Hacker News Reader

Comment by jlarocco | Hacker News Reader

But who's selling the land? If everybody has to pay the tax then all of the property owners can increase rental prices by the same amount.

View on HN

All property owners can increase rental prices now anyway. They can only increase them to the maximum someone will pay for it. That's why average rental prices tends to track average income. If you have 5 homes and 6 people, each able to pay 2100, 2200... 2600, then the worst home will rent for 2200, and the one who can only afford 2100 will live in a box.

There's a difference between can and must. A LOT of landlords don't maximally squeeze their tenants.

In fact, I'd argue the majority of landlords are shit investors sat on fairly low yields

They can only increase rents as much as the next guy. If you're charging $2500 but next door is $2400, then nobody will rent from you. But if everybody's charging $2500, then that's what people will have to pay.

You're right that some people will get squeezed out, but in high demand markets there are enough people willing to pay that it doesn't matter. The number of properties available for rent in California isn't growing as fast as the total population is growing. Property owners will eat the 5% increase for a while - at least until the existing leases expire - but eventually they'll incorporate that 5% increase into the rent.

If you charge $2500 and next door charges $2400, the first person to arrive rents for $2400, the second person has no choice but to pay your $2500

Now what happens if there are three houses for rent in the area, instead of two? Four houses? A thousand?

Reply on news.ycombinator.com