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this post was submitted on 16 Jul 2024
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This shit never works out as simply as you expect it to. With any public policy change there are layers and nuance. If you restrict rent increases then every year you're gonna see the majority of landlords including the ones who do not increase rent yearly suddenly change course to always up the rent 5% per year, every year. Otherwise as a member of the ownership class who doesn't increase rent your are losing out on equity compared to those who do. Compound interest never catches up.
If you want to make renting profitable and homeownership obtainable for nearly everyone you need to setup a system where renters gain a share of ownership proportional to the money they put in. Make it so ALL renters eventually own the place they rent if they stay long enough. Ownership increases for every dollar spent towards rent. Evaporate the double dip appreciation for landlords and punish the income so that you gain money but at a slower rate than an index fund.
You also need subsidized lending for individuals who own no home. Possibly make it so 100% of rental income tax goes into a fund that provides mortgages to someone purchasing a primary residence when they do not own any current properties or are selling their primary residence to purchase another one (e.g. moving, not hoarding housing.) Make the application process for these mortgages prioritize families without any owned homes in their direct lineage (e.g. those with parents and children which do not own homes get a higher priority than the kids of wealthy homeowners.)
Something like this can bring homeownership to the masses and bring prices down as investment income from housing is no longer as valuable as other investments. Prices may still stay high, but subsidized mortgages would keep monthly payments affordable for those who qualify while minimizing profitability for hoarders.
Finally if you are still in love with rent control, then do it concurrently with a program like the above. Balance the scales.
Why would someone buy a house so someone else could slowly buy it from them? They would essentially be acting like a bank.
Who keeps up with the house maintenance?
Landlords are unneeded middlemen. A good system doesn't use them.
Your idea is "rent to own".
You can rent to own a Playstation that's 300 dollars for a small monthly price but at the end of the loan you're going to pay 600 dollars total for the Playstation.
Why am I going to go to Best Buy, buy a Playstation for 300, then let Jimmy down the street play with it while he slowly pays me back my 300?
Why am going to buy a house for 100,000 and let Jimmy rent to own it?
600 a month for 15 years. He'd pay for it.
If I put 100k in the S&P500 for 15 years, I'd have 415k.
Would I rather:
A. Help Jimmy get a house
B. Make ~300k for just sitting
If you think landlords are bad you should see how much the bank makes.
My 500k 7.5% mortgage if I only paid the mandatory payment would end up costing me something like 1.6 million dollars. My PITI is something like 4k/mo and only like $500 is principal.
Edit:
Imagine if you can't make your mortgage payment on a home that you will not be living in due to whatever personal reasons you have, so you want to pause payments. Instead of selling the home you choose to rent it out.... barely losing equity thanks to the kind renters who take on the interest and tax payments for you so you don't have to pay.
The renters are not getting a worse deal than buying and they get the benefit of having a home they are gaining equity in. The landlord is not losing the home they otherwise could not afford to keep given whatever factor is going on. (Parents need short term care? traveling? going to college for a year or two? just don't want to work?) Bottom line, it's far more equitable for everybody.
Anything that just rips away equity from those who currently have it is going to be wildly unpopular. In gaming terms, nobody likes nerfs, you need to buff the curve for people who do not have equity. If you are perceived as taking something away it is so hard to convince anybody that the change is for the better or needed.
What you're saying
Say my mortgage is 1k a month.
I can't afford 1k, so I let you move in and pay me "rent"
You pay me 1k each month.
After a year, I kick you out and move back in.
Where'd your 12k go?
Bank going to give 12k in cash to you and increase my mortgage by 12k?
So let's say your mortgage is 1k/mo. We're not talking PITI, just mortgage.
Let's pretend the house is worth $30,000 and the landlord has $7200 in equity at the beginning of the lease (20%.)
Let's also say of that mortgage 700 is interest and 300 is principal. So a renter pays you 1k/mo rent for 12 months. They get 300/mo principal totaling $3,600 after a year.
At this point there are a few different ways of handling it.
Option 1: The tenant is buying debt from the bank with the principal payments over the course of the year. So $3600 of the debt they now own, when you pay the bank the payments go proportionally to the tenant which actively reduces their equity, but they collect all the interest income for the share they own.
Option 2: You could have shares of the home. As money is paid in against principal the tenant gains share of the overall home - so in this case a bit over 10% over the course of the term. Since this is shares as the valuation of the home increases so do the share prices and the typical compound interest applies. This can be very messy because when you want to cash out the principal owner either need to buy you out by taking another mortgage or paying you, but it could be done.
When you factor in things like the appreciation of the home the first option gives the appreciation to the landlord without reducing their mortgage. They would gain in net worth because the home is worth more money, even though they still have a mortgage that hasn't decreased in price.
The second option takes the equity gain away from the landlord proportional to shares owned. Although harder to track it's still possible.
This is ignoring the real world scenario where the mortgage is really only $500/mo for a lot of long time landlords who bought 20+ years ago or refinanced in 2020 and the rent is $2000-3000+++ There would have to be something that takes into account excess paid beyond the mortgage/taxes. This also doesn't make any sense at all if the house is paid off either since there would be only taxes, no mortgage. Obviously there would need to be some nuance in implementing a solution but it's not impossible.
Why the fuck would anyone other than the leeches that feed off of the rest of society by putting a human right behind a pay wall want that?
You need to free your mind of the worm that is capitalism, an entirely artificial construct designed to keep you down, you'd be able to see a significantly brighter future then..
I like the idea of rent to own condos from the federal government. That removes the profit incentive and allows tenants to immediately form a council for their building to manage maintenance and such rather than having a landlord (or 10 who own single units in multiple buildings) run the building council.
It's easy as pie too, federal government buys or builds, (doesn't matter), then divides the cost by the number of units. That number is the magic number at which you own the condo free and clear. Divide the magic number by 30 and you have base rent that must be paid monthly. You can pay more if you want or you can just do the base plus fees set by the building council. If you need to move before 30 years then someone can buy you out of your unit by paying the amount you've already paid or more. Otherwise the government will buy you out and start the process over with the next tenant.
Build enough of these and we can drop an anchor into the housing market that naturally prevents things from going too high. After all why would I mortgage 800k when I can pay half that over 30 years with no interest?