Wouldn't 20% tax on rent just lead to 25% general increase on rents? I don't think there are that much margin around in leveraged landlords.
Really better would be just to bump something like income tax and use money from there for same purpose.
Really better would be just to bump something like income tax and use money from there for same purpose.
Two landlords, one with a mortgage, one without, will charge the same amount for the same property.
Because someone else could undercut them. If everyone is being levied the same toll, and everyone knows that, it’s not that risky to just pass along the tax.
This is rarely true. Only universally true for large corporate landlords where there is an entire corporate structure maximizing every dollar due to personal incentives put in place by executives/ownership.
Small landlords (yes, even those with 6 buildings) are almost never min/maxing rent like this. They are optimizing for other things like time investment and hassle factor. And even doing the right thing.
I've both rented and landlorded. In neither side of those transactions over decades was I either paying maximal rent or charging it. When property taxes went up as a renter, my small time landlord would show me the tax bill and I'd pay exactly the increase. Same went for when I had tenants.
I'd go as far as to say the majority of mom and pop landlords are not looking to charge maximum rent. They only start doing so when they have a problematic tenant they are trying to "manage out" of the unit.
Yup. Have a single residential in a otherwise commercial building in NYC. They pay ~50% market for a spacious 3 BR for a number of reasons; mainly because we have known them for a long time and they struggle with health issues so we never really raised them. Charging them market would put them on the street. They can afford the 50%, live nicely, and the commercial tenants pay market which pays for the building with a little leftover. If they ever move we will certainly charge more but I see no reason to gouge like others.
Or the one without mortgage goes like I only get 800. Maybe instead I just throw this money in government bonds for better gains and save money...
Other option for same outcome could be just to charge any renter 20% on top of their rent. Which they directly pay to this fund. That would push rents down as they are able to pay less. Achieving exactly same effect.
No.
Nobody is forced to charge anything. The market forces limit what can be charged, as an upper bound.
And I'm saying this with experience as an actual landlord.
At the end of the day most economic activity is really an exercise in ratios. Some states don’t charge sales taxes. Some change double digits. Yet retailers are able to function in both environments.
What is clear is that rental and purchase housing is increasing beyond inflation since 2008 and COVID and that’s not good for tenants or landlords.