Rent control and Prop 13 are two sides of the same coin.
Prop 13 benefits people that have owned property for a LONG time. I cringe every time I see my prop tax bill while my neighbors who have been here for decades pay a fraction of taxes only because they were here first [1]. But Prop 13 props up housing prices which would drop like a rock if Prop 13 were outright abolished. So there would need to be some sort of retro tax event to help lessen the pain.
Additionally, I would make the distinction of this tax event for primary residence, investment property and commercial property. Maybe it should just apply for primary residence, I don't know the right answer to this but longer term, I agree that rent control and Prop 13 need to be revisited.
This could even be part of a hybrid approach where owners have some protection against rapid changes, but bills slowly catch-up to their neighbors… restoring equal protection under the law regardless of date-of-purchase.
For example, the increase-cap could be "the larger of 1% [like Prop 13] or a rate that, compounded 20 years, would reach parity with peer properties". As long as your bill is only ~22% less than comparable properties, you're still on the Prop 13 1% plan. But when things really get out of whack, your rates go up slightly more... and you have very strong visibility into the next two decades' of rises, if you assume property values hold. (If you're paying half your comparable-property new neighbors, your bill would go up around 3.5%/year.)
No surprises, small annual changes, but (over time) far less of a giant tax-handout to the already-property-rich.
If property values increase and there is no rent control, do you really expect landlords to not pass the property tax increases to the renters?
In fact, I would argue that more home ownership would be a lot better than rent control, because if the home owner chooses to leave a given area by selling, he/she is able to benefit from the increased values. Renters on the other hand cannot.
While it would be very interesting to contrast the tax situation in Washington state (property taxes adjust every year there from what I understand) with that of California, I doubt the current situation would greatly improve prop 13 gone, and I know for sure a lot of people would be squeezed.
The tax rates for the bands are then set by the local council, as a political decision. Band A property? £1000 a year. Band E property, maybe it's £3000 a year.
Admittedly, assessing a tax band is a little subjective - but it seems to work OK. Any idea why local government taxes in the US aren't calculated the same way?
From what I know, WA state uses real estate tax as one of the primary revenue streams (in addition to sales tax), whereas CA also has income tax. CA and WA seem to have similar sales taxes, so the main difference in funding is in WA not having an income tax.
There are many more differences, but I don't know if those are for a "good reason" or bloat. My personal biases make me lean to CA budgets being bloated...
California put limits on what property tax can be used for, how much it can change per year, and when the property's value gets reassessed (answer: when the property sells) in the '70s ( http://en.wikipedia.org/wiki/California_Proposition_13_%2819... ). It was done through a ballot measure, which means the legislature can't make any changes by itself.
Of course, somebody decided it would be easy to apply it to everyone, even large commercial properties. The fact that it applies to commercial properties is kind of insane.
http://www.sfgate.com/news/article/Bill-to-close-Prop-13-loo...
| In fact, I would argue that more home ownership would be a lot better than rent control...
This may be the case, but its an experiment that will never happen. SF is at an extreme housing deficit, and refuses to build new housing commensurate to its population growth (1 unit per 10 new people for the past decade). Prop 13 is a large part of the problem - minus squeezing, home owners have no incentive to allow new construction.
That said, I do live in a place that is fairly constrained on new development, but not as badly as SF. For my part, the lifestyle that makes both of these places so appealing includes a certain level of density, but not much more than that. It's hard for me to fault people who bought their properties for defending the lifestyle they bought into.
On the commercial use of prop 13, I would tend to agree that it's not the best idea today. I am entirely against means testing and such for personal uses, including non-primary residences.
A simple use case for non-primary residence non-commercial use is if one is taking care of elderly parents. Should the parents be forced out of their home because their child happens to own the property? This is not commercial use to me either, unless rent is being charged of course.
Part of the attraction of homeownership is security, in that homeowners aren't subject to fluctuations in the rental market. Prop 13 helps to reinforce that security, delaying the property tax increases to the point where the homeowner would be able to afford them -- at moving time. It's certainly not perfect, but I'm not convinced repealing prop 13 is the answer.
Perhaps a hybrid approach: live-in owners are subject to prop 13 caps on increases, but rental properties are not? Coupled with a repeal or loosening of rent control would allow landlords to pass on at least some of that cost increase to renters, which I think is a reasonable thing. Again, not perfect, but perhaps an improvement.
Prop 13 makes new property buyers pay more for property taxes. Rent control makes new renters pay more for rent.
As long as there are more people benefiting from these 2 laws than hurting, they will be in effect. It would be interesting to see organized efforts in changing these laws.
Both have "got theirs" and don't want to let new people into the city.
Your argument is that renters shouldn't give up something that hurts them, until another group gives up something unrelated?
Can you articulate why you think that negotiating strategy might lead to optimum outcomes for renters?
I think (guessing a bit here) is that the argument goes like this: repealing Prop 13 would drive down house prices, allowing some renters to instead buy/mortgage, therefore reducing the demand for rentals, driving rents down.
By increasing supply, I would imagine, at the expense of older, retired home owners. In my community, there are a lot of old people that wouldn't be able to afford a fraction of my property tax. Many would be forced to sell and there would be a glut on the market of new homes, which would likely drive prices down.
I hate paying the property tax rate I do, but I would also hate to drive all the old people of my community to cheap, depressed housing stock in some remote place.
What's the way out of this? I really don't know.
Prop 13 as it stands is simply a way to allow commercial landlords to avoid paying property tax at market rates.
It would make sense for governments to formalize this arrangement and allow deferring of property tax payments until the house is sold.
What do these have to do with each other? And I guarantee if you gave landlords the option, they would jump on that offer. Prop 13 is saving long-time owners a few thousand dollars a year, which would be easily made up (and more) with higher rents.
I have complex feelings about Prop 13, and I'm not by any means unilaterally a fan. But to suggest that it necessitates rent control sounds, at the very least, under-argued. How does San Jose fit into this picture?
Repealing rent control without repealing Prop 13 would result in a MASSIVE wealth transfer from renters to landlords. I don't think that's fair.