Hacker News Reader

Comment by Animats | Hacker News Reader

Article is from 2025, and "extend and pretend" is coming unglued.[1] Extend and pretend was big around 2024.[2]

The other side of this is that landlords hate to reduce rent to rent vacant spaces because their paying tenants will demand rent reductions or move. That can crash the rental market. A building half rented at rent X is more profitable than a building fully rented at rent 0.5 X.

[1] https://propmodo.com/the-end-of-extend-and-pretend/

[2] https://www.newyorkfed.org/research/staff_reports/sr1130

View on HN

This just says that they have too much power and society would be better off having a vacancy tax that aimed to reduce abuse by landlords while at the same time ensuring the city doesn't look like post crisis Detroit, which makes it worse for everyone.

Yup. Unfortunately landlords have plenty of time to lobby against things like this while the rest of us are busy contributing to society.

Most of the US does, its called property tax. Or in some cases, land value taxes.

That doesn’t work very well in practice because a half vacant commercial property has lower property value than a full one.

There are buildings that seem to purposefully keep commercial space vacant to devalue the building:

https://therealdeal.com/chicago/2021/09/10/trump-gets-anothe...

Property tax isn’t based on vacancy rate, it’s based on property value.

The article writes a bit about property value being based on rents.

So a completely rented building pays the same property tax as an empty building with no renters.

I used to think the same thing, until recently.

Where I live (NC, USA) there was a big issue where commercial property owners have been able to reduce their property tax assessments, not on the basis of 'comparable sales' (like everyone else), but on the basis of the income derived from the property.

I can't say how widespread this practice actually is, but it's not unheard of. Apparently property tax rules are going to vary widely by jurisdiction, which country / which state or province / etc.

There’s one thing you can guarantee in America. If it puts the interests of high income people vs everyday income people, the policies favoring the rich will almost always win out.

And as long as money = speech, this will never change.

It would be absolute stupidity for a property owner to keep a property vacant solely to reduce the property tax assessment. Certainly there are some stupid rich people... but I doubt that the majority are that stupid. There must be some other explanation.

Not the same because it does not depend on utilisation. Pretty much everywhere you see property taxes, but vacancy taxes are a lot more recent and I guess rare so far.

Arguably vacancy taxes are just Georgism with extra steps

If you wanted to switch to Georgism it seems that you'd need to add that and slowly shift taxes into just being the vacancy taxes.

Switching to Georgism overnight seems way too hard to execute.

You really thought you ate with this huh

The city doesn't want commercial real estate values to collapse either, since buildings are taxed based on their value. If extend and pretend is ending, tax revenues are about to take a nosedive.

The city is better off having its citizens participate more in the economy and paying taxes through it than staying home or not starting business because rent is too high.

Not necessarily. That's what's best for the city as in a geographical area where people live. What's best for the city as in an organisation with bureaucrats and finances is probably whatever increases revenues.

> The other side of this is that landlords hate to reduce rent to rent vacant spaces because their paying tenants will demand rent reductions or move.

That too is a "it depends". For a failing mall, getting anyone into the empty spaces starts to become important to the other tenants because anything that draws people into the mall is a potential customer. Customers will even no shop you just because they know there is nothing else in the mall. Thus some malls near me have museums and the like inside - anything to get traffic.

> A building half rented at rent X is more profitable than a building fully rented at rent 0.5 X.

That's assuming rents would decrease by half, and also that it's still half occupied. A building half rented at X isn't more profitable than a building fully rented at 0.7 X. A building 25% rented at X isn't more profitable than a building fully rented at 0.5 X.

If the space is commercial, it's more valuable for the tenants. More traffic, more random sales opportunities. If half-occupied, it looks like a ghetto, and they only get deliberate traffic.

> That can crash the rental market.

At this point I think that's exactly what we need in a lot of places.

I was told capitalism made for efficient use of resources.(inb4 oh you sweet summer child)

If the land isnt being used efficiently the owning entity should fail and a new productive use made.

Whether thats tearing it down for the public to get better use of the land; rerouting roads, community swimming pool, park etc. Replacing with a more economic building; factory, stadium, appartments (zoning not withstanding). Or a more productive entity getting use of it.

Bagholders being entrenched and protected are becoming a weight around the neck

It’s more efficient than other market allocation methods. But it’s not perfectly efficient.

> The other side of this is that landlords hate to reduce rent to rent vacant spaces because their paying tenants will demand rent reductions or move.

Since when have tenants known each other's rents?

The current tenants will see the listing for the vacant unit.

Fair point.

This is how I got a rent reduction in my flat during the pandemic.

Is this one of those secrets, like you aren't supposed to ask your coworkers how much they are getting paid?

> That can crash the rental market

...as if it was a bad thing.

It's bad for one person only, the landlord, which happens to control the rent price

It’s also a bad thing for future investment as building new units becomes riskier.

Reply on news.ycombinator.com