have the competition at the worker union and/or contracted workers layers.
The only way to fix too expensive housing is to build enough housing to drive the cost down via supply. If there's enough 'close enough' to where people want / need to live, then if someone asks too much it won't sell. Taxes that incentivize one (or at most two for a summer/winter home) dwelling per person and the 'Land Value Tax' for density and under-utilization issues help prevent unwanted speculation and rent seeking in the market.
I'd love to live in a world where all residential property is owner-occupied, owned by cooperatives, or maybe public housing. Just take the rent-seeking behavior and speculation out of the equation entirely.
If you’re not doing anything meaningful with the land, then it’s not gonna be profitable to own.
I'd much rather blame systems and regulations that make it hard for enough housing to be built. It makes zero sense to me that there are blocks worth 5m in the inner city, while houses in newbuild suburbs cost 400k. In any reasonable system it should be trivial to unlock value by buying the expensive block, sticking 20 apartments on it and selling them for 1m each.
Maybe it's because you pay their mortgage, often close to a hundred dollars a day if not more, and they won't fix the front door or the refrigerator. Then when you move out, they charge you for normal wear and tear like you threw a series of raves.
Trowing away 30-40% of your paycheck with no downsides for the other part is no fun. There is basically 0 risk involved in renting besides...having less than what you plan to make? You will always find someone is your price is good enough.
Like i understand how for example a hotel works, houses are like that but long term, the landlords manage houses and get a salary by doing so but...why has to be such a big part of my salary?
Rent control and public housing (you can't buy it, you can only rent it for a price that covers maintainance and emergency found)
Renting reduces your control over the physical structure that you live in. You can't do significant maintenance and you can't upgrade it. This might mean you have to put up with a lousy fridge and oven, or it might mean that there's actually mold everywhere and your choice is to suck it up or move. That's great when the other available options to move into are either too expensive for you, have defects similar to your mold issue, or are too far away for you to keep your job. It also reduces the stability of your living situation, in places like America where a ten year lease is not standard. If you have children, this increases the risk that they will have to change schools during the year, and a forced school change is supposed to cost approximately six months of education.
If you are a good renter (important part) a landlord will kick you out only if he wants to
1)Sell the house
2)Increase the amount of money and trowing you out is the only way to do so
The first problem is unsolvable but pretty rare, a good renter is a money printer and landlords like stability the same way you do.
The second could be mitigated by rent protection laws.
In the end is still a compromise, you don't have to invest massive amounts of capital but don't have complete control
Incorrect. If you're subject to an HOA, the HOA can take it from you for many bullshit reasons.
> If you're renting your home, your landlord can just say...
Also incorrect. In some jurisdictions the landlord must either withdraw the unit you're renting from the rental market for five or more years, or move himself or his family into your unit in order to execute a no-fault eviction.
A bit generalizing but I don't see what's wrong with that. At least for the landowning classes.
1. Here communism means handling it all yourself and capitalism means leaving some part of the economy to AI. It's immediately obvious why one will prevail since we dont have AGI yet. Also the game provides million times more information than Project Cybersyn ever hoped it'd have.
2. The dev have been accused to be very biased for communism. For the first few patches they don't even allow capitalists to set up their own investment ffs, only able to invest money to "investment pool" that will be used by government (player). Apart from design choices, they are also ones responsible for AI. They can set up landlords to be super selfish and revolutionaries to be super selfless and vice versa.
3. One of the most notable thing is that in the previous game, Victoria 2, it's not this lopsided. Even when that game is as robust of a simulation or even more so.
This sounds like some where suprised by that... of course we need more housing, if there are more houses than people who need the, the landlords will have to fight to keep renters in, to at last get some of the money.
Somehow, back in communist times over here, we managed to build a lot... both the government, that built large apartment buildings, and also people themselves, that were allowed to build single family houses a lot easier than now, and they did that mostly by themselves and with help from friends. Housing wasn't an issue.
And now, we act as if we're incapable of building anything anymore... no new neighbourhoods, no new schools, no new infrastructure projects... no nothing.
It's just that, nothing more than it.
(hopefully...)