How do you asses the value? You use the x last transactions. No transactions, no data, the last value remains.
Suppose there is a building that was built in 1970, last rented out in 1975 and then bought by a company that has used it as their own offices until now. The last transaction was in 1975, what's the value if they apply for a mortgage today? Surely they have some formula to use for this based on e.g. other buildings in the area.
Moreover, "failure to find a tenant" is also a type of transaction. It's the landlord acting as the high bidder for the space, essentially the involuntary edition of imputed rent, and implies something negative about the financial prospects of the building when it continues for a significant period of time or large percentage of units. Ignoring that it is either incompetence or some kind of perverse incentive.
For who and in what way though? Every entity involved wants to keep the price high, except the renter/new buyer, so with that in mind, "Last Value" seems optimal for achieving that.
Maybe it's different in the US, but in Spain there is a ton of properties that sit completely empty and unused, even since earlier than 2008, just because the owners don't think the value is enough to sell yet, and they wouldn't earn enough renting it out, so everyone (except renters/new buyers) seems to prefer it just sits empty for decades.
For anyone who wants an accurate accounting.
Suppose the building is supposed to be worth $20M, has an existing $10M mortgage and is actually only worth $10M. The landlord comes to you and wants to borrow another $5M against the building. Pretty important to the lender at this point that they're not overvaluing it, right? Or the same if they go to a different bank trying to refinance an existing mortgage they're already underwater on when using an accurate accounting.
You don’t like it. We get it.
No one is doing anything illegal. If the bank thought a customer couldn’t pay, they’d get foreclosed, end of story.
You’re also assuming every vacancy has this pigeon holed financial setup. A LOT of commercial property is freehold.
I’m honestly at a bit of a loss that people feel they can tell others what to do with their property because it’s vacant. That’s not how society works, and it won’t change to that either.
No one was really discussing in a EU context though.
This is not Bluesky leftist "let's take Jeff Bezos' yacht so we can all have 15 minutes of health insurance" but rather "let's have more businesses in this town that can put capital to work, create jobs, create wealth and the kind of consumer choice that Ralph Nader and Ludwig von Mises both agreed on."
One day a crew turns up and starts jack hammering away a gangway. Its technically now two buildings; one of them is still unfinished and empty, the other has now been finished and is up for rent.
In terms of my utility I would prefer things renovated, changed, or rented out to funky things than have ghastly empty buildings
There is no escaping the powers of supply and demand.
https://www.investopedia.com/terms/d/dscr.asp
Lower income for the building means lower numerator, which means being unable to meet the agreed upon DSCR, which means default. Whether or not the lender acts on this default is a separate matter, as they are usually loathe to get into the property management business, but renegotiation of terms and eventually foreclosure does happen.