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this post was submitted on 24 Aug 2023
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Economics
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Where do landlords get their money? (the money they exist with).
From renters.
If they have to pay money (as taxes) for rentals that aren't occupied, where will that money come from?
From renters in the form of higher rents.
Are you SURE you want to go through with this?
The solution is simply for landlords to keep their units occupied and they can increase occupancy rates by lowering rents, which will also have the effect of lowering their tax obligations. I'm not sure what you think the problem is.
That's certainly the preferable solution, I guess it's worth asking if it would work out that way.
So for example, I own 100 houses and I earn £100 per month for each one. (Values for purposes of illustration only!)
Let's assume 10% are empty at one time.
With an income of £9,000 per month I'm paying 20% tax on that, £1800.
Up that tax to £2000 under this scheme, costing me £200 per month.
so do I drop rents by £5 per building which is going to mean my income changes to £9500 minus £1900 tax for a net earnings of £7600
Or do I increase rents by £5 and keep running with 10% empty buildings? Earnings are now £9450 with a tax bill of £2100. Net earnings of £7350 while holding onto hope that I could rent out some of those other empty buildings?
Put simply, if I'm the kind of person who owns a 100 buildings do you imagine my instinctive response is going to be to cut prices or to pass on my costs to tenants?
If you're that kind of person then you're already charging as much as the market will bear. I think you would have an easier time doing what you can to fill the vacancies or just selling the vacant units.
If you own 100buildings, the proper tax burden is that you shouldn't be able to own 100 no matter what the rent would be. The tax burden should be so high that you are losing money for each building regardless of rented status, until you get down to a reasonable number of homes of say 2. And you'll pay a decent amount for that 2nd one if it's in an urban area.
Or they'll just raise rent further like they already do. Landlords already want empty units filled because in their eyes they are losing money on it being empty. They already have incentive to fill the units.
Thinking that'd they'd lower rent to fill more units rather than just raise prices further for current and future tenets to compensate additional expenses is frankily naive.
It's not like landlords are gonna run out of people to charge more money for. It's not like people won't just lower their standard of living further to compensate for the increase like what happens already.
The only solution to high rent and the housing crisis is to loosen zoning laws and allow the building of both more affordable government housing and general housing and apartments in cities and high population areas to have supply meet or exceed the demand. We know from studies and real world examples that this approach works and is very effective.
Imposing a tax on vacant units would make it more risky for potential investors and companies to build more housing and thus the rate and speed of new homes being erected would slow even further due to this tax.
On paper this tax makes sense, but it ignores the reality of how landlords and multinational companies that build houses and apartments currently operate
I get what you're saying. I agree that there's no new tax policy that will fix the landlord problem on its own. Ideally, it would have to be combined with a massive build out of publicly owned housing and supporting infrastructure, especially transit.