[HN Gopher] Dutch cities want to ban property investors in all n...
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Dutch cities want to ban property investors in all neighborhoods
Author : atombender
Score : 524 points
Date : 2021-09-05 09:31 UTC (13 hours ago)
(HTM) web link (nltimes.nl)
(TXT) w3m dump (nltimes.nl)
| BurningFrog wrote:
| This is a common policy across the world. It is based on flawed
| reasoning, and won't work.
|
| Simply put, housing isn't getting more expensive because
| investors are buying houses. The causation is the opposite:
| Investors are buying housing because its value is consistently
| going up, making it a good investment.
|
| So why _are_ prices going up?
|
| Prices are formed by the forces of supply and demand. In the
| regions I know about, housing supply is severely limited by
| regulations/laws that makes building new housing hard.
| imtringued wrote:
| >Prices are formed by the forces of supply and demand.
|
| Technically the problem is that the supply is permanently
| fixed. There is no force on the supply side.
| sidlls wrote:
| That's a rather extreme response. I don't know what the markets
| are like in the Netherlands, but I can't imagine the dynamics are
| much different from other regions where this sort of issue
| exists. That is, it's a combination of NIMBYism or other supply
| restricting phenomena and a surplus of investors from outside
| these communities with the means to take advantage.
|
| In my area on the Peninsula in the bay area, many years easily
| 25% of the available real estate stock is purchased by foreign
| investors. Forbidding _all_ investors (local or foreign) from
| buying real estate to lease isn 't going to solve the bigger
| problem: a lack of supply. It may help lower home prices into a
| range of affordability for locals (investors and primary
| residence seekers) substantially--which could be a good thing.
| chimen wrote:
| Good. I went to Prague recently (after 10 years) to discover that
| the entire city centre with all of it's businesses is now owned
| by chinese people. A 500ml water costs 10 euros and everything
| seems different, designed to just milk the cash from tourists.
| Had a much better experience 10+ years ago and made quite a few
| local friends.
| acd wrote:
| I think beside limiting property investors, curbing central bank
| zero interest rates will make housing more affordable. Why? Zero
| interest rates drives up all asset prizes including housing.
| Buyers buy housing that they can afford to pay the monthly
| mortgage on. Zero interest rates by central banks undermines the
| UN article 17 human right to own property, instead you rent from
| banks. I argue that there wouldn't be so many property
| speculators if the interest rate weren't set artificially close
| to zero by central banks purchasing bonds.
|
| UN human right of right to own property "Article 17
| Everyone has the right to own property alone as well as in
| association with others."
| rocqua wrote:
| This is stupid.
|
| It bans buying or renting. Our rental market is already very
| distorted because most rentals fall under regulations except for
| people just above modal incomes. That already leaves a gap for
| people not poor enough to be allowed regulated rent, and too poor
| to get an 700 a month mortgage, who are forced to rent at 900 a
| month.
|
| If you want to hurt pure investors, tax un-lived in housing.
|
| But really, we need to kill the mortgage tax credit for any new
| homes. That will reduce the value of land because it offers less
| tax benefits. At the same time, currently interest is low so it
| will barely effect new entrants. The key is to make houses worth
| a bit less. Homeowners are just going to have to suffer a slight
| dip after amazing gains for the last decades.
| gbajson wrote:
| Governments are printing money, inflation is eating savings.
| Properties are safe and easy way to protect money.
|
| When buying properties will be banned, what would you recommend
| as an alternative?
| dudul wrote:
| Gold and guns
| mercy_dude wrote:
| There is a better way - raise the real rate. Cheap loans along
| with endless printing has basically made fiat useless as a medium
| to store value, the only reason fiat exists now is as a medium to
| exchange goods/services. Here the Fed has been buying over 100B
| of mortgage based securities a month. This got to stop. For all
| the talks about Wealth inequality, I don't understand how
| politicians fail to understand this basic thing.
|
| I hope ECB and other central bankers realizes how they are
| fucking up an entire generation before it's too late.Negative
| rates is only going to make things worse.
| pydry wrote:
| This would lead to a steep collapse of property prices and
| force new homeowners who have just scraped together enough for
| a deposit into negative equity. This would drive a _lot_ of
| anger against it (all amplified by the media /ultrawealthy who
| would be furious too) even if it were the right thing to do
| long term.
|
| The only time I could see this happening would be in the case
| the value of the dollar fell off a cliff due to externally
| triggered emergency.
| mercy_dude wrote:
| Yeah this is the narrative that is always played every time
| there is a talk about even slightest increase in interest
| rate. When politicians and news media alike play this
| narrative this gives people signal that house prices can
| never go down. I know a couple who is one layoff away from
| defaulting their mortgage, but they bought a house with
| mortgage 60% of their income since they think housing prices
| can never go down.
|
| Assuming you are able to afford your mortgage in the first
| place and want to live in the house for distant future, why
| is repricing in due to rate change a problem anyway?
| cutler wrote:
| Agreed. I've never understood this assumption that one is
| entitled to get something for nothing merely by virtue of
| owning a house. Investment is just another form of gambling
| dressed up in the garb of respectability..
| mcv wrote:
| I don't think it's an issue of inflation. Inflation has been
| super low for the past decade or more. Everything else is
| cheap, it's just housing that's expensive. It's a combination
| of scarcity and speculation leading to more artificial
| scarcity. Make it less attractive for speculators and build
| more houses.
| birbs wrote:
| Inflation is extremely high: https://www.aei.org/carpe-
| diem/chart-of-the-day-or-century/
| GlennS wrote:
| How do you take "inflation is extremely high" from that
| chart?
|
| 56% over 20 years is 2.25%ish per year.
| pigeonhole123 wrote:
| How is the CPI a useful measure of inflation if it ignores
| the things people actually have to spend money on like
| housing and healthcare?
| em500 wrote:
| It wouldn't be, if it did that. Fortunately it doesn't
| ignore those. In the US CPI calculation, housing has around
| 42% weight, medical care around 9%. Source:
| https://www.bls.gov/cpi/tables/relative-importance/2020.htm
| pigeonhole123 wrote:
| I think this is only rent? Most people don't want to rent
| their whole life in the US
|
| https://www.bls.gov/cpi/factsheets/owners-equivalent-
| rent-an...
| em500 wrote:
| It uses actual rents for renters and owner-equivalent
| rents for owners. This does not assume at all that people
| want to rent their whole life. (The main assumption it
| relies on is that owners do not systematically understate
| what they think their own house could be rented for.)
| pigeonhole123 wrote:
| So as long as the interest rates stay extremely low then
| this hold true?
| imtringued wrote:
| You don't pay for the house. You pay for the mortgage. The
| mortgage is accounted for in the CPI and man gets this
| tiring. The housing component of the CPI has always been 3%
| for decades. It's one of the few things dragging it up to
| 2%.
|
| If you have a higher interest mortgage the value of the
| house goes down but you still have the same monthly
| payment.
| imtringued wrote:
| >There is a better way - raise the real rate.
|
| Ok, you decreased monopoly rents but you also raised the cost
| of everything that isn't a monopoly. You will now pay more
| interest on your car. Companies pay more interest and pass the
| cost of interest onto you through more expensive products and
| services.
|
| The truth is that you didn't even make housing cheaper. You
| still pay $1000 per month for 30 years. Higher interest rates
| just mean more of your money goes to the bank in the form of
| interest payments rather than into home equity.
|
| >Cheap loans along with endless printing has basically made
| fiat useless as a medium to store value,
|
| I don't understand this logic. Fiat currency is created by the
| promise that someone will work for you. If you never redeem
| that promise it is worthless. You cannot store labor the same
| way you can store gold. All saving money does is create room
| for investments today. If those investments never happened then
| you saved for naught. You denied yourself of the value of your
| money and yet you have the audacity to blame others for it.
|
| >I hope ECB and other central bankers realizes how they are
| fucking up an entire generation before it's too late.Negative
| rates is only going to make things worse.
|
| What negative interest rates do is force you to face the fact
| that you are not utilizing the promise and that money, just
| like grain decays over time. You are letting people sit
| unemployed unable to live up to their potential.
|
| What "fucked up" an entire generation is the utilization of
| money as a time machine. Let's imagine a simple money system.
| $1 = 1 pound of grain. The grain standard. Grain decays over
| time. Therefore $1 appreciates exactly at the rate at which
| grain decays. The farmer storing grain has to pay the
| maintenance cost of holding onto it while the person with the
| money has none of the costs. Everyone will start hoarding money
| while they get to watch the real world decay. If you put a
| holding fee onto money that matches the decay rate of grain
| then people will be forced to spend their money on something
| that is more durable than grain like giant pyramids that
| survived for 4000 years.
| wsc981 wrote:
| In The Netherlands I don't think this would make a big
| difference around the major cities as there is a huge housing
| shortage and this will stay the same at least for the next 10
| years, probably more much longer.
| mercy_dude wrote:
| Scarcity was always a problem. Even in 90s and early 00s
| there was a lot of posters about housing shortage. But prices
| we're rather stable. In a healthy housing market, you expect
| the property values to not grow over real interest rate.
| Which was the case back then.
| zihotki wrote:
| The main problem which this won't solve is the lack of space.
| There is a little land in NL so you can't grow endlessly and
| new districts would also put additional burden on
| infrastructure. People want to live close to major transport
| connections and/or big cities. You just can't build more and
| faster without considering the whole picture.
| nmca wrote:
| In the long term, the ethically right answer seems pretty clearly
| to me to be a land value tax [0]. But due to encouragement of
| home ownership [1], that's not going to democratically tenable in
| a lot of countries for 20+ years. Unfortunate situation.
|
| [0] In 1879, a man asked "How come all this new economic
| development and industrialized technology hasn't eliminated
| poverty and oppression?" That man was Henry George, his answer
| came in the form of a book called Progress & Poverty, and this is
| a review of that book -
| https://astralcodexten.substack.com/p/your-book-review-progr...
|
| [1] https://www.economist.com/leaders/2020/01/16/home-
| ownership-...
| [deleted]
| dogma1138 wrote:
| LTV won't work in the UK land ownership is way too concentrated
| and leaseholds give land owners an easy tool to transfer the
| cost to the leaseholders.
|
| London and other metropolitan areas still have a lot of low
| income housing in very high value areas, there are
| current/former council houses in Westminster and Kensington and
| Chelsea for example that sit on land worth billions.
|
| LVT in the UK would likely just increase cost of ownership for
| leaseholders which would make flats in cities even more
| expensive (and since many newly developed terraced, detached
| and townhouses also come as leasehold these days even buying a
| house won't help) and just push for further gentrification as
| housing like this
| https://en.m.wikipedia.org/wiki/Hallfield_Estate would become
| economically non-viable.
| imtringued wrote:
| >LVT in the UK would likely just increase cost of ownership
| for leaseholders which would make flats in cities even more
| expensive
|
| Increasing the cost of ownership makes it more expensive to
| speculate on real estate which would drive prices down. The
| most speculative assets have no maintenance costs.
| ClumsyPilot wrote:
| "leaseholds give land owners an easy tool to transfer the
| cost to the leaseholders"
|
| This relationship has always reminding me of medieval
| surfdom, i think it's deeply unfair and rigged and needs to
| be abolished.
| imtringued wrote:
| https://www.ducksters.com/history/middle_ages_feudal_system
| ....
|
| >Lords and Knights - The lords ran the local manors. They
| also were the king's knights and could be called into
| battle at any moment by their Baron. The lords owned
| everything on their land including the peasants, crops, and
| village.
|
| It was not the king (the government) but the local lord
| (the property owner) that abused his subjects the most.
| dogma1138 wrote:
| It is the UK never really had a "democratization" of land
| ownership like the rest of Europe especially following WW2.
| zhengiszen wrote:
| Thanks for the review it comes like a revelation.
| newswasboring wrote:
| Land ownership tax doesn't work because land is a basic need.
| You have to exist somewhere. The problem isn't ownership of
| land, it's excessive ownership of land. Ownership of land
| beyond need into greed. You can easily design land ownership
| tax like income tax where people who own more pay more. People
| who own enough for their family are not taxed at all and if you
| want more you pay a lot more.
|
| Of course there is the usual issue of the definition of
| "enough" but those kind of questions are solved all the time in
| parliaments. This all or nothing behavior is what harms the
| prospect of land tax.
| imtringued wrote:
| Well, when people talk about wealth taxes those are always
| above a certain threshold. I am perfectly fine with taxing
| excessive ownership of land. We don't need the theoretically
| perfect utopia. We need something that is good enough to give
| us another 80 years of peace.
| refurb wrote:
| It's a nice theory but it would involve tossing people out of
| their homes because they can't afford the tax. If you make an
| exception for them, then the entire system is defunct because
| it'll just be a web of exceptions that just create a "housing
| elite" that is exempt from the rules.
|
| The easier thing is just make is easier to build more housing,
| denser if needed, to fulfill demand.
| merrywhether wrote:
| Who's getting tossed out of homes? If they own any part of
| it, they can sell their land at its new higher value and
| pocket their share of the gains. Then the can either move
| into a nearby newly redeveloped multi-unit building
| (increased efficiency as incentivized by LVT) or they can
| move further out to land with the same low value on which
| they used to live in a detached home.
|
| This same type of thinking drives me crazy in CA where Prop
| 13 exists because someone might have to move because they've
| made a million dollars in house value (simply by existing)
| that they might have to realize.
| refurb wrote:
| You just described someone forced out of their home.
| imtringued wrote:
| Well, you don't have to make "tossing people out of their
| homes" a horrifying experience. If the eviction process on
| your primary residence granted you 3 years to pay the tax
| then it would be exceedingly unlikely that anyone would get
| kicked out because of a sudden real estate boom or bust.
|
| As a concession the debt can be reassessed at any time during
| those 3 years. If there is a boom that makes the tax
| excessive followed by a bust that reduces the value of the
| land by 50% then your tax bill would also go down by 50%.
|
| >The easier thing is just make is easier to build more
| housing, denser if needed, to fulfill demand.
|
| That's the entire goal behind the land value tax.
| rocqua wrote:
| Homeownership is a great ideal. Letting people work towards
| having a place to live without paying rent is great for
| independence.
|
| What is stupid is promoting Homeownership as a personal
| investment for the individual home-owner. A home is already a
| great thing to own financially, because it 'produces' not
| having to pay rent. There is no need to also have it pay 5% a
| year for people who have 100% leverage (which is very common in
| the Netherlands for mortgages).
|
| But politicians get lots of votes by making the current middle
| class richer for owning homes. Nevermind that it is bad long-
| term as people have been saying for the last 20 years.
| refurb wrote:
| In a perfect market where there was always enough housing and
| rental units to supply the demand, rent would just end up
| settling at the same price as owning. See price vs rent
| index.
| wallacoloo wrote:
| Just a note that 100% leverage would mean that you're
| borrowing against 100% of the portion of the asset you bought
| to purchase more of the asset. I.e. you put 50% money down
| and borrowed to buy the other 50%.
|
| A typical 20% down-payment in the US gets you 400% leverage
| (you used your 20% ownership 4 times over in order to
| purchase the other 80%).
|
| 5% down gets you 1900% leverage.
|
| If you put $50000 down (5%) on a $1M home, it rises by 1%
| ($10000) and you sell it, then you just made a 20% return on
| your initial investment. You were leveraged 1900%, and so you
| got a return 1900% above what you would have without
| borrowing any $. Nobody serious advises that kind of leverage
| on any asset _except_ for real-estate, AFAIK.
| saulpw wrote:
| How about a land value tax with an exemption for primary
| residence?
| acomjean wrote:
| We have straight property tax in Cambridge(ma United States).
| If you live if your unit they'll reduce the value that is
| taxed (by about 400000$ Or about $2500)
|
| I'm not sure it's helped, but it might be worse without it.
|
| https://www.cambridgema.gov/departments/finance/propertytaxi.
| ..
| lifty wrote:
| This sounds like a reasonable trade off which doesn't hVe the
| risk of uprooting people from their primary residence.
| R0b0t1 wrote:
| I like it too, but it seems to incentivize sprawl. If
| people attempt to lease land the LVT will be passed to
| their tenants. To avoid paying the LVT, tenants will look
| for new construction.
| lotsofpulp wrote:
| Higher fossil fuel taxes would counter the sprawl
| incentive.
| nextaccountic wrote:
| Isn't this a good thing? The more constructions, the more
| housing.
| imtringued wrote:
| It would certainly be better than nothing. You can then add
| some sort of capital gains on primary residences so taxes
| will be paid on sale not during use.
| murgindrag wrote:
| I'm not sold on the Economist article. I do believe in home
| ownership. The idea that a person spends a lifetime in the same
| home and community is a good one. We're tribal creatures, and
| you want a tribe -- you want people to know their neighbors,
| have community BBQs, and live in real communities. You want
| enough of a vested interest in municipal politics that
| democratic structures work. You want kids growing up with the
| same friends in school.
|
| The flips side can be pretty dark too. For example, there are
| are plenty of stories of poorer communities, especially African
| American tenant ones, being broken up and priced out by
| gentrification of rental markets.
|
| Ownership is less economically efficient, but much more
| resilient. Once a mortgage is paid off, you've always got a
| roof overhead. You just need to earn enough for food, clothing,
| and medicine.
|
| I think the trick would be to implement significant differences
| in land tax based on:
|
| * a home you live in; versus
|
| * an individual investment property (e.g. if you own 2-3
| homes); versus
|
| * an institutional investment property (e.g. investment fund
| owns hundreds of homes)
| rhacker wrote:
| To be 100% completely honest, home building needs to be one
| of our basic skills taught in school. That along with
| chopping down the building codes for small homes to be
| extremely simple. I'm not saying we support shanty homes
| everywhere, but the problem we have is that investors are
| buying up all the perfect homes and most homes are perfect
| homes. Maybe we should have less than perfect homes that
| aren't valued so high and sought out by investors that live
| in China.
| the_gipsy wrote:
| > community BBQs, and live in real communities
|
| The sad reality is that people want their own BBQ and not
| really mix with their neighbours. That's what poor people
| have to put up with, so to speak.
| ClumsyPilot wrote:
| I massively disagree - the reason people want their own BBQ
| is that they dont know, and hence dont trust their
| neighbours. My parents knew ~100 people on the same street,
| these days average person know zero.
| simonh wrote:
| I don't think the article is saying ownership is a bad thing
| in itself, but that the vast resources that have been poured
| into promoting and subsidising it have had some pretty
| undesirable consequences.
|
| Here in the UK we have started imposing tax penalties on buy
| to rent that disincentivizes owning more than one or two
| rental properties. The problem with punishing institutional
| investors is it would take huge amounts on investment out of
| the housing market, just as we have a massive need for more
| housing. We need more houses for people to buy and more new
| housing available to rent. Rental properties by themselves
| aren't a problem, it's taking houses out of individual
| ownership and transferring them to the rental sector that's
| the problem.
| murgindrag wrote:
| Investment in the housing market drives up supply of
| buildings, and drives up the cost of the land underneath
| them. In high-cost markets, most of the cost is the land,
| not development on that land.
|
| You can waive the higher taxes for very high density
| developments. Skyscrapers to require investors, and that is
| beneficial.
| imtringued wrote:
| A progressive land tax would encourage investors to have
| few but high quality/density properties. The tax would be
| something like 2% for the individual home owner with less
| than 1000m^2 of land and 10% for companies owning 5000m^2
| or more land.
| R0b0t1 wrote:
| Home prices are up because there is no supply. There's no
| supply because people can't afford to build houses. The
| issue isn't home ownership, it's the lack of it.
|
| An LVT _might_ work but I think it is only ethical if you
| advantage primary residences with a complete lack of tax.
| simonh wrote:
| It can't simultaneously be true that people are paying
| huge sums fir houses, driving prices up, and they can't
| afford to build new houses. New construction is generally
| much cheaper than buying an existing house. The lack of
| new house building is reluctance to grant planning
| permission due to NIMBYism.
|
| One of the points of an LVT, among other things, is to
| encourage little old ladies living in 4 bedroom houses to
| move somewhere smaller. It's actually a very equitable
| tax that reduces distortions in markets and reduces
| inequality. I highly encourage you to read up on it.
|
| https://en.wikipedia.org/wiki/Land_value_tax
| mattmanser wrote:
| They're not imposing tax penalties, they just got rid of
| the tax _breaks_.
|
| You can no longer claim a mortgage as an 'expense' when
| calculating your profits.
|
| That's not how it works for other companies, loan
| repayments are not classified as an expense to reduce your
| profits.
|
| So now they have to pay the same tax rate as other
| businesses, where before they were getting a huge tax
| break.
| paganel wrote:
| Unfortunately "community barbecues" oftentimes meant
| "barbecues with people who are exactly like me and who think
| exactly like I do", an attitude which has had a pretty
| corrosive effect on democracy in the near past.
| thepangolino wrote:
| Wouldn't a land value tax encourage urban sprawling ?
|
| Current ubran policies in the western world, coupled with the
| normalization of remote working already do this to some extent.
| zeepthee wrote:
| How would it encourage urban sprawling?
| Pet_Ant wrote:
| Preosumably the closer to the city centre the higher the
| per square fot value so to minimise costs you move to the
| edge of town, thus sprawl.
| pydry wrote:
| Or you buy an apartment in a high rise and share the cost
| with the other residents.
|
| It would certainly discourage the building of houses in
| the city centre.
| taffer wrote:
| > It would certainly discourage the building of houses in
| the city centre.
|
| No, that's not how it works. The value of a property is
| made up of the value of the land and the value of the
| buildings on it. If one of these two components is taxed,
| its value is reduced. However, it is important to
| remember that the supply of land is fixed, but the supply
| of buildings is not. If one taxes buildings, as is the
| case with a traditional property tax, construction
| activity is reduced, but if one taxes only land, as is
| the case with a land value tax, construction activity is
| not impeded at all. That's the beauty of a land value
| tax: it doesn't distort anything.
|
| With a property tax, an undeveloped lot in the center of
| town is taxed less than a high-rise. With a land value
| tax, both are taxed at the same rate. Relatively
| speaking, a property tax promotes sprawl, a land value
| tax promotes density.
| pydry wrote:
| That's essentially my point. A house in the city center
| which consumes the same amount of land as an apartment
| block would face the same tax bill.
|
| Who would want that house with that tax bill?
| imtringued wrote:
| The bill is high because people are willing to pay it. If
| the neighboring properties are 3 story multifamily
| buildings then this one will be upgraded to a 3 story
| building as well.
| merrywhether wrote:
| Someone who wants to demolish it and turn it into an
| apartment building! That's literally the point of LVT:
| incentivizing increasingly efficient usage of land in
| high-value areas.
| ForHackernews wrote:
| If you're taxed on the value of the land, rather than the
| value of the property built on top of that land, it
| arguably incentivizes buying super-cheap exurban land and
| planting massive McManisions on it.
|
| Obviously in real life, people care about other things
| besides just pure acreage, but you can see the argument.
| taffer wrote:
| If people only cared about land area, the distinction
| between urban and non-urban land wouldn't even exist.
| What makes urban land special is the infrastructure,
| schools, workplaces, restaurants, cafes, theaters,
| libraries. These things make a city a city. These things
| promote density because people cluster around them.
|
| As I explained in another comment[1], a property tax
| discourages density and encourages sprawl. A land value
| tax, on the other hand, does not have these adverse
| effects on density because it taxes only the fixed supply
| of land, not the variable supply of buildings.
|
| [1] https://news.ycombinator.com/item?id=28423428
| neutronicus wrote:
| Aspiring single-family home dwellers will go farther afield
| in search of less-taxed land
| thriftwy wrote:
| Maybe they will go to smaller metropolitan area instead?
| Lammy wrote:
| Sprawling to where? It's an island
| pydry wrote:
| It would probably encourage less urban sprawl by driving more
| efficient use of city center land and housing.
| R0b0t1 wrote:
| It depends. If owned land is converted for rent then the
| LVT is passed on to the tenant. To avoid paying the LVT
| tenants are incentivized to own, which may imply buying new
| construction.
|
| As population density increases, desirability increases,
| and people may try investing with the goal of renting,
| which with an LVT will more sharply decrease the
| desirability of population density.
| coryrc wrote:
| Currently, the owner could rent out 2 units on the land
| and break even. But really there could be 12 units there.
| LVT raises the taxes as if there were 12 units. This will
| bring the break-even point to renting out 6 units. The
| owner has to either build out the property (increasing
| supply, driving down rental prices), sell to someone who
| will, or lose money.
|
| That's also why there shouldn't be an exemption for first
| home.
|
| Obviously made up those numbers but hope you get the
| idea.
| taffer wrote:
| > To avoid paying the LVT tenants are incentivized to own
|
| LVT is paid by the owner of the land. That is the whole
| point of a LVT, that you cannot avoid it.
| R0b0t1 wrote:
| On paper, yes, but it'll just get passed on to the
| renter.
| imtringued wrote:
| On paper it will be passed to the renter. The owner of
| the land obtains returns through rent seeking.
|
| If he raises his rents to the maximum that renters are
| willing to pay then the value of the land grows and he
| has to pay more land value taxes. He actually cannot make
| land more expensive. He can only make the land as
| expensive as it already is.
|
| Of course, it is entirely possible that the effective tax
| burden on the tenant has risen in the process. For that
| reason I would encourage the government to reduce income
| taxes.
| pydry wrote:
| Renters would pay the same rents they do now.
|
| For some landlords that would cover their tax bill.
| Others not so much.
|
| It would precipitate a collapse in property values, but
| not a rise in rents.
| R0b0t1 wrote:
| I must sincerely ask you if you read my original comment
| and the person I am replying to:
|
| As population density increases, desirability increases,
| and people may try investing with the goal of renting,
| which with an LVT will more sharply decrease the
| desirability of population density.
|
| An LVT can incentivize sprawl because all else equal the
| LVT would ultimately be passed on to renters.
| taffer wrote:
| On the contrary, a land value tax is often proposed to
| discourage sprawl. Since a land value tax is the same whether
| you leave a lot vacant or build a single family home or a
| multi family home, it encourages density and leads to less
| sprawl.
| inter_netuser wrote:
| how is land value tax any different from a property tax that
| all homeowners already pay?
|
| If anything, it might end up being lower tax on residential
| housing, and much higher on commercial/retail.
| oftenwrong wrote:
| Property tax increases when you improve the property, and
| land value tax does not. Therefore, property tax creates a
| disincentive to improve property, and land value tax creates
| an incentive to improve property.
| taffer wrote:
| In contrast to the property tax, the land value tax only
| taxes the value of the land, not the value of the buildings.
| A land value tax is always the same regardless of whether the
| land is undeveloped, a single-family house or an apartment
| building. A property tax, on the other hand, encourages the
| former and discourages the latter. A property tax encourages
| urban sprawl, a land value tax does not.
| ChrisLomont wrote:
| So they want to make renting impossible? That surely won't help
| low income people.
| lifty wrote:
| The Dutch system caters for that through the social housing
| system. There are special companies that get permits to own
| houses and rent them at cheap prices for disadvantaged groups.
| ChrisLomont wrote:
| Ah, so a government monopoly on a common part of markets.
| Usually such action has downsides, in the same way rent
| controls end up hurting renters.
| ehou wrote:
| In theory you are right. In practice this part of the system
| is having problems too: - people who used
| to move on to a larger house stay because of the increased
| costs - older houses are broken down and are replaced
| by newer ones ... but due to building regulations fewer are
| build at the same place - due to stagnation in
| outflow and decreased number of houses the waiting time for
| getting a "social house" is increased by a ridiculous amount.
| In Eindhoven it is more than 10 years - in theory. But due to
| rules about preferred placement it's often way more.
| alexbiet wrote:
| The intervention is late, yet much needed. It's time to create
| some rules for the greedy bankers too, they have been inflating
| the housing bubble with massive amounts cheap debt for far too
| long. Can't find a decent property for under EUR500K on the Dutch
| market. And bear in mind not everyone has Tech salaries; you have
| teachers, nurses, drivers, etc. on ~ EUR20K - EUR25K per annum
| before taxes. They would be homeless without social housing or
| homes passed on through generations.
|
| Dutch properties listed for EUR350K-EUR400k are sold for +EUR50K
| to +EUR100K OVER the asking price. To complete the property sale
| prepare to put another EUR15K-EUR20K on the table for various
| fees, taxes and middlemen. Unless you are a millionaire or be
| willing to go deep into debt for 30 years and obliterate most of
| your savings, sadly you have no chance at purchasing a home in
| the Netherlands.
|
| A home is a basic human utility (shelter), not a pump and dump
| investment scheme. Making standard homes so expensive that most
| people cannot afford is completely wrong and goes against
| society. Property investors have many other options such as
| investing in new property development, hotels for students, the
| stock market, new businesses, Bitcoin, etc. Heck, it's time to
| diversify.
| tmnvix wrote:
| The issue of housing affordability comes up a lot on HN and the
| discussion often turns to a shortage of supply.
|
| Often overlooked is the demand side of the supply and demand
| equation. From my perspective (mostly familiar with the NZ/AU
| markets), this is where the real problem lies.
|
| Statistics New Zealand have collected data on the total number of
| private residences and the total number of households since the
| mid-90s. The difference between the two has almost doubled to
| around 7.5% nationally. There are substantially more empty or
| under-utilised residences in a time where every politician is
| telling us that building more houses will fix the problem. It
| won't. At best it will alleviate the problem.
|
| Prosper Australia's Speculative Vacancies Report [0] (looking at
| water usage to determine under-utilised properties) suggests
| areas with high vacancy rates in Melbourne correlate with areas
| where capital gains (i.e. percentage price increases) are
| greatest. This is the opposite of what you would intuitively
| expect in a naive supply and demand equation - desirable areas
| have higher vacancy rates, even approaching 20% by their
| reckoning.
|
| A study in the UK [1] using council data found that high property
| prices correlate strongly with what the study refers to as 'low
| use properties' (LUPs).
|
| I wouldn't be at all surprised if the situation is the same in
| the Netherlands.
|
| All of this suggests that demand for investment, not demand for
| housing is driving prices up. Zoning restrictions and other
| regulations do play a part, but I think in many cases their
| influence on the larger picture is overstated. Cheap loans,
| leverage, and favourable taxes make property a good investment.
|
| The only solution is to make property investment less attractive.
| A land value tax - though politically difficult - seems to me to
| be a good option.
|
| [0] https://www.prosper.org.au/wp-
| content/uploads/2019/04/Specul... [1]
| https://theodi.org/event/friday-lunchtime-lecture-empty-home...
| option wrote:
| why ban? why not tax more and/or restrict it to, say 10% of all
| properties?
| ralfn wrote:
| I'm slightly annoyed with all the UK examples. This is about the
| Netherlands.
|
| The Dutch housing bubble consists of 4 factors:
|
| - interest rate on mortgages has been tax deductible
|
| - new developments are limited due to environmental
| considerations
|
| - it's the safest "on the books" wealth storage in all of Europe
| (it has been a good investment since the 16th century)
|
| - the Netherlands outclasses it's direct neighbours in quality of
| life and urbanisation. It's #1 best location in the world to
| raise children. This leads to many many people wanting to move to
| the Netherlands. They are not coming for the jobs or our great
| personalities (sarcasm) they come for the nice living conditions,
| the great bicycle and public transit infrastructure. The great
| roads. The good education. The livability of our towns and
| cities. And we can't really scale it up further. It's all of the
| country already. You can be in the middle of nowhere in Frisia
| and jump on a lightrail or see a proper safe bike detour due to
| some new construction. From small suburbia to big inner cities.
| We really need Germany, Belgium and Denmark to step their game
| up. Release some of the pressure. (PS. Denmark is actually
| stepping up and will get there soon)
| Flatcircle wrote:
| They need to do this in most big cities TBH
| supperburg wrote:
| I can't read a clickbait article. It reminds me of when some
| Swiss people wanted to use their power of direct democracy to put
| a cap on CEO pay. The Swiss were smart enough to vote it down. If
| every country had such a system, the world would quickly burst
| into flames. And here we have some Dutch people who want to
| nationalize housing development. Because without private
| investors, there will be nobody else besides the government to
| develop housing. The dutch and their government are exceptional
| enough to make it work I would imagine. But a lesser government
| would quickly turn nationalized housing into a disaster.
|
| These people are angry at housing prices. Just wait a while
| longer and the housing investors will all be experiencing
| something much more painful than a government buyout and your
| houses will be quite affordable. That the beauty of a free
| market.
| morpheos137 wrote:
| The spirit of the idea makes sense but maybe not the
| implementation. Homes should be occupied. I don't think a ban is
| necessarily the right approach. Have a high vacancy tax.
|
| The way houses have been turned into a speculatively appreciating
| asset in much the world is absurd.
| sega_sai wrote:
| I think I mostly agree with this idea, but while removing pure
| investors from the market may offer some (or significant) help,
| however it still does not solve the mismatch between supply and
| demand. I think the removal of investors will lower the demand,
| but I think the mismatch will still exist in many places. And
| proposing solutions for that is essential, i.e. either building
| more or making it easier to work remotely etc.
| rusteh1 wrote:
| I don't understand how this would work. How do people rent?
| Obviously many people can't or do not wish to own their house for
| any number of reasons. Who will own houses that are rented? I
| used to live in Amsterdam as an expat, and rented from a landlord
| who owned several homes in Amsterdam. Would she not be able to
| own and rent these homes under this scheme?
|
| The social housing system seemed to be abused when I was there. I
| had a number of Dutch friends still living in social housing
| places they'd rented as students on very low incomes, and were
| still renting 10 years later. For the same 300 euro per month,
| when they were now earning 6-7000 euro/month. I could never
| understand why this wasn't means tested continually.
| em500 wrote:
| > I could never understand why this wasn't means tested
| continually.
|
| They've started some degree of means testing a few years ago:
| the maximum allowed rent increase on social/rent-controlled
| houses can now depend on income. This was controversial
| legislation for privacy reasons (it involves giving landlords
| information about tenant incomes every year).
| kingludite wrote:
| Oh, I missed that one. It seems to me that income tax based
| on rent would be more privacy preserving.
| TomSwirly wrote:
| > Obviously many people can't or do not wish to own their house
| for any number of reasons
|
| "Those reasons" being that the price of real estate in
| Amsterdam has grown exponentially in recent years.
|
| Some large but unknown number of apartments here have vanished
| into private investments where no one lives or AirBNB etc where
| no one lives for more than a few days.
|
| If houses in Amsterdam were reserved for people _living_ in
| Amsterdam, there would be a significant increase in supply, and
| therefore a significant decrease in prices, which right now,
| are such that your average Amsterdam worker can't live here.
|
| > The social housing system seemed to be abused when I was
| there.
|
| Still is, but I see this as rational calculation on the part of
| the Gemeente (municipality, these are much more powerful here).
|
| Those apartments aren't palatial. Most of the time, people just
| naturally move out, maybe a few years late, but why force
| people onto the street when they're just getting started?
|
| Some number of people do go on for years, but they calculate
| that it's better to have a more relaxed system, not to cause
| grief by going after a few freeloaders, and to spend their
| efforts on building brand-new public housing.
|
| ---
|
| I had to get over 30 years of NYC living when I moved here. But
| the Gemeente is pretty smart. There's a reason for most
| everything, often a good reason, and they are constantly
| tuning.
|
| Sure, I have complaints, but generally if I wonder why
| something is there or what's going to happen in terms of public
| works, I say, "What would a competent person do?" That almost
| never worked in NYC.
|
| ----
|
| Did you know they're talking about banning cruise ships from
| part of the river IJ, raising the river bed there by 4 meters
| so they can put a bike path underneath it? And by gum, they
| might just do that.
| IkmoIkmo wrote:
| This is one of those terribly myopic and symbolic policies that
| the Netherlands (despite generally one of the best governed
| countries in the world) keeps falling for.
|
| Studies have shown over and over again that investors aren't
| causing the price increases in the Netherlands. Prices won't
| improve much.
|
| Renting is going to take a beating, which is already an
| extremely small sector in the Netherlands, among the smallest
| in Europe. Remaining rental stock will be priced like crazy,
| pushing everyone desperately into a decision to buy. Due to
| systemic shortages that's not possible, exacerbating the gap
| between haves (who bought) and have-nots (who must keep
| renting).
|
| Various studies have also shown a rental market is extremely
| important for labour mobility. Transient workers can't just
| move cities/regions in pursuit of jobs, when the rental market
| is completely destroyed and the only alternative is to buy a
| home and be stuck to that location for years (due to the
| friction and transaction costs of buying over renting).
|
| > Would she not be able to own and rent these homes under this
| scheme?
|
| She would, but she'd be unable to buy more off the market to
| rent out, unless they were already buy-to-let stock previously.
|
| > I could never understand why this wasn't means tested
| continually.
|
| Me neither. It seems like the least controversial thing that
| the left and the right should have agreement over: rich people
| not getting subsidised social housing. Things are getting
| better though, there's now means testing and accelerated rental
| price increases (up to a maximum) if your income is assessed as
| too high. But the new policy still way, way too generous to a
| class of rich people, while there's poor people waiting in line
| for 10 years in Amsterdam.
| colechristensen wrote:
| So the housing market is so inefficient that removing a
| significant source of demand won't change prices?
|
| That is an exceptional claim that requires exceptional
| evidence.
| IkmoIkmo wrote:
| No, that's not the claim. There's waterbed effects. Buy-to-
| let is done for the purpose of renting. If you take that
| rental supply away, rental prices go up, and demand for
| homes go up. Taking away buy-to-let demand thereby creates
| other demand that buy-to-let was supplying. You're just
| replacing the demand, not removing it.
| skybrian wrote:
| Could you spell out why this doesn't just move demand
| around? Aren't the same number of people as before
| looking for a place to live?
|
| (I also don't know what you mean by "waterbed.")
| missedthecue wrote:
| New Zealand banned foreign buyers a couple years ago and
| house prices are up 20-50% nationwide since then.
|
| https://i.stuff.co.nz/life-style/homed/119636052/foreign-
| buy...
|
| The problem is that people chronically overestimate the
| number of foreign buyers in the market. I can't find data
| for the Netherlands online, but for other western nations,
| it is around four or five percent of demand. Removing that
| will have essentially no noticable impact on housing prices
| as NZ has learned.
|
| The advantage of a foreign ban is political in nature.
| Foreigners can't vote in local elections, so politicians
| lose very little, and the actual electorate is satisfied
| that government is 'doing something' about the problem.
|
| It's a no lose situation for the politician, but at best it
| does nothing to reign in the issue of housing costs, and at
| worst it fans the flames of xenophobia.
| yread wrote:
| Foreign investors account for more than half of total
| real estate investment flows in the Netherlands, see page
| 8
|
| https://www.bouwinvest.nl/media/4305/bouwinvest-dutch-
| real-e...
| missedthecue wrote:
| That is real estate investment flow. That's not the same
| thing as housing. The graph you linked shows the majority
| of the investment going into things like office space,
| industrial real estate, retail, hotels, healthcare,
| etc...
| colechristensen wrote:
| Foreign buyers isn't generally a problem on a national
| level but on a city or neighborhood level where specific
| areas are targets.
| missedthecue wrote:
| Even still, home prices have risen the fastest in
| Auckland.
| berkes wrote:
| As above, you are presenting as a fact that investors aren't
| causing increasing prices. And as above, that is both uncited
| and, at the very least, a highly debatable 'fact'.
|
| Even if not the only cause (is there ever just one isolated
| cause in economics), investing certainly is a big part.
| speleding wrote:
| Basic economic theory says that the price is determined by
| supply and demand. Investors buying house does not affect
| supply or demand, since they will simply rent out the
| house.
|
| If you claim that investors are causing a significant price
| increase then I think onus would be on you to cite a
| source.
| gpvos wrote:
| Means testing would force medium-rich people to live on the
| streets (or with their parents), since there are no rental
| houses available between 700 and 1200 euro/month (that is,
| between social housing and the liberalized sector), and not
| all of them will be able to buy a home with the current
| prices.
| DoubleDerper wrote:
| "Studies have shown over and over again that investors aren't
| causing the price increases in the Netherlands"
|
| Source(s), please.
| gruez wrote:
| Sibling comment:
| https://news.ycombinator.com/item?id=28425948
| luckylion wrote:
| > It seems like the least controversial thing that the left
| and the right should have agreement over: rich people not
| getting subsidised social housing.
|
| The argument I've heard in Germany is that it's a good idea
| to have more socially mixed housing projects, so people who
| moved in as students are allowed to stay when they work full
| time. Initially they had to pay an extra fee
| ("Fehlbelegungsabgabe" = erroneous occupancy fee, but even
| with that it was much cheaper than regular housing), which
| was removed at some point.
| jenscow wrote:
| I live in social housing (in the UK), and could easily afford
| to buy or rent non-social... and I was already in that
| situation when my current tenancy started.
|
| You could say I abuse it, and I agree in principal. However,
| I'm only abusing it because social housing is scarce. The
| solution is to build more, and I do my bit by voting for a
| government that would probably do that.
|
| If they ever decided to make it means tested, and my tenancy
| was at risk, I would just buy the house.
| IkmoIkmo wrote:
| Making use of any scarce resource intended for the poor,
| while you're rich, because it's so scarce, is beyond
| backwards... I have trouble being generous and playing
| devil's advocate because I simply can't see the argument
| you're making.
| jenscow wrote:
| OK, I worded that very badly. I'm not using it _because_
| they 're scarce. I mean to say:
|
| _The reason someone could say I 'm "abusing" it, is
| because they're scarce._
|
| They shouldn't be scarce, and they're not intended for just
| poor people.
|
| To be clear, I'm not here for financial reasons. In fact, I
| would not object to paying more, if it meant putting more
| in the pot for poorer households to benefit from.
| Yaa101 wrote:
| We had housing cooperation's for a century until they were
| forced by consecutive right wing governments to sell their
| houses, and thus ruining a system that was well working, except
| for rich friends of the right wing government to speculate with
| the housing system, which is taking place now.
| kingludite wrote:
| And before that we had _woningbouw verenigingen_. Non profits
| ran by their tenants. Something like: God fearing church
| goers wouldn 't stand for hard working newly wed couples not
| getting a home.
| Yaa101 wrote:
| We are talking about the same... I said cooperation's, not
| corporations.
| imtringued wrote:
| One of the dumbest things to do with government owned land is
| to sell it. You get a quick injection of cash and then the
| money runs out just as quickly. Meanwhile the land keeps
| going up in value forcing the government to subsidize housing
| for low income earners. If the government kept the land it
| could lease it out at reasonable rates and have an ongoing
| income stream.
| user568439 wrote:
| I guess this is only for new sales. The point is that there is
| plenty of people wanting to buy a home in Netherlands, they
| just can't pay the same price as investors. With this law the
| seller will have to lower the price till some person who wants
| to live there can afford it
| arp242 wrote:
| This is called _scheefwonen_ - which roughly translates to
| "crooked living" - and has been a point of attention for
| several decades at least, more or less as long as I can
| remember.
|
| It's a bit of a difficult problem, because you don't really
| want to kick people out of their house just because they have a
| better-paying job, and especially in the current climate these
| people don't really have anywhere to go; EUR7k people will
| probably manage, but EUR4k/month will have a harder time
| finding something affordable.
| IkmoIkmo wrote:
| I agree that evictions is an extreme measure and to be used
| as a last resort. I think it should be part of the policy
| instruments to be used, under the right circumstances. e.g.
| if you make 1.5x the wage that would give you a right to a
| social home, averaged over 3 years, then you get a 2 year
| period to move out.
|
| That means you won't move out until 5 years after you've
| started earning more, and if your earnings were temporarily
| high, you get to stay. But if you're consistently earning a
| ton, you have to leave.
|
| That's not so crazy considering that there's people who're
| low-income on a 10y waiting list for the home you'd be
| occupying, there has to be a mechanism that makes you have to
| leave. Yes it's hard to find something great at 3-4k, but
| it's even harder for someone at 2k who's 'spot' you're
| occupying. That could be limited to 5 years.
|
| Everyone has a hard time finding a place, but why are some
| rich getting subsidised indefinitely at the expense of some
| poor?
|
| But apart from evictions, I've never understood why we can't
| simply have dynamic rental rates adjusted to the market rate.
| I know people who live in Zuid for 500 a month in a home
| that's 1500 market rate, and their household income is 3x the
| average. Why can they not be made to pay 1500 to the social
| housing association? When they move out, the home reverts
| back to the subsidised rate for a low-income family.
|
| I understand this can't be done on old contracts with no
| contractual clauses that make this possible, contracts are
| contracts after all. But we've had this situation for many
| years, and new contracts still allow the possibility of
| consequence-free scheefwonen. That's pretty absurd to me.
| 734129837261 wrote:
| Designations. That's how. Some houses are built and intended to
| be rented out to people. These houses are constructed entirely
| by companies (or people) for that purpose alone.
|
| Other houses are meant to be for purchase, and purchase only.
| If you purchase a house like this and then rent it out, that
| should be considered breaking the intended designation.
|
| So if you as an individual want to own multiple houses to rent
| out, you need to find houses with that designation and that are
| for sale. Alternatively, you need to find ground with the
| "rental housing"-designation and build a house or multiple
| houses on there.
|
| You can do this in a collective of individuals, too.
|
| And people who currently own multiple houses that were not
| meant to be rented out (but are rented out to other people)
| would need, by law, to either sell those properties (the
| current renter should get the first option on the house's
| current market value price).
|
| And honestly, I feel that the people renting houses that were
| never meant for rental should get a discount. And that discount
| should come out of the pockets of the government.
|
| And yes, I'm a Dutch citizen. I know that means my tax money is
| going to help these people buy their houses a little cheaper at
| my expense. I'm fine with that as it would create a healthier
| housing market for everyone. That's exactly what my tax money
| is for.
| TacticalCoder wrote:
| > These houses are constructed entirely by companies (or
| people) for that purpose alone.
|
| So private companies are allowed to engage in rent-seeking
| behavior but individuals aren't?
| Ensorceled wrote:
| What individuals are you talking about that are not covered
| by '(or people)'?
| 734129837261 wrote:
| People can make companies. You know that, right?
| IkmoIkmo wrote:
| > And people who currently own multiple houses that were not
| meant to be rented out (but are rented out to other people)
| would need, by law, to either sell those properties (the
| current renter should get the first option on the house's
| current market value price).
|
| What is the 'would need' referring to, your ideal situation,
| current law, or proposed law? If it's any of the last two, I
| don't think you're correct but I'd be happy to read any
| references you may have to substantiate this.
| rusteh1 wrote:
| Thanks. What if I purchase a home, to live in. Then I take a
| job overseas and move for 2-3 years. Must I sell the house
| rather than rent it out on a short term basis?
| IkmoIkmo wrote:
| No.
|
| For homes purchased after January 1st, you can still get a
| license to temporary rent out the home. But you'll need to
| have lived in the home yourself for at least 1 year.
| Temporary rentals can be done for 2 years at the moment,
| and extended once more, I assume the same would apply under
| the new law. So the 2-3 years could be covered.
|
| Existing ownership isn't affected, as far as I know. This
| only would apply to new transactions.
| winkelwagen wrote:
| There are special rules for that specific scenarios. As
| long if you don't live in the Netherlands yourself and it
| is the only property you own
| ponow wrote:
| Markets don't need exceptions, they adapt. With
| property/price/rent controls, it comes down to a
| committee of "experts" or it becomes effectively closer
| to community property with the tragedy of the commons.
| IMO, reduce the restrictions on new development and
| creative use, e.g., by cutting back on zoning to allow
| higher density development and reduce the ability of
| neighbors to stop development of neighbor properties (due
| to aesthetic or other concerns). Building codes and
| regulations shouldn't protect the consumer from himself,
| but rather protect the physical safety of adjacent
| properties. But it's too often used as an excuse to limit
| competition and preserve the privilege of the early
| entrants.
|
| We also need to acknowledge that cities inevitably
| increase in density, which necessarily means apartments,
| etc. Protecting single-family residences near city
| centers is a subsidy to them that we should not pay any
| longer.
| einpoklum wrote:
| "Adapt"? They've "adapted" by milking Amsterdam tenants
| dry for many years already.
|
| And the "tragedy of the commons" is essentially a red-
| Herring fallacy. It is perhaps valid at the most in a
| free-for-all rather than a commons. Where you have a
| commons, you have relations between the users of the
| common resources, and social structures for decision
| making about sharing and use, which prevent depletion of
| resources.
|
| See also:
|
| https://theanarchistlibrary.org/library/the-anarchist-
| faq-ed...
| vwoolf wrote:
| So the solution to government interference in the market (by
| preventing adequate building from occurring) is yet more
| interference, and that interference will by fiat somehow
| lower prices, but without dramatically increasing supply.
|
| What could possibly go wrong??
| 734129837261 wrote:
| The government isn't preventing anything, it's a free
| market. The only thing that needs to change is to prevent
| companies from buying houses meant to be sold for ownership
| who then rent them out instead. That is working against the
| people. The law would work for the people.
| reacharavindh wrote:
| I may be biased because I moved recently to the Netherlands and
| looking to buy our first home and stop paying rent.
|
| But, the house prices are crazy out here. I work in tech and my
| wife is an academic. We earn what is definitely above market
| average, and it looks like we cannot afford most houses we find
| in the area where we are renting now(well outside Amsterdam).
|
| At this juncture, at least temporarily, investors who are looking
| to buy up properties and make money out of it need to be stopped
| by regulations. This is for the greater good. Investors can
| always find other avenues to invest. But, people need reasonable
| housing prices.
| vishnugupta wrote:
| While buying the house in early 2019 I consulted Woz portal and
| saw that the price (of the house I was planning to buy) had
| increased 300% over ~8 year period. A constant lunch table
| discussion used to be how crazy housing prices were even back
| in 2018-19. So the market was already hot even before the
| pandemic, but now it's reached mania levels!
| akudha wrote:
| This is becoming a problem in farmlands too. Young farmers are
| unable to buy farmlands, they are forced to lease from huge
| landowners. It is zero risk investment for these big
| landowners. Farmers do all the work, put in all the investment
| like tools (except the land) - landowners simply collect rent.
| Some of these people own hundreds of thousands of acres (Bill
| Gates, for example).
|
| This is an ugly situation. This is not sustainable. At some
| point, we'd have a few hundred super wealthy
| people/corporations owning much of the desirable land and
| property. Everyone else would become just a peasant/tenant
| living in tiny apartments working all our lives just so we can
| have a tiny roof over our heads. This isn't hyperbole - one
| look at BlackRock should give us an idea in the direction this
| problem is going.
| Aeolun wrote:
| Oh, I know! We can give them the land for free, but instead
| we get to collect a tax on their produce. Of course they
| cannot leave this arrangement without immediately paying for
| all the land.
|
| I think we can call these people serfs.
| imtringued wrote:
| https://news.ycombinator.com/item?id=28424989
| cutler wrote:
| The same applies to the whole rented sector. We're all
| serfs.
| xunn0026 wrote:
| Luckily Apple only wants 30% for selling an app your
| customer cannot otherwise load on their phone or table.
| arp242 wrote:
| This kind of system was sustained for thousands of years in
| many different cultures, so I wouldn't exactly call it
| unsustainable. I would very much call it ugly and undesirable
| though.
|
| My point here is that there is no guarantee that this will be
| solved just because it's "unsustainable". I don't understand
| why people aren't literally protesting on the street; we did
| so in the 70s and 80s ("geen woning geen kroning") and the
| situation was a lot less bad back then.
| agilob wrote:
| I'm in Wales and house prices in Amsterdam look incredibly low
| for better build quality and higher living standard.
| charlesdm wrote:
| The result of years of low interest rate policies.
| einpoklum wrote:
| Title is inaccurate. It should read:
|
| > Dutch cities want to ban property investors from buying some
| kinds of apartments in some or all neighborhoods
|
| I'm all for this. However, it is insufficient, because small-
| scale property investors may not be considered as such, but as
| buying an apartment for a family member or a friend etc. Or they
| will just "lend" money to someone to buy the apartment.
|
| Generally, the situation in which individuals have full ownership
| of apartments or houses other than those they live in is
| problematic.
| macawfish wrote:
| Refreshing to see this conversation play out while the silicon
| valley neoliberals are fast asleep. I want this in my city.
| People in my life are _struggling_ to keep up with housing
| prices. It 's obscene.
| bamboozled wrote:
| Wish they'd do this in the town I'm residing, so many houses are
| vacant, it's really hard to find something to buy, its very
| annoying.
| timwaagh wrote:
| I'm very unhappy about this. It won't be possible to buy a
| reasonable retirement income anymore and all the profits of the
| property sector will flow toward those deep pocketed property
| firms who have the right political connections to get permits. I
| think the governments just want to work us till we either reach a
| much extended retirement age or die from depression (which you
| can be euthanized for here). I'll be fighting to get a second
| property in the coming months to rent out.
| belter wrote:
| If you are buying to rent in the Dutch market, and you are not
| part of the royal family, or a Black Rock fund you are making a
| big mistake. You are in a legal environment where you will not
| be able to evict a non paying tenant for several years. If
| there are children in the picture or a divorce you will have
| even more serious problems. The Belastingen will come after
| your earnings plus, you are likely to be victim of a legal
| environment biased to puritanical inspired laws, that try to
| hit back at anybody trying to get ahead of their neighbors in
| the same street. In other words, there are strong forces to
| make you get back to conformity, on what is a very homogeneous
| society. You will be taking on a huge amount of risk that
| normally only professional well funded investors are able to
| weather.
| TacticalMalice wrote:
| Eviction is already possible after 3 months of not paying
| rents (and sometimes after 2 months if there's a history of
| non-payment). The landlord has to get a court order, which is
| commonly granted.
|
| Minors will be placed in foster care if they cannot be placed
| elsewhere.
|
| Taxes on earnings depend on how you structure your work. They
| are usually in "box 3" where taxes are based on fictitious
| returns on investment as a percentage of total wealth and
| (fictitious) asset class.
|
| That said, law-makers are a significant source of uncertainty
| and risk.
| belter wrote:
| Well not at the moment to start with:
|
| "Government rules that tenants cannot be evicted during
| corona crisis"
|
| https://www.iamexpat.nl/housing/real-estate-
| news/government-...
|
| Also tenants can sign contract with you ( as landlord) and
| immediately go to the Huur Commissie and argue their rent
| is too high. So it will be lowered if they first signed a
| different contract with the landlord.
|
| https://www.huurcommissie.nl/
|
| Concerning what you seem to describe as a very smooth
| process I have strong doubts. If a tenant lawyer argues
| there is a temporary situation with the family, children
| take priority etc...A Dutch judge will not ignore all that,
| and simply take the major step of putting children under
| foster care, if the landlord does not need the house to
| live there himself. Specially taking into account the dire
| situation of foster care in the Netherlands:
|
| "The decline in foster parents means that the Netherlands
| is facing a shortage. According to Foster Care Netherlands,
| 3,500 foster families are needed each year. Last year there
| were only 2,566. Currently over 700 children are waiting
| for a place in a family..."
|
| https://nltimes.nl/2020/01/09/many-foster-parents-quit-
| lack-...
|
| I know a landlord who waited 2 years. Just a data point I
| would agree, but I strongly doubt its the smooth process
| you describe.
| TacticalMalice wrote:
| > "Government rules that tenants cannot be evicted during
| corona crisis"
|
| The above is an agreement between several housing
| cooperations/companies and the ministry. It is not a law
| and eviction orders due to backpay have still been
| granted after June 2020, when access to the courts opened
| up again for these cases.
|
| And yes, judges will consider the interests of all
| parties. In the case where a judge won't grant an
| eviction, the tenant will be ordered to pay missed rent.
|
| > Also tenants can sign contract with you ( as landlord)
| and immediately go to the Huur Commissie and argue their
| rent is too high. So it will be lowered if they first
| signed a different contract with the landlord.
|
| This is only possible for social housing (based on the
| point system), so this shouldn't come as a surprise for
| the landlord. This is also a reason to avoid renting out
| social housing.
|
| The only thing during COVID that's affecting most
| landlords is that rent increase is maximized. Considering
| that employees are supported via their employer's NOW-
| subsidy, I don't buy the argument for this maximization
| for people that still have jobs. Another benefit to
| offering only temporary contracts.
|
| > I know a landlord who waited 2 years.
|
| Waited two years before getting an order, or only
| successfully getting an order after two years?
| debarshri wrote:
| This move is well appreciated. Currently, I own a house in
| oudegracht, Utrecht. It is very terrible situation here. All the
| apartments in and around me are all the time rented out as
| airbnb. During peak of pandemic, it was pretty much a ghost town.
|
| The housing prices have skyrocketed due to covid, but all these
| all-cash investor are jumping and swooping in the apartments,
| holding it for a while and passing it to the next person. Some of
| the people, even have to pay around 50k euros over the asking
| price to buy it.
|
| Because of the rising prices, the annual property tax to be paid
| also increases dramatically. People blame the low interest rate,
| but based on what I am seeing and heard from other people, it is
| investors all over the globe investing in properties in
| Amsterdam, Utrecht, Rotterdam etc.
| imtringued wrote:
| It's not just the investors. It's literally everyone.
| chii wrote:
| > People blame the low interest rate
|
| it is the interest rate - because the price of property is
| related to the cost of money (aka, interest rate).
|
| Investors are merely looking for returns, with as low risk as
| possible. When property is priced low compared to the rate, you
| must expect this to happen.
| imtringued wrote:
| >it is the interest rate - because the price of property is
| related to the cost of money (aka, interest rate).
|
| You can manufacture more cars and houses as you get more
| money. It clearly is related to the fact that land yields a
| risk free return regardless of what you use to price it.
|
| In that sense money and land is an NRA. A non reproducible
| asset. Low interest rates break the NRA property of money
| which is perfectly ok if inflation is also low. Rather than
| holding onto money unproductively they simply switch to
| holding land unproductively. The solution is to introduce a
| holding fee onto land.
| IkmoIkmo wrote:
| > All the apartments in and around me are all the time rented
| out as airbnb. During peak of pandemic, it was pretty much a
| ghost town.
|
| What you mention around Airbnb shouldn't be addressed through a
| buy-to-let ban, but an airbnb or short-term rental ban, which
| already exists in various forms. If there's problems with
| enforcement, address that. The ghost-town you described
| happened regardless of airbnb but due to literal lockdown
| measures that affected everyone, in particular the local
| population, you don't see the effect anymore despite tourists
| still largely staying away.
|
| > Because of the rising prices, the annual property tax to be
| paid also increases dramatically.
|
| No that's not correct. Typically Dutch municipalities tax based
| on what they need. If they need 1 million, they'd charge 1% of
| 100 in property values, or 2% of 50 million in property values.
| Price increases don't translate into higher property taxes.
|
| You can see a video of how Utrecht does it, on their own
| website: https://bghu.nl/belasting/ozb
|
| In fact, in Utrecht property tax rates decreased by about 22%
| in the past 6 years, due to increasing home prices.
|
| Of course there is inflation, in absolute terms the number is
| increasing. But what you're describing isn't happening. I own a
| home in Utrecht, too.
|
| Many studies in the Netherlands have shown investors aren't the
| cause of the price increases, I don't think this policy will
| solve things. It'll just relieve some pressure on the buying
| market and put extra pressure on the rental market.
|
| > People blame the low interest rate
|
| Yes, these people are economists, including the Dutch Central
| Bank, the AFM, every bank, every professor, in countless
| studies. The effect is clear and obvious.
| rhacker wrote:
| > Airbnb shouldn't be addressed through a buy-to-let ban, but
| an airbnb or short-term rental ban, which already exists in
| various forms
|
| Airbnb is probably paying off various government officials
| around the world to make sure the laws are friendly to them.
| IkmoIkmo wrote:
| Well, I'm sure this is true for every industry.
| Nonetheless, in the Netherlands the law is 30 days per year
| max, that law has been around for years, and penalties are
| heavy. The Amsterdam municipality is laserfocussed on
| enforcement (which is difficult) and has been making plenty
| of headway.
| finikytou wrote:
| why not banning foreign buyers first. then corporations. homes
| should be for the people. it should be cheaper to acquire a home
| u live in than an home u buy to speculate/rent. And the
| difference should be way higher than a few % tax more
| ginko wrote:
| >it should be cheaper to acquire a home u live in than an home
| u buy to speculate/rent. And the difference should be way
| higher than a few % tax more
|
| At least in Norway your primary home is exempt from property
| tax. I guess that's one reason why we have a home ownership
| rate of over 80%.
| capableweb wrote:
| It seems there intent is to reduce the number of people who buy
| property just for investments, and then potentially sit on
| empty property waiting for opportunities. Banning foreign
| buyers would just do that, banning foreign buyers, which does
| not seem to be their intent. Even Dutch people buy property and
| just sit on it, like what happens in other countries as well.
|
| Not sure how focusing on if someone is Dutch or not will help
| the situation, compared to banning speculative property
| investment as a whole instead.
| mission_failed wrote:
| I'd like to see data on who can afford to sit on an empty
| property. I've heard of Chinese money trying to avoid Chinese
| government crackdowns or really rich families who refuse to
| sell empty houses, I don't see how the average investor could
| afford it.
| raffraffraff wrote:
| Absentee landlords were notorious for allowing their Irish
| tenant's properties and amenities decay, while continuing to
| extracting rent. Yet back at home they were known as
| philanthropists who gave generously to "their own" poor
| houses and churches. People tend to care whether or not they
| are judged poorly, but only by peers and neighbours.
|
| It may not make any difference who the investor is, but then
| again it may. Also, if the investor is resident, could there
| be other ways to ensure that they are not simply wringing
| every cent out of their investment with no reinvestment?
| throwaway6734 wrote:
| Won't this result in higher rent prices for those that don't
| have the funds or interest in purchasing property?
| WouterZ wrote:
| I've been looking at buying a bigger home than the current one I
| own. It's near impossible as prices keep on going up. Very
| disapppinted that cities have to arrange this - it means that
| some cities won't yet introduce anything.
|
| I can already see investors swooping into those markets without
| the ban... i.e. Haarlem where I live will be among them.
| mytailorisrich wrote:
| We'd need to look at demand versus supply, including new builds
| before we can point the finger at "investors", which may be
| convenient but not necessarily useful.
|
| Ultimately, market forces are what they are. If demand exceeds
| supply then some people will always miss out.
|
| There is also the problem of the amount of liquidity available.
| Since 2008 and even more since Covid mountains of cash have
| been created at zero interest rate and that partly explains
| assets' price inflation.
|
| Let's also not forget that many people cannot afford to buy,
| and don't want to for whatever reason, so decimating the
| private letting sector is not great, either, and will only
| cause rents to skyrocket.
| jlokier wrote:
| Rents have already skyrocketed while the private residential
| letting sector is thriving.
|
| It's not clear at all that changing the market forces to
| increase access to ownership by occupiers would lead to
| increasing rents, even with reduced supply of rentable
| properties.
|
| At the moment, a lot of tenants would rather buy if they
| could, and are paying the same or more in rent than they
| would pay on an equivalent mortgage, plus rents are rising
| faster than a mortgage would if they had one. Rents are also
| rising faster than their salaries. So they would gain
| location stability and financial stability by owning, but
| they can't get a mortgage. Mortgages, like anything in a
| competitive market, are preferentially offered to the best-
| looking customers, and property speculators are better-
| looking than ordinary working folks struggling to make ends
| meet on their current and rising rent.
|
| If those people could buy properties like the ones they are
| currently renting, rentable supply would go down. But demand
| would also go down by the same amount, and mostly from those
| competing to pay the higher end of rents currently. I think
| this would reduce average asking rents for the remaining
| tenants.
| mytailorisrich wrote:
| The proposal is to ban investors from buying more
| properties, it is not to increase access to ownership. If
| anything the effect is more likely to reduce supply than to
| increase it.
|
| Those who are already able to buy may benefit, but that's
| about it.
|
| Again, a big part of the problem is also the mountain of
| free money in the market.
| avsteele wrote:
| What's the deal with landlord hate?
|
| If I buy a lawnmower, pool, or whatever else and rent it out you
| all are ok with that.
|
| If I buy a house and rent it out suddenly I'm an "enemy of the
| people".
| logicchains wrote:
| Most leftists are driven by envy; they see someone else has
| something they can't afford, and they feel rage. They can't
| afford multiple houses, so seeing people with multiple houses
| triggers this feeling. Fundamentally it's because they're so
| ego-driven they can't accept the market rewards people fairly,
| because doing so would require accepting that someone else
| deserves those houses more than they do.
| imtringued wrote:
| I want to become a landlords and I do not want to think about
| the moral implications of rent seeking. If the government
| simply taxed the unfair gains I received through rent seeking
| then I would have no moral qualms about other landlords. I
| would be very happy to pay land value taxes if that is what
| it takes to make free market capitalism fair again.
|
| I do not envy Jeff Bezoz for owning $200 billion in stocks. I
| do not envy Bill Gates for owning Microsoft. I consider Bill
| Gates accumulating farmland without paying a tax to
| compensate for his monopoly rights to be a form of extortion
| that should not be allowed.
|
| >Most leftists are driven by envy; they see someone else has
| something they can't afford, and they feel rage.
|
| I don't.
|
| > They can't afford multiple houses, so seeing people with
| multiple houses triggers this feeling.
|
| I am always in favor of a land value tax that taxes home
| owners and large scale investors at the same rate. The reason
| why I have to make a concession to primary residences is that
| home owners would vote against the tax and the land value tax
| wouldn't be introduced at all.
|
| >Fundamentally it's because they're so ego-driven they can't
| accept the market rewards people fairly,
|
| How can abusing the monopoly of location be considered a fair
| reward? You are distorting the market.
|
| > because doing so would require accepting that someone else
| deserves those houses more than they do.
|
| No, it's the opposite. You can buy the land 30 years ago and
| let the property on top sit vacant and still net a return
| because the value of the land has risen. Such an investor
| made a lot of money without deserving the land at all. If
| land had a holding fee then only those who can extract the
| most value out of the land would seek it out.
| avsteele wrote:
| This doesn't make much sense to me.
|
| Considering the high degree of competition in ~all rental
| markets, claims of monopoly are unfounded.
|
| Returns on capital for land-owning businesses aren't higher
| than other sectors.
|
| In the US in particular, we have ludicrisly large amounts
| of space. Even in our most expensive areas we don't
| approach the density of places like Hong Kong. Scarcity, as
| usual, is due to government fiat.
| dt3ft wrote:
| This is the only right way to deal with greed. Enough is enough.
| tellersid wrote:
| Greedy? Not me. Always the other guy that is greedy.
|
| The irony is there is such high probability with posting on
| this board you are part of the top 1% of the globe when it
| comes to wealth.
| sumedh wrote:
| > you are part of the top 1% of the globe when it comes to
| wealth.
|
| So what, what do you want the person to do, go live in a hut?
|
| How is that person greedy compared to people with multiple
| houses?
| logicchains wrote:
| >How is that person greedy compared to people with multiple
| houses?
|
| They're greedy because they think the world owes them cheap
| housing just by virtue of being born. The person who owns
| multiple houses actually did some work to earn the money to
| pay for them, they're not the one eyeing other people's
| property with envy.
| noahtallen wrote:
| The problem here is that, in general, you don't get to
| own multiple houses by being a hard worker. You could be
| an extremely hard worker, but not make very much money.
| You could be very lazy and make loads of money. The
| reality is that the housing market is on a trajectory
| where most people cannot and will not be able to afford
| ownership, even for white collar jobs. Wages do not go up
| quickly for most folks either, so the cost of acquiring a
| house relative to your income continues to rise.
|
| More specifically, say you enter society making $80k in a
| major city. You're young, so this is normal. At this
| point in time, a house is not an option, because a
| mortgage would require $100k in savings. And if the
| housing market continues increasing like it has the past
| few years, that amount keeps going up. For most people,
| the rate that house prices go up is quicker than the rate
| they can save towards a down payment.
|
| It's important to note that a quickly accelerating
| housing market is EXTREMELY beneficial for investors. It
| creates a feedback loop which makes investments more
| common, which makes the prices go up further. Spending
| $400k this year and selling for $500k next year is an
| excellent investment opportunity.
|
| Is it greedy to think that one deserves a home? Likely
| not. Is it greedy to make some extra money via property
| investment? Maybe sometimes, maybe not. The point isn't
| that property investment is inherently bad, but that
| property investment is pricing most people out of the
| housing market.
|
| As a hypothetical, would you like to live in a society
| where homes are not accessible for 90% of people? I
| personally do not want to live in a society where housing
| is extremely scarce. That's a recipe for societal
| upheaval. If property investment is making the market
| spiral out of control, which it likely is, it benefits
| most people to curtail that problem.
| snemvalts wrote:
| Greed is innate to humans and you can't even take it away with
| communism, people will still find a way to collect and hoard.
| The problem is the low interest rates from central banks
| flooding the economy with money.
| imtringued wrote:
| If you raise interest rates then people hoard money. How does
| that solve anything?
| arvinsim wrote:
| That's not an excuse. Lots of undesirable traits are also
| innate like violence, tribalism, etc. Does that mean we give
| those a free pass?
| mcv wrote:
| Exactly. We've got laws to mitigate or redirect any harmful
| innate traits that we've got. Greed, like violence, is
| definitely among them.
| logicchains wrote:
| >Exactly. We've got laws to mitigate or redirect any
| harmful innate traits that we've got. Greed, like
| violence, is definitely among them.
|
| And what about envy? That's clearly a big problem among
| commenters in this thread.
| WealthVsSurvive wrote:
| It's not. You're mistaking the will to live and prosper
| with envy. People are correctly identifying all across
| the world that centers of power and capital are
| objectively worsening their lives, and they are taking
| action against them in their own, perfectly justified
| self-interest. The difference between that desire and
| greed is that greed cannibalizes the existence of others
| to sustain its own existence. No one is confused. We're
| seeing a revolutionary period approaching that will be
| comparable to "The Enlightenment." Let's hope it happens
| because I think the unavoidable alternative is 1000 years
| of darkness, another longer, world dark-age.
| capableweb wrote:
| Some greed might be innate, but what we're seeing today with
| billionaires is not normal greed, it's extreme greed,
| something me (and many others) don't think is innate.
|
| And where does "communism" come from? No one mentioned it
| here on HN nor in the article. People are so quick to label
| things, even if they are not even related.
|
| In this case, Dutch people seems to had enough of expensive
| prices so now they are on the lookout for a solution. Just
| because this solution involves the government stepping in to
| adjust the market, doesn't mean that the Dutch government is
| suddenly "communist".
| imtringued wrote:
| I don't think it is greed. Rather, money and real estate
| has become a status symbol. It's just as dumb as trucks and
| SUVs being a status symbol among the middle class.
| globular-toast wrote:
| > what we're seeing today with billionaires is not normal
| greed, it's extreme greed
|
| No, it's normal greed and, if anything, inequality is lower
| now than it has been in the past. What we have today is
| fat, comfortable people looking at billionaires and
| screaming greed because the billionaire has a yacht while
| they only have 3 cars and one massive house. Who's the
| greedy one here?
| mejutoco wrote:
| I was looking for data for inequality per country (https:
| //en.m.wikipedia.org/wiki/List_of_countries_by_income_...
| ).
|
| What location and timeline are you thinking of for now
| being less inequal? Do you have a data source I could
| look into? Cheers
|
| Edit: grammar
| globular-toast wrote:
| Data of current inequality isn't very useful. I don't
| have any data, but I wasn't the one claiming things were
| more extreme now than they have been in the past. If I
| look at the UK I see even the poorest people have
| shelter, food and free access to healthcare. In the past
| the poorest people were literally starving and in very
| poor health while the richest lived in huge manor houses
| that would make even a billionaire blush today.
| mejutoco wrote:
| > if anything, inequality is lower now than it has been
| in the past
|
| So, sorry for rephrasing it, your claim is that the
| poorest have better conditions than before (I don't know
| if that is the case), not that inequality has decreased.
| It is an interesting point.
| cutler wrote:
| There are plenty of people starving in the UK. Food banks
| can't keep up with demand. There are also the "new
| homeless" who once had stable jobs but are now part of
| the gig economy. Some are out on the street but most are
| couch surfing somewhere.
| chownie wrote:
| > What we have today is fat, comfortable people looking
| at billionaires and screaming greed because the
| billionaire has a yacht while they only have 3 cars and
| one massive house. Who's the greedy one here?
|
| This is the weirdest straw man, isn't the entire point of
| the issue that no one can afford housing? What are you
| even talking about?
| arvinsim wrote:
| Sadly, it is inculcated in modern capitalism that anything
| is permissible as long as "it is just business"
| logicchains wrote:
| > This is the only right way to deal with greed. Enough is
| enough.
|
| How about dealing with envy? Seems you've sure got plenty of
| that.
| reacharavindh wrote:
| Perhaps relevant to this discussion. Another article on the same
| website from 7 days ago.
|
| https://nltimes.nl/2021/08/29/us-investor-blackstone-accused...
|
| Cant help but think, may be this is some form of insider trading
| by the wealthy - buy up apartments before such a regulation comes
| into place?
| Ekaros wrote:
| I think real solution is to increase governmental supply. That is
| push market rates so much down that only marginal gains from
| property could be gained. Let's say 2% year... Property shouldn't
| really appreciate very much over time.
| tellersid wrote:
| In the US at least though I believe zoning is the issue.
|
| Our zoning laws are so bad and it is so hard to add to supply
| that no one really bothers much.
|
| There are all kinds of dislocations in the market because what
| you should see right now is massive amounts of home building
| but you do not. 15 minutes away from me there is a ton of open
| land that could practically be built into a entire new town. I
| would imagine the larger the project the more bullshit you have
| to deal with when it comes to permits, zoning, political
| pushback, palms that need grease.
|
| If you compare the work, risk/reward to alternative investments
| like just holding the stock market index it becomes a bad
| investment so it doesn't get made.
|
| We have all these self reinforcing distortions happening in the
| market that probably can't be fixed.
| smashah wrote:
| One day an intergalactic 5th dimension demon investor will buy
| earth and rent it back to us for 1 Billion souls per year. What
| madness.
| 57844743385 wrote:
| The only way to make housing affordable is to end property
| investing.
| lostlogin wrote:
| New Zealand had a stock market crash in the '80s which is
| frequently blamed for the aversion New Zealanders have to
| shares and the love of property investment.
|
| We have a truely terrible housing stock (cold, damp and poorly
| maintained) and in the largest city, Auckland, the average
| house price is 20x the average wage.
|
| People claim it's untenable but the rise in values has been
| utterly relentless.
| tjpnz wrote:
| Nothing's going to put that cat back in the bag at this rate,
| short of a capital gains tax. But given 70% of our
| politicians are property investors themselves that won't ever
| be on the cards.
|
| This whole sorry state of affairs makes me glad I left the
| country. That and how utterly abysmal IT salaries are.
| arp242 wrote:
| When I lived in Dunedin a few years ago I was truly shocked
| at the state of the houses. I don't think I've ever seen a
| house in the Netherlands without central heating; but I've
| never seen a house _with_ central heating in Dunedin, and
| Dunedin is quite a bit colder than the Netherlands. Isolation
| and even double glazing seems almost non-existent and wooden
| houses are the norm.
|
| Don't get me wrong, I really loved living there, and I'd move
| back in an instant (but work visas are very hard at the
| moment), but Kiwi houses are the worst and many decades
| behind Europe.
| throwaway6734 wrote:
| What defines property investing?
|
| Why not a land value tax instead?
| kortilla wrote:
| How do you buy a house then? Does the government just own all
| housing?
| jlokier wrote:
| You just buy a house the usual ways and live in it. With cash
| or a mortgage.
|
| If you live in it, it's not called "property investing".
|
| "Property investing" refers to buying property to benefit
| from price speculation and use as a store of value, without
| actually using the property as a home. The property may sit
| there empty most or all of the time, or it may be rented out,
| with a combination of rent and price speculation being the
| owner's business plan. "Flipping" may be involved.
| chrisseaton wrote:
| Since houses don't wear out or get used up, like clothes or
| food, and you can sell them when you're done with them,
| they're inherently an investment.
| imtringued wrote:
| They do. It's the land that goes up in value.
| chrisseaton wrote:
| Houses get more valuable the older they are. Most people
| don't want new houses.
| jlokier wrote:
| Sure, they're an investment too, but properties bought
| primarily to live in, with investment as a handy side
| effect, do not have the same effect on housing
| availability and affordability. Each such purchase
| reduces supply by 1, but also reduces demand by 1, and
| gives someone relative stability.
|
| So purchasing to live in is not what "property
| investment" refers to in this context. It has a narrower
| meaning than "anything you could conceivably think of as
| an investment".
|
| Aside, houses do in fact wear out, need regular repair,
| and eventually most get demolished because regular repair
| isn't good enough.
| Isinlor wrote:
| Do I understand correctly that they want to kick out all the
| students from the cities?
|
| When I was studying in Groningen I had to look for places to rent
| out of the city.
|
| Some students were camping in tents in front of the campus.
|
| Here is a photo from another city, Tilburg:
|
| https://www.dutchnews.nl/wpcms/wp-content/uploads/2019/09/st...
|
| Some academic staff were even taking them in due to shortage of
| places to rent.
|
| I managed to rent a very nice place in Bedum, a village 13 km
| from the university campus, and I was commuting every day on
| bike.
| johndoe0815 wrote:
| The trend here in Trondheim (third-largest city in Norway with
| 200k residents, of these ca. 40k are students) is that a lot of
| houses and apartments are explicitly offered for sale with
| plans for conversion to student apartments.
|
| Rents in the city have increased by 8.2% over the last 12
| months, property prices by 20-25% over the last two years. The
| price per square meter to buy anything reasonable is above 6k
| Eur now. Salaries are, of course, not adjusted to compensate
| for this...
|
| So I can understand and support this Dutch initiative, but of
| course universities and municipalities then have to ensure they
| provide an appropriate amount student accommodation. Since
| students are an important economic factor, this doesn't sound
| to be a too unreasonable demany to me.
|
| The Norwegian government also tries a different approach - it
| tries to enable young people to buy property already in their
| twenties by funding special discounts on interest rates.
| Together with banning investors from the cities, this might
| also be a model for the Netherlands, which, like Norway, has
| quite a high rate of home ownership (69% NL vs. 81% NO). Some
| of my recent master students owned an apartment here and made a
| nice profit when they sold it this year and moved back to
| Oslo...
|
| [1] https://www.statista.com/statistics/543453/house-owners-
| amon...
|
| [2] https://tradingeconomics.com/netherlands/home-ownership-
| rate
| marvin wrote:
| Everyone is suggesting ineffective solutions with idiotic
| side effects. The proper way of solving this problem is to
| build a lot more homes. Otherwise you'll be creating a plan
| economy where bureaucrats are constantly scrambling to
| alleviate the side effects of their shuffling of deck-chairs
| on the sinking ship.
|
| But of course, few cities want to do this. The biggest cities
| in Norway are particularly bad at not even attempting to
| solve this problem at the root.
|
| Let's just say it loudly and proudly: If you're against
| allowing the free market to build as much as the demand
| indicates, you're for high housing costs and screw everyone
| who is negatively affected. This hypocritical virtue
| signalling has gotten really old.
| lotsofpulp wrote:
| I can envision a scenario where both are true and result in
| short term (possibly on the order of decades) pain for
| locals. The supply of housing is not meeting the demand of
| local residents and the supply of "desirable" investments
| in stable societies is not met for global investors.
|
| It is an arbitrage and inefficiency scenario created by the
| ability of capital to move easily around the world, but not
| people.
| distances wrote:
| Do you have any examples where building more would have
| resulted in stabilizing or lowering housing prices? This is
| the classical suggestion but doesn't seem like there would
| be any supporting evidence of it actually working in
| practice.
|
| Of course I want cities to build more. But I don't imagine
| it will ever actually lower the housing costs.
| marvin wrote:
| Cities rarely try this out in practice. There are
| examples of smaller cities that manage to keep up - e.g.
| Kristiansand in Norway, which kept the real estate price
| development slightly negative during a decade when the
| rest of the country had a massive increase. I get the
| impression Copenhagen has also managed to build enough.
| Their bubble popped in 2006 AFAICT, with moderate
| development since then in spite of negative interest
| rates.
|
| But for large cities, there seems to almost universally
| be democratic agreement that we won't build a lot more
| right here.
|
| You get the odd symbolic attempt. But I'm not talking
| about re-zoning the odd industrial park and rationing
| them out to the three developers that get things done in
| this town.
|
| I'm talking about building 40 stories everywhere, where
| previously there were 8. Consistently allowing developers
| to build in front of their neighbors' ocean view. Turning
| 50% of the beloved hills around the city into high-rise
| apartments. Stuff like this, to a degree proportional
| with demand. Annual price increase or decrease is the
| signal to steer by.
|
| My point: If you support local democratic policy that
| will lead to an outcome every passing ECON101 student can
| predict -
|
| Own it.
| cutler wrote:
| Even better - ban profit on property sales.
| MonaroVXR wrote:
| Person living in Groningen right now, as Dutch citizen here.
|
| There aren't enough houses for students right now.
| jhgb wrote:
| > Do I understand correctly that they want to kick out all the
| students from the cities?
|
| Presumably not, unless those students are property investors.
| Isinlor wrote:
| > investors won't be allowed to buy cheap and medium-priced
| homes and rent them out
|
| So, who will be renting cheap and medium-priced homes?
|
| There are already extremely severe shortages as exemplified
| by students camping in tents.
| jhgb wrote:
| People living in them? That's how it mostly works
| elsewhere. Also, it is not customary in the Netherlands for
| students to live in dorms?
| 988747 wrote:
| Right, because that's what every family dreams about:
| having a stranger living in their house. Also, if there
| was enough space in dorms for everyone there wouldn't be
| those students camping in tents, as OP wrote.
| jhgb wrote:
| There's no need for every family to sublet. Usually a
| small minority of residences house subletters.
|
| I'm not quite sure how worsening the situation for
| everyone by property investors hoarding houses would make
| it _better_ for students, either.
| 988747 wrote:
| Property investors are not "hoarding" houses. They buy
| them and then rent them out, thus increasing the supply.
| It is actually better for students this way: an investor
| that does not live in their property can rent out it
| whole. If a house can fit 5 people that means a living
| space for 5 students. If the house gets bought by a
| family, that family moves in, so 3 out of 5 spots are now
| occupied, leaving only 2 available for rent. I don't
| know, maybe that's the hidden goal of this policy: push
| the students out, and bring in more families.
| athrowaway3z wrote:
| I know a girl who bought a house with a mortgage backed
| by her government-student-grant somewhere around 2006
| iirc.
|
| Additionally, If prices weren't so high there would be
| more students buying houses with their parents money.
|
| None of that is to say I understand the market, it's
| history or future. But your take seems to be based on
| dogma and an oversimplified supply and demand model.
| TeMPOraL wrote:
| > _an investor that does not live in their property can
| rent out it whole_
|
| There's a flip side to this. An investor that does not
| live in their property doesn't care about the property as
| a place to live. So...
|
| > _If a house can fit 5 people that means a living space
| for 5 students._
|
| But what actually happens these days is the house gets
| renovated to turn those 5 living spaces into 8 or 10.
| Students don't have any leverage on the market, so
| investors will densify houses over time, until they
| health and safety limits, and then some (the rents, of
| course, don't drop proportionally). Not enough students
| anymore? Fortunately there's AirBnB now. What about
| people who actually want to settle in the area? Nah,
| they're too needy, literally the least efficient bunch to
| extract money from.
|
| Elsewhere in the thread, some people say that the problem
| is with people who want to settle in expensive, wealthy
| cities. But perhaps the main reason those cities are
| expensive is because of property investment? That is, all
| those high salaries cancel out with high rents. Get rid
| of high rents, salaries may drop, but so do costs of
| living, and the whole market settles at a more
| approachable and sustainable level.
| jhgb wrote:
| > They buy them and then rent out, thus increasing the
| supply.
|
| That doesn't increase supply. I'm really not sure how
| middlemen skimming money could increase supply since that
| should push the supply curve to the left.
|
| > If the house gets bought by a family, that family moves
| in, so 3 out of 5 spots are now occupied, leaving only 2
| available for rent.
|
| And the family moved in from somewhere else, leaving you
| with three spots in that some other place plus two spots
| in the new place, so you have 5 places for students
| regardless. Not sure why you think this changes
| something.
|
| The optimal solution is obviously to fix the dorm system.
| It's well organized, cheap, and space efficient - at
| least in my country, at about half the price of renting
| your own place. Surely my backwards country is not more
| capable than the Dutch in this respect.
| 988747 wrote:
| > And the family moved in from somewhere else, leaving
| you with three spots in that some other place plus two
| spots in the new place, so you have 5 places for students
| regardless. Not sure why you think this changes
| something.
|
| Because that family might have moved from out of town,
| and students can't move to their old place that is too
| far from the university?
|
| EDIT: I'm not sure that building more dorms is a good
| idea. My experience (although from totally different
| country) is that dorm rooms are the worst possible
| environment for learning. During my time in college there
| was a clear division: those who prioritized studying
| lived in the quiet rental apartments, those who
| prioritized socializing lived in the dorms :)
| TeMPOraL wrote:
| > _During my time in college there was a clear division:
| those who prioritized studying lived in the quiet rental
| apartments, those who prioritized socializing lived in
| the dorms :)_
|
| And I wonder who ended up better off :).
|
| The longer I live, the more I realize that I made a
| mistake during my university years. I focused on learning
| where I should've been partying - because as it turns
| out, knowledge is the easy part. The hard part - and the
| important part - is building a network of friends and
| connections, which happens at parties, not in quiet
| rental apartments.
| jhgb wrote:
| That's not a problem specifically for students, though.
| That's a problem for everyone when X people need to move
| to a city where there's Y<X capacity of housing.
| Isinlor wrote:
| If there was enough rooms I could have rented a tiny
| room, like a Norwegian prison cell, from a student
| housing. But there was not enough of these rooms. And
| they were available only for one year. You had to vacate
| them after that.
| jhgb wrote:
| Presumably the reason for why there isn't enough housing
| for students is related to why there isn't enough housing
| for everybody else.
| amelius wrote:
| You misunderstood. The only way to rent a place is to rent it
| from an investor. If investors are banned from the city, then
| students need to buy the house/room they live in. This is of
| course not feasible for the majority of students.
| jhgb wrote:
| > The only way to rent a place is to rent it from an
| investor.
|
| You mean in the Netherlands? Because I never had to do that
| in my country. I'm not aware of places where the only
| landlords are investors.
| [deleted]
| Pet_Ant wrote:
| I think you are missing the point.
|
| All landowners are investors. They bought the property to
| make money. That makes them an investor. Maybe not a
| coporation but an investor.
| distances wrote:
| Lots of student and young people housing is owned by non-
| profits around here. My whole campus was non-profit.
| jhgb wrote:
| Surely the Dutch are _not_ using your proposed
| definition, because that would make zero sense unless
| they wanted to turn the Netherlands into another
| Chernobyl exclusion zone. That seems unreasonable, so
| they must be using a different one.
| kalium-xyz wrote:
| It is the definition we use. This is just gonna create
| more kafka tier stuff for people to deal with, its not
| gonna end housing if Amsterdam decides it only wants
| multi millionaires with privately owned overly expensive
| houses in certain areas.
| cutler wrote:
| Investor or parasite?
| sverhagen wrote:
| I suppose the implied question is: who's going to rent to
| students if the landlords' investments get penalized for them
| not living there themselves. There's presumably too many
| students in these cities for all of them to find some family
| who have a spare room to rent.
| athrowaway3z wrote:
| The municipality can designate locations where these rules
| apply and they can designate if a location is intended for
| student housing.
|
| I'm not seeing an issue that is directly exacerbated. There
| are simply more tools that can be (ab)used .
| jhgb wrote:
| Even if this action _were_ to have unintended consequences,
| the question was "do they _want_ to ". No, they don't,
| obviously, not any more that the people who gave "go" to
| STS-51L _wanted_ to kill seven astronauts. What they _want_
| to do is to get rid of predatory investors.
| timwaagh wrote:
| There are some very hard limits to taking students in too.
| You don't want to be a student after the covid induced
| decline in demand is over. Especially not if you are not
| from here. The regulation exempt SSH will put you in a room
| with another student or two and charge you 800 or so.
| zihotki wrote:
| To add to the topic, in NL you, as an owner of a property, are
| obliged to report to municipality if your property is vacant for
| one year. This is to prevent squatting. Very recently U.S.
| investor Blackstone reported ~300 apartments at once in Amsterdam
| for being vacant. They did it only after it was found out that
| some of the properties were squatted. And according to different
| sources, the apartments were vacant for very long time, more than
| a year.
|
| On top of that, the investors often buy social housing. After
| some refurbrishment they start renting it as a non-social one.
| Many people are upset by this behavior as well.
| Aeolun wrote:
| I think it's interesting that we tend to believe that someone
| would actually report these things.
|
| Then we get hit by these US (and other) foreign companies to
| whom morality is just a suggestion, and whom will happily do
| whatever makes them most money.
|
| Now they've made literal millions out of these empty
| properties, and they'll be given the benefit of the doubt,
| because that's how we do things.
| reillyse wrote:
| So long as homes are considered an asset class governments are
| compelled to protect their value and help increase that value.
| This is a small step to decoupling property from investing but I
| think a great start.
| FridayoLeary wrote:
| If the price of properties fall dramatically won't that have an
| adverse affect on property owners? Imagine shelling out PS1M on a
| house, and spending 20 years paying it off. Now, at the end of
| that time period the house is worth half of that. I'm not an
| expert but is closing off an entire section of Capitalism going
| to work flawlessly?
| ChuckNorris89 wrote:
| And what's wrong with that? You still own the house in full and
| can live in it till you die whether it's worth $1MM or $1.
| There should be no guarantee for your house to appreciate over
| time; that's what got us in this mess in the first place.
|
| If you want to turn your housing into an invested vehicle to
| sell an make you rich then you're basically gambling and should
| fully accept the risks of losing money in the process like with
| any other investment.
|
| Capitalism also means letting bad business or poor investments
| go bust, not prop them up artificially for decades via low
| interest rates, zoning laws and nimbyism to make them worth
| more.
| iamnotwhoiam wrote:
| So investors buy the homes then rent them out? What's the
| problem?
|
| In some asian markets investors buy homes then sit on them unused
| for years. That's a problem.
| turbinerneiter wrote:
| The problem is that it gets harder and harder for normal people
| to own anything (build up wealth), while building wealth is the
| best retirement startegy there is.
|
| I myself, for example, live in a city where owning the place I
| live in is just barely getting in reach for me, although I am
| in the top 30% income bracket of my country. I therefore have
| to put my savings into the stock market, which is at an all
| time high. Maybe even a bubble.
|
| It is frustrating to see any income gain that I make being
| absorbed by the housing market. I work hard while others get
| unspeakably rich just by owning stuff.
|
| Simply put, the balance is off.
| lotsofpulp wrote:
| > The problem is that it gets harder and harder for normal
| people to own anything (build up wealth),
|
| In the US, it is easier than ever. Open a free account online
| at a number of brokerages, and buy some broad market low cost
| equity index ETF.
|
| The problem is government subsidies for real estate. Get rid
| of federal taxpayer guaranteed mortgages (Fannie Mae, Freddie
| Mac, ginnie mae). Get rid of 1031 exchanges. Let the markets
| set the interest rate and do its own risk calculations.
|
| See similar price distortions due to federal taxpayer
| guaranteed student loans.
|
| All of this is unlikely, however, since the US and many other
| societies have baked in burgeoning economic growth for
| decades to come in their previous decades' spending.
| Therefore, to avoid defaulting on these assumptions, the
| societies will keep inflating currency to keep the ruse going
| as long as possible.
| stavros wrote:
| Even my low-risk Vanguard ETFs have gone up like 30% in a
| year. That seems insane to me.
| lotsofpulp wrote:
| I would expect that. Politically, everyone is aligned
| with ensuring equity prices go up. And so everything
| possible will be done to accomplish it.
|
| I am 100% equities for any funds I do not need in the
| next few years. Index fund ETFs are the real TIPS,
| Treasury Inflation-Protected Securities.
| turbinerneiter wrote:
| It's just that most people would prefer owning a house over
| owning stocks.
|
| Because when the economy tanks and you lose your job, you
| have to sell your stocks at the low point to make rent.
| When you own your house, losing your job still sucks, but
| at least you still have a home. Thats also the reason why
| the low interest rates, although nice for homebuyers, also
| aren't a great levy of the situation: I have to pay back
| the credit for my house over 40 years, I have the same risk
| of losing everything in a downturn. You can't make the
| credit payment and are forced to sell your home at the
| market low.
|
| Maybe I'm just traumatized. When I left school, 2008
| economy crash was in full swing, two years after leaving
| Uni and in my first job, Corona happened.
|
| On the topic of price distortions through government
| influenced loan rates: I think what you say makes sense.
| lotsofpulp wrote:
| I do not understand your comment, as it started off
| sounding like there was a downside of renting vs owning,
| but then later on in the paragraph, you say that the
| risks of not being able to pay rent and not being able to
| pay a mortgage result in the same consequences during an
| economic downturn.
|
| > Because when the economy tanks and you lose your job,
| you have to sell your stocks at the low point to make
| rent.
|
| You should have an emergency fund so that you do not have
| to sell at the low point. I try to keep at least 24
| months of expenses.
|
| In the US, the government also offers a federal taxpayer
| subsidy in the form of lending people money with no money
| down or 5% down or some ridiculous scheme advertised as
| helping lower income people. On the contrary, this simply
| increases home prices and over leverages them since they
| will barely make monthly payments and any hiccup will
| derail them.
| [deleted]
| keewee7 wrote:
| >The problem is that it gets harder and harder for normal
| people to own anything
|
| One of the reasons is that people insist on living and
| working in some of the wealthiest and most expensive cities
| in the world.
|
| I live a cheap town and my commute to work in the 2nd biggest
| city in my country is just 25 minutes.
| Flashtoo wrote:
| You are assuming that it is possible to live cheaply within
| 25 minutes of a big city in The Netherlands. That's not the
| case.
| iamstupidsimple wrote:
| Mainly that's because that's where the jobs are. (Remote
| isn't a 100% solution, either.)
| imtringued wrote:
| The jobs are where the international investors are and
| they prefer big cities over small unknown towns.
| lotsofpulp wrote:
| Perhaps people's perception of the risk of living in a
| smaller town is sufficient to merit the risks of higher
| land prices in some of the wealthiest and most expensive
| cities in the worlds. Namely the risk of losing your source
| of income in a small town and the increased probability of
| higher income/access to opportunities in major cities.
|
| Of course, it is a pendulum, and it is possible people's
| perception swings too far towards the small town and the
| big city and back and forth.
| polytely wrote:
| But the Netherlands is small enough that the unaffordable
| prices in the big cities has pushed most people to the rest
| of the country basically increasing prices _everywhere_.
| bradleyjg wrote:
| _The problem is that it gets harder and harder for normal
| people to own anything ( build up wealth), while building
| wealth is the best retirement startegy there is._
|
| This is the problem in a nutshell! It's impossible for houses
| to continue to be great "wealth building" vehicles and for
| them be affordable. Politicians have prioritized the former
| and that's how we got where we are.
|
| If we want affordable housing for people to live in they
| can't also be the universal investment vehicle. Those two
| objectives are in direct contradiction.
| Fargren wrote:
| I've often wondered, with enough knowledge to actually
| know, what would happen if renting housing was made
| illegal. I imagine prices would drop precipitously, maybe
| to a point where everyone can buy?
| cutler wrote:
| Marx's analysis is as relevant today as ever. The expansion
| of capital seeking ever-increasing sources of surplus value
| has left most of us as nothing more than serfs subject to
| the whims of landlords.
| imtringued wrote:
| It's not very difficult to criticize capitalism. Figuring
| out a solution is a much harder problem.
| csomar wrote:
| The problem is that in a globalized world, dutch homes are more
| attractive than, say, homes in Cairo or Sao Paulo. Investors
| moving money in means that home prices are no longer correlated
| with the local economy. A salary is no longer what determine
| the rent or the mortgage but rather "global" appeal to that
| place.
| II2II wrote:
| From my experience, the size and type of investor seem to be a
| factor. I have rented my entire adult life since it has some
| advantages (notably mobility), yet have always rented from
| homeowners or small-time investors. They tend to place more
| emphasis upon keeping their units rented and keeping good
| renters. Except for moving, I have only seen my rent increase
| once. It was a small increase and I lived in that place for
| many years.
|
| Contrast that to people who have lived in places with large
| property managers. The rent increase is automatic, even with
| better renters than I. I have heard substantiated stories of
| rent doubling. Now those renters may have been bad apples and
| the property manager may have been using it as a tool for
| eviction, but that is still a problem. It is a problem since it
| is used a means to bypass tenant protections. Those protections
| are necessary to provide housing stability.
|
| My apologies for the rant. In principle, I have nothing against
| investment. That said: the excessive greed of some investors,
| the ones that effectively push people down or out to achieve
| ... well, I don't know what some people are trying to achieve
| beyond a certain point ... is turning me away from that
| principle.
| cutler wrote:
| Market investment, ie. where little new value is added, is
| gambling dressed up to look respectable. It's all about
| getting something for nothing which is the root cause of all
| our economic ills.
| II2II wrote:
| I try to be careful with how I think about these things, so
| I don't go off the deep end. In my mind, investment is the
| adding of value while trading does not add value. Both are
| gambling on the outcome, but investment tries to direct the
| outcome while trading tries to predict the outcome.
|
| In the context of housing, investment may look like a
| renovation to improve desirability or replacing a small
| number of units with a larger number of units. In contrast,
| trading would involve maintaining the status quo in hopes
| that the desirability of a neighbourhood or relative
| scarcity would increase the value of a property.
|
| That being said, I don't know how you would create a system
| of investment that doesn't create an environment for
| speculative trading. In would be difficult to encourage the
| former without a means of selling off the investment at a
| later date. Reducing the frequency of trading wouldn't help
| in the case of housing since those are long term
| investments to start with.
| lotsofpulp wrote:
| >I don't know how you would create a system of investment
| that doesn't create an environment for speculative
| trading.
|
| Remove the government subsidies and guarantees and
| improve price transparency.
| Genego wrote:
| The problem is that these investors have raised rents
| nationally to a point where there is no affordable housing
| outside of social housing (8-15+ year wait lists). And this
| happened in a very short time period. If I'd want a 60-80m2
| apartment in the city I currently live, I'd have to pay
| 1000-1200+ Euro for that; three to four years ago, that would
| have been half. Just over the border in Germany the same
| apartment goes for 350-500 Euros (NRW to be specific). The
| housing market here feels beyond crazy. Real estate prices
| themselves are also exploding +10%~ month over month
| iamnotwhoiam wrote:
| Is that because Germany had banned property investment or
| because supply keeps up with demand in Germany?
| Genego wrote:
| Germany has much better tenant and rental market
| protection. Real estate prices are rising rapidly, but
| supply does seem to keep up with demand when it comes down
| to renting. Population density in Germany also is only half
| that of the Netherlands (240 vs 508 per km2), so that also
| helps. If you're priced out somewhere, you always have the
| option to move somewhere else. In the Netherlands you don't
| have much of a option right now when it comes down to
| renting (and mostly buying as well).
| imtringued wrote:
| It sold social housing and stopped building more of it. If
| you had asked about real estate 10 years ago you'd hear
| about how Germany solved the housing problem.
| leoedin wrote:
| A lot of these investors are 50+ year olds who've benefited
| from tremendous unearned wealth from their primary residence.
|
| When you own outright your main house and have paid effectively
| no rent or mortgage payments for decades, that surplus income
| makes buying a second investment property, even at today's
| prices, relatively easy. The extra money and demand entering
| the market pushes prices up.
|
| Then the renting tenants have to pay an ever increasing share
| of their income in rent. They never build up capital, and so
| can never afford to buy anywhere.
|
| This is a societal problem - home ownership means stability (to
| have children), commitment to an area, a willingness to invest
| time into improving it. When you can be cast on to the streets
| with a few months notice at your landlords whim, you have none
| of that.
| throwaway-8c93 wrote:
| The real problem is that governments around the developed world
| gave up on building affordable social housing since the 70s.
|
| AirBnB investors just highlight the symptoms.
| azeirah wrote:
| It affects the housing market very negatively. These are houses
| that could've been bought by families and couples and so on.
| Instead of being available for purchase, the same people have
| now have to rent instead of buy.
|
| House prices rise, rent increases, common folk are struggling,
| investors are getting rich without doing anything.
|
| It's just meh all over.
| winkelwagen wrote:
| If that means middle income families or starters are not able
| to buy those houses, and the investors driving the prices up.
| Then yes, it's a problem.
| keewee7 wrote:
| Why should middle income families be able to buy property in
| some of the wealthiest and most expensive cities in the
| world?
|
| There is suburbs for that.
| bsksi wrote:
| Suburbs? What do you think we are, Americans?
| keewee7 wrote:
| I'm Danish and we call it "forstad". It's pretty much the
| same as a suburb.
|
| https://da.wikipedia.org/wiki/Forstad
| bsksi wrote:
| I know they exist. What I'm saying is that European
| cities are built around the idea of people being able to
| live in walking distance of... Everything. Suburbs here
| exist for snobs and assholes.
| maccolgan wrote:
| Who are you speaking on behalf of?
| bsksi wrote:
| Like everybody else who posts comments on the internet,
| myself. Did I give the impression I was speaking on
| behalf of someone else?
| leoedin wrote:
| The problem of inflated house prices extends to the suburbs
| and beyond
| mcv wrote:
| The fact that those cities are so expensive is exactly the
| problem. Those cities are healthier if they have a healthy
| mix of different population groups. I live in Amsterdam and
| would hate to see it become a rich people's ghetto, though
| it's definitely at risk of that happening. Maybe it already
| is.
| II2II wrote:
| Where are the people who work in those cities supposed to
| live? Are they expected to commute an hour a day,
| diminishing their earning potential and increasing their
| expenses? People in the wealthiest cities also tend to have
| access to more resources, due to the concentration and
| diversity of the population. Denying low and middle income
| families access also diminishes their potential, while
| diminishing the potential of cities through the reduction
| of diversity.
|
| At best, this sounds an argument to hold people back. At
| worse, it sound like an argument to push people down.
| Griffinsauce wrote:
| This is really necessary.
|
| I'm a senior engineer, my wife is a neurologist, we are currently
| not able to afford a pretty normal house in the city.
|
| Even if we did, buying now is a enormous waste of money. The
| market has been bad for years and it's absolutely out of control
| now.
| chrisseaton wrote:
| > I'm a senior engineer, my wife is a neurologist, we are
| currently not able to afford a pretty normal house in the city.
|
| I don't understand why people think having a certain job means
| it's more of a travesty that they can't get a house.
|
| Everyone should be able to get a house. Whatever your jobs are
| is irrelevant.
| arp242 wrote:
| Of course, but I think the point the previous poster was
| making that _even with_ well-paid jobs well above the average
| it 's very hard to find something reasonable that fits in
| your budget, which underscores the point that for people at
| the average it's damn near impossible.
| jvvlimme wrote:
| There are more efficient ways to achieve the same and get a bunch
| of other positive side effects in one go: Land Value Taxation.
| Henry George proposed it already in 1879 in his book "Progress
| and Poverty".
| ianai wrote:
| I'm reminded of behavioral studies showing that other primates
| have an instinctive concept of "fair" and will choose against
| cooperation if a deal seems unfair to them. I think this was
| covered in Freakonomics.
|
| How about making a civil law where anybody can sue the owner of a
| home if it's not occupied in a way that benefits the community
| around the home - say with a $10,000 plus court fees and 10% of
| any residual income minimum for anyone in the community who sues
| and wins?
| logicchains wrote:
| Then do other citizens have the right to sue the passer of this
| law for the resulting shortage of rental properties that this
| incentivises?
| nabla9 wrote:
| Instead of banning, it's better to steer with taxation. Tax on
| empty houses (no permanent address) changes incentives.
| lunarboy wrote:
| Interested how this plays out in other countries in terms of both
| reception and actual effect. The current Korean gov set out to
| reduce house prices by various methods: e.g. high property taxes
| on houses that are not the owners primary residence, banning
| loans/mortage for flipping homes, etc. But prices have gone up
| more during this regulation. People suspect its actually driving
| buyers to buy before more regulations in the future.
|
| I feel like the only way would be to restrict to one house per
| co-residence family unit in contested cities. But I have no
| knowledge of real estate/economics, and I'm sure it'll be called
| communism. So really feels like a near impossible problem to
| solve.
| wsc981 wrote:
| As others have mentioned the best solution is to just build a
| massive supply of houses, in order for supply to outstrip
| demand. This, however, is unlikely to happen in the next 10-15
| years. Especially if The Netherlands keeps the current
| immigration levels up (~400 people per week).
| winkelwagen wrote:
| Better late than never. The housing market in the Netherlands is
| currently terrible. I've "fled" the country for the next few
| years. Hoping that would be enough time for the market to get
| healthy again. It's just insane that we made it this easy for
| people who were well off to begin with to profit. Just sold a
| house, the profit I got from buying and selling that house alone
| makes me nauseous. Makes me wonder why I work at all. Can imagine
| corporate investors are milking it for all its worth.
| ___luigi wrote:
| Is it better in neighboring countries?. There was a discussion
| [1] about controlled rent market few days ago, it seems that
| the problem is related to growth.
|
| [1] https://www.bbc.com/news/business-58317555
| amelius wrote:
| IANAE, but I'm guessing part of the problem is also that
| housing is not part of inflation (i.e. not in the
| indexation).
| lotsofpulp wrote:
| It is, but it is mixed in with housing that people do not
| want, such as due to location, size, quality, etc.
|
| The US CPI figures have no resemblance to your expenses if
| you live in one of the desirable and booming regions of the
| US.
| amelius wrote:
| The Netherlands (where the article is about) is
| relatively small, so I'm wondering if the whole country
| has more or less the same "booming" factor (?)
|
| How does housing affect inflation in that country?
| lotsofpulp wrote:
| I think EU citizens have the right to live anywhere in
| the EU, so while not exactly the same as the US due to
| language and cultural differences, it might still have a
| noticeable effect. But I am not well versed in the topic,
| so I would only be able to guess.
| cjfd wrote:
| This is cart before horse stuff. As noticed by other commenters
| some people need to rent. I am blaming 'quantitative easing'. If
| the central bank buys a whole lot of assets where do other
| investors go?
| varjag wrote:
| I believe the Netherlands used to allow full tax write-off of
| the mortgage interest (dunno if they still do). That certainly
| is bound to heat up the market.
| dwightgunning wrote:
| This is still in place for PPOR. Does not apply for
| investment properties AFAIK.
| hvdijk wrote:
| There are a few other cases where it applies as well, but
| you're right that it doesn't apply to investment
| properties.
|
| Also, it's no longer always a full write off, it's a write
| off at a capped rate. Those with low incomes have a full
| write off, those with high incomes see a more limited
| effect.
| varjag wrote:
| Since most people would like themselves a PPOR that still
| has the effect of heating up the market.
| the-dude wrote:
| Note to self : PPOR means 'Principal Place of Residence'
| here.
| dogma1138 wrote:
| That's not a full write off and it's only for a mortgage on a
| property you reside in. BTW many countries in the EU allow
| you to write off interest from loans even from credit cards
| but it didn't cause an inflation of personal credit line or
| increased utilization.
| varjag wrote:
| The line of credit is not a physical, limited-availability
| asset however (and not something among basic people needs).
| the-dude wrote:
| I am not sure 'full write-off' is the correct term.
|
| It is tax deductable, so you are taxed less, typically max
| 50% of the interest sum.
| varjag wrote:
| That's the explanation I had from a local back in 2003. He
| said their whole interest part of the mortgage was eligible
| for tax rebate.
| the-dude wrote:
| Still the case for PPOR, 30 years max, no interest-only
| mortages.
| IkmoIkmo wrote:
| Not 50% anymore, the max deductible rate is now 43% and
| in 2023 it'll be 37% at which point there won't be
| anymore scheduled reductions. (but I'd be surprised if
| further reductions won't be announced the coming years).
|
| It can be a misleading to say this means only 50% or 37%
| of your interest can be deducted. It could still be fully
| deducted. i.e. if your income is taxed at 37% rate, then
| the 37% rate of 2023 will mean your entire interest can
| be deducted from your income (100% interest deduction).
|
| It means that at higher progressive tax rates for higher
| incomes, e.g. at 50%, only 37% of the 50% can be
| deducted.
| seanieb wrote:
| Real estate investors buying existing properties, without
| substantial capital investment into upgrades/renovations, are
| exactly the same as concert ticket scalpers. Their business is of
| little benefit to society.
| Ekaros wrote:
| Investors buying existing private properties and not replacing
| them with higher density housing is something I could support
| ban of. Ofc, there should be some limitations on pricing of new
| units offered.
| Freak_NL wrote:
| This is desperately needed. And not just in the major cities;
| this is happening in every Dutch town. Amsterdam may have prices
| beyond absurd, but the whole nation is burdened by this problem.
|
| In the street I live in the capital of the northern province of
| Fryslan (Frisia) most homes are owned by their inhabitants, but
| in the past few years we've seen several houses being bought by
| small-time investors (who already own their own home of course,
| are financially well on their way, and are looking for ways to
| save their saving from low interest rates and inflation), who
| charge renters four times what my fellow homeowners and I pay for
| mortgage.
|
| You never get to know the renters, because they are really only
| here for as long as nothing better comes along (like buying a
| house or social housing), and who can blame them?
|
| Meanwhile maintenance of these houses is minimal, because the
| market won't really reward proper upkeep at this point; they can
| always sell the house for an insane price tomorrow.
|
| It's really upsetting to see my younger colleagues stuck renting
| a flat, while I own my house having even paid of the vast
| majority of the mortgage simply because I had the luck of buying
| it in 2013 (a major dip in the market where paying _less than the
| listed price_ was common).
|
| For the good of society we need to put a stop to this type of
| speculation on the housing market.
| joelbluminator wrote:
| When I was living in NL I knew a guy who had a mortgage for a
| house in Australia, a mortgage on a house in Groningen and then
| he was looking to get another mortgage for a house in Den Haag.
| Banks don't seem to cooperate internationally or even
| nationally; he never told the banks he has mortgages already.
| berkes wrote:
| While banks may not check this on signing, they'll certainly
| check it when you start defaulting.
|
| This really is the worst advice ever. It's a sure way to get
| you in Real Trouble when shit hits fans. This is not legal
| advice either, btw. Just someone who read the tiny letters in
| the mortgage contracts.
| Freak_NL wrote:
| Banks will definitely know about any other mortgages and
| loans you have within the Netherlands before the mortgage
| is finalized. These are all registered with the credit
| agency they all employ. The only exception to this rule
| (for now) is a government student loan.
| joelbluminator wrote:
| I hope you're right! No one knew or did anything about
| him renting out the Groningen house thats for sure. I
| don't know what happened with the 3rd house plan of his,
| hopefully it didnt materialize.
| joelbluminator wrote:
| If he defaults. From his point a view he is not risking too
| much; he never put his own money as down payment it was
| 100/ mortgage which NL is too generous with. Then the rent
| he earns is higher than the mortgage due to the low
| interest. So best case he ends up with 3 houses in 25
| years. Worst case he gets some angry letters from the bank
| and loses houses that arent really his. I am not condoning
| his actions but they are not irrational.
| seanmcdirmid wrote:
| But he lied on his mortgage application about loans in
| other countries. So he could be up for some fraud
| criminal charges, and jail time.
| joelbluminator wrote:
| I find that extremely unlikely
| seanmcdirmid wrote:
| We had to reveal all of our houses and loans on our
| mortgage application. They had no way to verify, but the
| penalty in that case is always fraud. But there are
| definitely a lot of people out there who don't think that
| is a serious problem, and the government has to come down
| hard on it:
|
| https://www.magnifymoney.com/blog/mortgage/lying-
| mortgage-ap...
|
| Is the UK more tolerant of lying than the USA? It doesn't
| seem so via a Google search:
|
| https://www.onlinemortgageadvisor.co.uk/mortgage-
| application...
|
| Now, of course, they might not find out, but that just
| means it is a perfect crime, it is still a crime.
| [deleted]
| samsonradu wrote:
| You're right, banks don't cooperate internationally in this
| area, but it cuts both ways no?
|
| How can one get a mortgage in Holland without being a
| resident/having income declared there? The bank will not loan
| a foreign resident in those circumstances. Did he pay taxes
| in all those countries?
| joelbluminator wrote:
| He is a Dutch resident but no bank knows he has other
| mortgages. He is not even allowed to rent out his house yet
| he does.
| beckman466 wrote:
| > In the street I live in the capital of the northern province
| of Fryslan (Frisia) most homes are owned by their inhabitants,
| but in the past few years we've seen several houses being
| bought by small-time investors (who already own their own home
| of course, are financially well on their way, and are looking
| for ways to save their saving from low interest rates and
| inflation), who charge renters four times what my fellow
| homeowners and I pay for mortgage.
|
| specifically the last part:
|
| > small-time investors who charge renters four times what my
| fellow homeowners and I pay for mortgage
|
| But what about maintenance costs though? Those costs are very
| high, definitely 4x the cost of the mortgage! /s
| xvector wrote:
| Dutch cities are easily the best-planned cities in the world. The
| channel "Not Just Bikes" [1] goes fairly in-depth as to why. I
| think I'll trust that the Dutch city planners know what they're
| doing in this instance.
|
| [1]: https://youtube.com/c/NotJustBikes
| kalium-xyz wrote:
| I wonder if things will turn around on this channel now covid
| lockdowns are stopping. I have never found living in a city
| center in the Netherlands quiet before the lockdowns, and don't
| find it very quiet now anymore either.
| nathanvanfleet wrote:
| I have thought about San Francisco. It really does feel like this
| whole city is empty. No stores stay in business, no one seems to
| be walking around these neighborhoods. I have considered if you
| can fly around with a plane at night and use something like heat
| vision to determine who is home?Because I think the stats are
| just not correct for SF
| ModernMech wrote:
| San Francisco has enough empty homes to house every homeless
| person in SF many times over. And there are a lot of homeless
| in SF, so that's saying something.
| logicchains wrote:
| And at the rate a certain subset of homeless destroy
| property, in a couple years none of those empty homes would
| be liveable.
| DonHopkins wrote:
| There's a history of violent protests and riots about housing in
| Amsterdam, and a slogan "Geen woning, geen kroning" (No house, no
| coronation):
|
| https://en.wikipedia.org/wiki/Amsterdam_coronation_riots
|
| >Amsterdam coronation riots
|
| >The Amsterdam coronation riots (Dutch: Kroningsoproer) refers to
| major violence and rioting in Amsterdam, the Netherlands on the
| day of the accession of Queen Beatrix, 30 April 1980. It was one
| of the biggest episodes of such disturbances in the country since
| the end of World War II and the most significant event of the
| Dutch squatters' movement (Krakersrellen).
|
| >Since the 1960s and the 1970s, squatting had become common in
| Amsterdam to protest the city's shortage of housing. Many of the
| protesters were youngsters of the baby boomer generation. The
| 1980 riots were precended by the Nieuwmarkt Riots in 1975 and the
| Vondelstraat Riots in March 1980, when authorities heavily
| responded to evict squatters from properties in the city.
| dmje wrote:
| Amen to this. Two case studies from the UK I've been thinking
| about recently:
|
| 1) Visiting London and spending time in South Kensington -
| walking back to hotel at night, only about 30% of houses had any
| lights on. Suggestion is the others are effectively uninhabited,
| and a search on RightMove shows properties sell for PS20-PS30m
| for a 4/5 bed. This isn't normal Londoners, it's outside
| investment.
|
| 2) Cornwall, where I live - an insane house price rise over
| lockdown as city dwellers aim for the beautiful bits of the
| country. Literally no way now you could afford your first home
| round here on minimum wage, and some towns have a high (>50) %
| holiday or second homes.
|
| It's an untenable situation. I think my generation (I'm nearly
| 50) are probably the last to be able to afford their own home on
| anything other than a massive wage.
|
| Round here in Cornwall the jobs are things like surf instructor,
| supermarket worker, barperson, etc. That's not gonna stretch to
| the local house prices.
| anothernewdude wrote:
| Those empty homes should be torn down or squatted in. I imagine
| an organisation like a squatters union could be set up to
| manage protection for them.
| csomar wrote:
| Sure. Let's fix a housing crisis by completely breaking up
| laws, society and order.
| Quarrelsome wrote:
| squatting is a "solution" to empty houses. Its not a good
| solution but it certainly draws attention to the issue.
| sam_lowry_ wrote:
| It's not uncommon for cities to pas laws that aim at the
| reduction of unoccupied spaces amid housing crisis.
| Actually, most European capitals do this either by raising
| taxes on empty housing or by partially legalizing
| squatting.
|
| Londongrad is an exception to what is otherwise a rule.
| mytailorisrich wrote:
| Houses that are vacant for a long period attract higher
| council tax in London and the whole of England.
|
| Of course you may argue that the difference is small in
| relation to multi-million pounds properties, but that is
| a more general issue with the council tax's range.
| throwaway2048 wrote:
| I'm not sure society is going to break down if a few empty
| rich investor properties actually get used.
| rtpg wrote:
| Let's fix a housing crisis by having houses be used.
|
| I doubt this is the magical unique problem everyone claims
| it is, but "oh no think of people's investment" when people
| are sleeping outside is valuing property over people.
| CydeWeys wrote:
| Housing vacancy is essentially a red herring when it
| comes to the housing crisis. Vacancy rates are still low
| overall, and reducing vacant housing would barely make a
| dent in the issue. The real issue is that there isn't
| enough supply for a given level of demand (i.e. how many
| people there are who do or would like to live there).
| Cities have added way more people than they've added
| housing units over the past several decades.
| Aeolun wrote:
| Hmm, I'm fairly certain we have some laws giving squatters
| rights if they live in some housing long enough without
| opposition.
| lsiebert wrote:
| America fixed it's British Colony issue by doing just that.
| valparaiso wrote:
| Squatters should be shot dead.
| mytailorisrich wrote:
| Vacant properties in London are a red herring. Last time I
| checked official number they accounted for 1% of the housing
| stock, bearing in mind that a number of properties are always
| being refurbished at any given time. In general it does not
| make sense to keep a property empty unless perhaps it is an
| extreme luxury one.
|
| South Kensington is one of the most expensive area of London
| and not representative at all. Whatever happens there does not
| affect the average person, and quite of few of the grand houses
| there are also actually offices.
|
| In any case, it is not true that 30% of homes are empty there.
| Apparently the City of London (i.e. the square mile, not London
| as a whole) has the highest rate in the country and that is
| still only about 4% [1].
|
| In Cornwall the issue is quite different: The area is very
| attractive for second homes and, at the same time, it is the
| second poorest region in all of Northern Europe. This means
| that local resident have a very low purchasing power and indeed
| cannot compete with people from London and the South East. I
| think that they are starting to implement restrictions in some
| areas in order to give priorities to buyers who will occupy the
| property as their main residence in order to keep second homes
| in check.
|
| [1] https://www.cityam.com/15bn-worth-of-london-homes-sit-
| empty-...
| dogma1138 wrote:
| The median price for a property in London is PS600K, the
| average is over PS1M today.
|
| That means that normal people cannot afford to buy anything
| in London even with HTB which is a terrible policy the people
| who can afford to use it are already in the top percentiles.
|
| A PS600K property as a first time buyer requires you to have
| about PS100K to get on a property ladder.
|
| 10% deposit for a 90% LTV mortgage is PS60K, stamp duty is
| PS17,500 (PS20K from end of Sep 21) that's already ~PS80,000
| then you have mortgage fees, legal fees, furnishing costs
| (since new builds don't even come with blinds)...
|
| The average salary in London is PS41K, that leaves you with
| take home pay of about PS30K after tax (if you have no
| student loans).
|
| So a house hold of two people living in London has about
| PS60K per year if both earn the average pay, PS25K or more of
| which would go to rent per year, another PS4000 will go to
| various utility bills and council tax, another 5-5.5K would
| go for travel (assuming you live within zone 1-4), then you
| have food, clothing and other living expenses, so if you are
| somehow lucky and can save up PS10K per year that's 10 years
| to save up enough for a median property which is most likely
| a 54 sq/m flat.
|
| Add kids to this mix and well you are royally fucked.
| refurb wrote:
| Why is it reasonable to assume that people earning an
| average wage should be able to afford a home in the most
| desirable city in the UK, and one of the most desirable
| cities in Europe if not the world?
|
| I mean, nobody complains in the US if the average family
| can't buy a home in Manhattan. That's just unreasonable.
| ClumsyPilot wrote:
| "Why is it reasonable to assume that people earning an
| average wage should be able to afford a home"
|
| Whats's next, "why should an average person be able to
| afford an education or healthcare"?
| jefftk wrote:
| _> earning an average wage_
|
| Average wage in London, not average overall.
| iso1210 wrote:
| The idea is that two people on an average London wage
| should be able to afford to live in an average home in
| London. The truth is they can - if they can get the
| deposit together (which is trivial if you have parents
| you can live with for a couple of years, but if you've
| moved to London for work and your family lives 300 miles
| away your deposit savings go on rent). Perhaps they can't
| live in the most desirable parts of Chelsea, but there
| are affordable houses in the London area for a couple of
| 41k each.
|
| Personally if I had to work in London, I'd look at buying
| a 2 bed house somewhere like Leighton Buzzard (30m
| Euston), Gravesend (22m St Pancras), Tonbridge (35m
| London Bridge), for about 250k.
| iso1210 wrote:
| > even with HTB which is a terrible policy the people who
| can afford to buy are already in the top percentiles
|
| What a load of rubbish. HTB really helped us when buying by
| giving 5 years of interest free
|
| We bought a 240k house with a 12k deposit and 48k htb.
| Moving costs etc meant we had to find about PS17k, which we
| borrowed.
|
| Assuming you do that now, HTB means paying PS647 a month on
| the mortgage and PS330 a month on repaying the deposit.
| Total of PS977pcm.
|
| After 5 years we sold for 240k with PS48k htb and PS160k
| mortgage, leaving us with 32k in equity. We could have
| remortgaged and repaid the htb at that point for a total
| outlay of PS911pcm (with about PS500 in fees)
|
| With two earners on a middle 28k a year that's falls into
| well into the "affordable" bucket.
|
| Even in London, a 600k house with htb will mean a PS30k
| deposit (a problem) and a PS330k mortgage. Two people on
| 41k each can borrow up to PS368k with nationwide which
| gives an idea about affordability (you'll have to knock
| some off for things like service charges which are
| ubiquitious in new houses)
|
| And 41k a year with a coalition loan means you have
| PS30,310.51 per year _after student loan_ , not before. If
| you still have a labour loan from pre-2012 you'll be paying
| an extra PS600 a year.
|
| All that's assuming a 600k loan. Reality is that help to
| buy homes aren't that expensive. This is a decent sized 2
| bed flat for PS375k.
|
| https://www.helptobuyagent2.org.uk//property-
| search/property...
|
| Personally I think you'd be crazy to live in London when
| there are far more reasonable places to live just half an
| hour out of a one 1 station and far far less cost, but it
| London is affordable for people with two London incomes.
|
| If you're single on minimum wage and wanting to live in
| central London? Well tough. Move somewhere else. Plenty of
| choice for houses in Crewe and Stoke, and plenty of minimum
| wage jobs.
| yodsanklai wrote:
| > you'd be crazy to live in London when there are far
| more reasonable places to live just half an hour out of a
| one 1 station and far far less cost
|
| How much cheaper would it be? I've just moved to London
| (living in zone 2, going a bit further didn't strike me
| as much cheaper).
| iso1210 wrote:
| Depends how often you need to be in London,
|
| 2 bed terrace, PS270k
| https://www.rightmove.co.uk/properties/111488087
|
| 40 minutes to Fenchurch Street (little less for
| Docklands), PS65 per week//PS2600 per year.
|
| 2 bed 230k
| https://www.rightmove.co.uk/properties/112846073
|
| 22 minutes to St Pancras, PS127 per week//5k per year
|
| If you can get a 2 bed house that close to central London
| at those prices that's great.
| dogma1138 wrote:
| HTB is a disastrous policy that did nothing but to
| increase the prices of properties.
|
| People could borrow much more than they could because the
| government covered 40% in London and 20% outside of it.
|
| Look at the new developments in London, the price is well
| just under the HTB limit for the handful of HTB flats,
| then there is the shared ownership racket too.
|
| And commuting towns aren't that cheaper either, and that
| is even before you account for the insane costs of rail
| passes.
| iso1210 wrote:
| > HTB is a disastrous policy that did nothing but to
| increase the prices of properties.
|
| It let me buy a property which I wouldn't be able to
| without HTB, therefore your statement is objectively
| wrong.
|
| > And commuting towns aren't that cheaper either
|
| Plenty of 2 bed houses in daily commuting distance for
| PS250k - easily affordable on a London wage.
| mytailorisrich wrote:
| The problem with HTB is that it sustains inflation.
| Essentially it subsidises continued property prices'
| growth, which, in my view, is rather nonsensical
| economically.
|
| As for saving for a deposit, I think an issue is also
| that many people seem not to have been educated about the
| benefits of saving at all. Bluntly, many young people I
| see find the money for short term consumption and don't
| save anything.
| iso1210 wrote:
| When I was young my outgoings were mainly the cheapest
| rent I could find. And maybe a slice of avocado toast
| once a week /s
|
| This is because rents rise to the amount someone is
| willing to pay, which is basically what they earn,
| because they have to live somewhere near work. If they
| get free board then they can swiftly build up savings and
| buy a house and continue the cycle of wealth. If they
| have to pay, they're screwed.
| rocqua wrote:
| Note, this targets anyone buying houses to rent out. It does
| not (like london considered) tax un-lived-in houses.
|
| This is just a weird bandaid. Mostly trying to blame landlords
| for this housing crisis when mortgage tax credits, and scarcity
| due to weird eco regulation shenanigans are to blame.
| iso1210 wrote:
| There aren't mortgage tax credits in the UK, and I have no
| idea what you mean by "eco regulation shenanigans"
| rocqua wrote:
| They are both Dutch situations.
|
| The eco regulation shenanigans is about nitrogen emissions.
| They are limited by European regulations near protected
| areas. The government ignored and worked around these
| regulations for a long time. Then environmental parties
| sued, and we were so far above the limits it was
| essentially ruled "no more emissions". Whilst building new
| houses causes a decent amount of emissions. This meant that
| country wide, getting building permits became almost
| impossible.
|
| This contributed partially to our current housing shortage.
| Fnoord wrote:
| The massive shortage existed way before that lawsuit was
| even in the making.
| iso1210 wrote:
| > Round here in Cornwall the jobs are things like surf
| instructor, supermarket worker, barperson, etc. That's not
| gonna stretch to the local house prices.
|
| That was the case. A colleague of mine, originally from St
| Just, moved to London for work as so many have to do. Another
| from near Cockermouth did the same. Both now work remotely full
| time from their 'home towns' on decent wages.
|
| Covid has done wonders for local communities - good jobs are
| now available for people without having to move across the
| country.
|
| https://www.rightmove.co.uk/properties/112353359 for example is
| under PS300k. Assuming you got it for 300k (asking price is
| 285k) with a 15k deposit you're looking at PS1,278.19 a month
| with nationwide on a 30 year rate, well within the range of a
| couple earning PS35k each, which is a reasonable
|
| Now sure if you didn't get the education to get a decent job.
| Hell even on 25k each, Nationwide can lend upto PS275k for a
| first time buyer - just need that deposit.
| itsdsmurrell wrote:
| The real problem is how much the bank earns off the interest
| it charges you throughout your life while it had to do
| what?... create new money from nothing into the money supply
| with special permissions given to it by the government. This
| is why housing is so expensive to begin with. This bullshit
| needs to stop.
| refurb wrote:
| The bank is collect money in the future that is worth less
| than what they leant out today - time value of money.
|
| Charging 0% interest means the bank is losing money.
| kingludite wrote:
| I don't get how people can keep saying this. Is it that
| people are told banks lend out money from depositors in
| school?
|
| Anyway, if you sign a contract that says you shall pay me
| every month for 30 years OR ELSE I get to sell your house
| (and whatever else you own, seize your income etc) then
| the document with your signature IS the value created and
| I can sell that document for what it is worth.
|
| So the bank creates money not entirely out of thin air
| but against this contract.
|
| This is a fantastic deal for them as there is almost no
| risk.
|
| The seemingly few percent interest per year over 30 years
| quickly ads up to 2 or 3 times the initial sum.
|
| I suppose this would be a reasonable amount roughly
| around the point where 3 out of 4 houses and the ground
| under them would just vanish in thin air with their owner
| stopping all payments after about 5 years on average.
|
| The reality was that some people still had to pay rent
| for their flooded home.
|
| So we are all suckers for putting up with the scheme,
| welcome to the club.
| gruez wrote:
| >>Charging 0% interest means the bank is losing money.
|
| > I don't get how people can keep saying this. Is it that
| people are told banks lend out money from depositors in
| school?
|
| They don't? Where is the money from? Due to complicated
| reasons (ie. bundling mortgages into mortgage backed
| securities and selling them), it might not be the case
| that the mortgage issued by Bank A is funded by Bank A's
| depositors, but it is the case that it's funded by
| depositors/investors _somewhere_.
| imtringued wrote:
| From a technical perspective you need deposits but from a
| practical perspective deposits never leave the system
| except in the case of a bank run where everyone tries to
| withdraw their money. If we assume a cashless system then
| banks can never run out of deposits and deposits never
| limit loan creation. Saving doesn't increase the number
| of deposits, it just shifts them around. Borrowing money
| increases the number of deposits.
|
| https://www.investopedia.com/articles/investing/022416/wh
| y-b...
|
| However, saving does have one important function. It
| creates a hole in the economy and that hole can then be
| used for investment spending (motivated by a borrower
| taking on a loan) without causing inflation.
| gruez wrote:
| >If we assume a cashless system then banks can never run
| out of deposits and deposits never limit loan creation
|
| ...except for reserve/capital requirements, right?
|
| >However, saving does have one important function. It
| creates a hole in the economy and that hole can then be
| used for investment spending (motivated by a borrower
| taking on a loan) without causing inflation.
|
| In other words, capital isn't free as the parent poster
| suggests.
| dragonwriter wrote:
| > Where is the money from?
|
| It is created _ex nihilo_ , limited by reserve concerns
| (which include hard requirements for some banks)
|
| Note that the most of the money never exists in the form
| of currency, it is just accounting entries in the banking
| system.
| 6510 wrote:
| > Where is the money from?
|
| https://youtu.be/b6_SLwReMqo
| imtringued wrote:
| The system makes some sense because your fiat isn't
| completely worthless paper as many people think but there
| is something missing. It's that promises inherently have
| a tendency to lapse so we artificially introduce
| inflation. Well, the problem with inflation is that it
| requires you to borrow more money so you replace the
| lapsed promise with an empty promise that is bound to
| lapse as well. If we were truly serious about letting
| promises lapse then we would consider having negative
| interest rates rather than inflation.
|
| Rather than have 0% interest and 2% inflation there would
| be -2% interest and 0% inflation. Less need for endless
| debt growth and government stimulus.
| eloff wrote:
| I've wondered lately, since the government backstops both
| banks and mortgages, shouldn't it just cut out the
| middleman? It could either give cheaper mortgages or use
| the difference as tax revenue.
| mkr-hn wrote:
| There's this weird brain worm from the 1980s in a lot of
| western democracies where everything government does has
| to be bid out to companies and driven by profit motive
| under the theory that it produces better outcomes. It
| doesn't seem to be working after decades of this
| experiment, but people keep trying.
| imtringued wrote:
| Well, I personally think that the banks profit margins are
| way too high but let me explain why they deserve to charge
| a profit in the first place.
|
| We can make promises to each other. Essentially write debt
| contracts to each other at no fee. The problem is that we
| trust each other but if we want a more complex economy than
| a barter system allows, then we need to make it possible
| for a third party to trust the debt contract. Through the
| introduction of banks as middlemen they use their resources
| to check how trustworthy the debt contract you offer to the
| bank is. In exchange you get money, which is a liquid claim
| on your debt contract and thousands or even millions of
| other debt contracts. Thus the bank is primarily in the
| business of managing risk and the management of risk
| demands a net interest margin. If the bank didn't make
| money off of loans then any bad loan would lose the bank
| money and it would go bankrupt over the long term. In other
| words, the surplus profit that the bank made off your loan
| is its reward for correctly managing risk.
|
| >This is why housing is so expensive to begin with.
|
| Or it could be that housing is in high demand and banks
| offer financing so people have more money but since
| location is a monopoly, supply never catches up with demand
| in popular areas. Speculators themselves simply predict
| that there is sufficient demand for you to be willing to
| bay $400k for a house. Speculators didn't create that
| profit margin, it is the monopoly of land that created it
| and they merely exploit it.
| himlion wrote:
| That's a concern after more pressing issues are solved.
| dan-robertson wrote:
| Banks don't get to create money. Quantitive Easing isn't
| something banks can call up on demand and it isn't banks
| getting loads of free money. Instead they sell certain
| slightly risky assets to the government at a slightly
| higher price than they would be worth without QE. This
| small price difference is the free money but the bigger
| difference is that the banks have more liquid cash to use
| for e.g. making loans.
|
| I think mortgages are pretty competitive, especially for
| reasonably well-paid people and there isn't really that
| much profit made by the banks (your interest corresponds to
| inflation and the risk that you default on your loan with
| the house price having fallen.
|
| Money today is worth more than money in 25 years and you
| have to pay the difference.
| Yaa101 wrote:
| "Banks don't get to create money." nope, they create
| debt, which is the same in practice.
| imtringued wrote:
| Well, if we want to use correctish terminology then banks
| grant credit (the number on your bank account) when
| debtors offer a promise to pay (the debt contract).
| samsquire wrote:
| Commercial banks create money when lending money.
|
| https://www.bankofengland.co.uk/-/media/boe/files/quarter
| ly-...
| eurasiantiger wrote:
| > Banks don't get to create money
|
| Literally every loan a bank gives out is mostly made up
| on the spot, everywhere in the world.
|
| In some countries, banks are subject to reserve
| requirements -- typically from fractions of a percent to
| some percents of their liabilities to depositors.
| Basically: banks need to cover the savings of people.
|
| In the UK (and many other countries), this is not the
| case; banks are not required to have cash on hand in
| relation to their liabilities to depositors.
|
| Instead, they are subject to capital requirements, which
| means they need to have sufficient equities (cash,
| securities, other financial instruments) with sufficient
| liquidity in relation to their risk-weighted assets
| (credit and loans). In effect: banks need to cover the
| investments of the investors.
| mkr-hn wrote:
| The term for the type with reserve requirements is
| fractional-reserve banking:
| https://en.wikipedia.org/wiki/Fractional-reserve_banking
| iso1210 wrote:
| It's not a lot to be fair, and interest rates are below
| inflation.
| arp242 wrote:
| For a small village of less than 5,000 people nowhere near
| any sort of city or population centre, this seems like a lot.
| PS1,278/month is well outside the range for a lot of working
| class and even middle class families. The median gross salary
| in Cornwall was PS27,223 in 2020.
|
| I'm baffled by your comment to be honest; not very long ago I
| could buy a house in Bristol for the same or less.
| iso1210 wrote:
| > For a small village of less than 5,000 people nowhere
| near any sort of city or population centre, this seems like
| a lot.
|
| Not really, people want to live there, and can now live
| there while working in a decent job, raise a family, send
| kids to school, etc.
|
| Without remote work, villages like that are meaningless.
| Communication and social changes caused by covid have
| allowed people to actually live in remote villages.
|
| > For a small village of less than 5,000 people nowhere
| near any sort of city or population centre, this seems like
| a lot.
|
| Not really, people want to live there, and can now live
| there while working in a decent job, raise a family, send
| kids to school, etc.
|
| Without remote work, villages like that are meaningless.
| Communication and social changes caused by covid have
| allowed people to actually live in remote villages.
|
| House prices have shot up since the mid 90s as they become
| more affordable. A new 3 bed home in say east anglia is
| more affordable now (compared with median wages) than it
| was in 1980, despite being far far more expensive to buy.
| That's because
|
| 1) Most households have two incomes rather than one 2)
| Interest rates are much lower
|
| House prices rise to the level people are able to pay for
| them. Remote work has allowed people to live in villages
| like St Just and continue in a decent job, which is great.
| Before it was mainly retirees and holiday owners, neither
| of which were good for the area.
| Dayshine wrote:
| Median post-tax household income in the UK is PS30k. So,
| PS25k each is roughly PS20k post-tax, so you're looking at
| the top 30% of households.
|
| Admittedly this includes households including people who are
| "retired" but I think that's reasonable as plenty of people
| have to keep working even though they're receiving a pension.
|
| https://www.ons.gov.uk/peoplepopulationandcommunity/personal.
| ..
| iso1210 wrote:
| Median weekly earnings for full-time employees reached
| PS585 in April 2019, an increase of 2.9% since April 2018
| [0]
|
| That's PS30k a year.
|
| [0] https://www.ons.gov.uk/employmentandlabourmarket/people
| inwor...
| DrBazza wrote:
| > Now sure if you didn't get the education to get a decent
| job. Hell even on 25k each, Nationwide can lend upto PS275k
| for a first time buyer - just need that deposit.
|
| This horrifies me. Even the slightest increase in interest
| rates will ruin a huge number of home owners.
|
| On the other hand, home ownership in the UK isn't normal
| either. It's only since the 50s or perhaps 60s that the
| average person has been able to afford a home. And then again
| in the 80s with council houses sold off to tenants.
| imtringued wrote:
| >This horrifies me. Even the slightest increase in interest
| rates will ruin a huge number of home owners.
|
| And the slightest increase in inflation will benefit them.
|
| A competent central bank would make sure that it all
| balances out.
| DrBazza wrote:
| Having lived through the 70s and 80s, the last 30 years
| have been relatively stable by comparison. But different.
| Zero interest rates, ERM, and QE, versus inflation,
| stagflation, currency devaluation, decimalisation and the
| winter of discontent. I can wait to see what black swans
| we get in the next 20 or 30 years. My point being really,
| the classic finance phrase, past performance is no
| guarantee of future performance.
| galdosdi wrote:
| Usually mortgages are a fixed rate for the life of the loan
| (usually 30 years) -- at least here in the USA. Variable
| rate (eg "ARM") mortgages are also available but are less
| common and mostly used for short term flipping and the
| like, for the very reason you say -- nobody wants to risk a
| rising payment due to rising rates.
|
| Is the situation very different in the UK? Do Britishers
| actually prefer variable rate mortgages for some bizarre
| reason?
|
| Edit: I did my own research and was shocked to find that in
| the UK it sounds like variable is indeed more or at least
| as common as fixed and that even fixed tends to be fixed
| only for the first 5-10 years!This is the opposite of the
| US, where I know someone on a normal middle class
| circumstance who just secured a 3.25% 30 year fixed
| mortgage, and this is extremely common right now if you
| have good credit. Even the "scary and risky" variable
| mortgages in America are things like a 5/1 ARM which is
| fixed for the first 5 years, which sound like they'd be
| relatively low risk for the UK!
|
| I am baffled. Is the great advantage for the American
| homeowner simply due to the wages of empire, ie dollar
| supremacy? Federal policy favoring homeowners? Or what? I
| did always wonder how banks could afford to provide such a
| good deal.
|
| This is a vast difference really worth wondering about; I
| hope someone has some insight.
|
| Source: https://www.money.co.uk/mortgages/should-you-get-a-
| fixed-tra...
| ljm wrote:
| A lot of things in the UK are set up essentially with the
| notion that you shop around as much as you can to get the
| best deal, but it extends to credit cards, utility bills,
| internet, your mobile phone plan, etc. and not just one-
| off purchases.
|
| You have little to no incentive to stick around as a
| long-term customer when there will be a fresh new deal
| enticing you to switch whenever your last contract
| expires. It's often more expensive not to switch as
| there's no benefit to being loyal to an energy or
| telecoms firm.
|
| This arguably extends to mortgages too.
|
| At the root of it all is that there's more competition
| between these elements and legislation has forced
| businesses to make it easy to switch providers at no
| cost. Anecdotally, I've been through three different ISPs
| in as many years in order to keep my internet costs down.
|
| That doesn't directly address the question, it just
| highlights a mindset.
| dajomu wrote:
| I've been on a 3 year fixed rate mortgage here in the UK.
| The first 3 years are something like 1.8%, after that it
| goes up to something like 3.6%. The idea is that you
| remortgage every three years at no extra cost, so you
| should be effectively paying that lower rate for the full
| term of your mortgage, that is unless the economy tanks
| and interest rates go through the roof...
| dragonwriter wrote:
| > Usually mortgages are a fixed rate for the life of the
| loan (usually 30 years) -- at least here in the USA.
|
| Note that the very low share of ARMs is a recent (post
| Great Recession) phenomenon. Prior to that, ARMs were
| typically a large minority of loans.
|
| https://www.newyorkfed.org/medialibrary/media/research/cu
| rre...
| galdosdi wrote:
| Ah, makes sense. Low rates, you want fixed. High rates,
| you want variable. I just don't understand how the bank
| puts up with it.
| dragonwriter wrote:
| Most of the ARMs were sold with very little downward
| adjustability. With rates at historic highs, the ones I
| was seeing when mortgage shopping in 2006ish consistently
| had wide open upward adjustment and one 0.25% step
| available of downward adjustment to their minimim rate
| from the initial rate.
|
| The bank wasn't taking much risk on the adjustable rate.
| galdosdi wrote:
| I mean the risk the banks take today offering a fixed 30
| year note at a very low rate, if there is significant
| inflation or rate increases anytime soon. It seems like a
| very good deal for the buyer right now and for the last
| decade.
| iso1210 wrote:
| Fixes in the UK now are typically 2, 3, 5 or 10 years,
| certainly not life of mortgage. Idea is that prices
| increase and you repay the mortgage and you remortgage
| onto a better rate (so start with 90% 5 year fix, after 5
| years you've paid down to 85% of the original value, but
| value has increased so you now remortgage onto 75% LTV
| which is a lower rate than you would have on 90% LTV as
| it's less risky.
|
| Mortgage rates in the UK are far lower than 3.25% though
| -- 80% LTV on a 10 year fix with nationwide is 2.8%, 2
| year fix is 1.54%.
|
| Drop that to 60% LTV and 2 year is 1%, 5 year 1.1% and 10
| year 2%.
|
| It all falls down if rates were to shoot up, or house
| prices were to shoot down. The UK government
| traditionally protects house prices like the US
| government protects the S&P though. A house price crash
| is bad for polling.
| DrBazza wrote:
| Uk banks offer a wide range of mortgages. Interest rates
| used to be set by the government rather than the Bank of
| England and were a political tool until the late 90s.
| That added to uncertainty and pushed people to fixed
| mortgages. Then the era of low interest rates arrived and
| people were locked in to high fixed rate mortgages which
| had a fee to get out of.
|
| Now there are Australian type mortgages, basically repay
| as quick as you can, that are variable rate plus X. Or
| fixed and floating, or pure fixed. It generally depends
| on your personal position.
| ___luigi wrote:
| > walking back to hotel at night, only about 30% of houses had
| any lights on.
|
| I wish a data scientist at utilities (water, electricity and
| gas) providers pick up this line and provide some statistics on
| this. I wish also that city-services companies (e.g.
| Electricity/water/parking service provider) can collaborate to
| provide better and justified policy making.
|
| I did similar studies based on open data to provide insights on
| road/sidewalk optimization usage, and I still see value in
| collaboration with policy makers.
| mordae wrote:
| Pirates tried to investigate the situation from this angle
| only to be publicly shamed for being commies, spying on
| people. They only wanted district aggregate statistics.
| spangry wrote:
| There's an organisation called Prosper Australia that does
| analysis of 'speculative vacancies' in Melbourne using water
| consumption data: https://www.prosper.org.au/wp-
| content/uploads/2021/01/Prospe...
| icelandicmoss wrote:
| Similar situation for York -- tourist hotspot, a large chunk of
| the local jobs in tourism/customer service, retail, food
| service etc. Article in the local press in the last year (which
| I obviously can't find now) found that something like 95% of
| the properties on sale were unaffordable on the median wage of
| a local resident.
|
| And then you get articles like this one:
| https://yorkmix.com/york-is-the-norths-property-hotspot-as-i...
| Funny thing is, this article happens to be a total submarine --
| I recognise the development they're describing, it's been there
| for years and has not sold well (totally overpriced) -- this
| article and others like it are just an attempt to drum up
| further demand.
|
| Really frustrating that when we have so many people needing
| housing, homes are built entirely with the objective of selling
| them to people who already have homes elsewhere!
|
| First houses should have priority over second houses please.
| ed_blackburn wrote:
| Another Cornishman here (Par). The financial destitution and
| how much harder they have to work for the same things I do in
| the South East is unsustainable. Cornwall has Luther to the
| right politically and that's because there's been some useful
| scapegoats. Now those scapegoats have been slain and things are
| getting worse not better I hope we'll see policies that are
| focused on root cause issues instead of ideology (left or
| right). Property is an obvious example. Dormant second home now
| means the Cornish rent or live in low quality new build
| accommodation (hello Wainhomes) but when communities are
| hollowed out and empty through winter local businesses fail and
| the destitution affects even the pretty locations. Those people
| wonder what happened to the quaint fishing village their second
| home is in. Why is cafe closed, the nearest shop a supermarket
| that is a 30 min drive away. Why is their a drug problem? Why
| are the pins all boarded up etc etc. I hope Cornwall and it's
| political representatives can act before the bust comes and
| find a balance between tourism and building sustainable local
| businesses in different sectors. The obvious place to start is
| accommodation. If people cannot put a roof over their head how
| can a community function least of all an economy.
| makomk wrote:
| Unfortunately, the British press and all the wealthy people
| with second homes still have Brexit as a scapegoat for why
| cafes and shops in tourist destinations can't find staff.
| Never mind the fact that AirBNB and second homes have pushed
| up house prices and rents to the point that it's impossible
| to live there on the kind of pay those jobs have, according
| to the media it's all the fault of Brexit driving away the
| foreign workers who had to do the jobs because all the
| Brexit-voting morons who were brainwashed into blaming the EU
| are too lazy to do them.
| afuchs wrote:
| There's a dead comment later in this thread which using
| directed abusive language towards another commenter while
| linking to a Louis Rossmann video.
|
| The video [1] was interesting, although the dead comment
| seemed to completely ignore the video's [1] main point,
| where Louis talks about a hypothesis [2] where in New York
| City there may be an incentive structure between real
| estate investors and banks which is creating a market
| failure. The hypothesis [2] is that a building's assessed
| value is based on the rental prices that the landlord asks
| for even if nobody will reasonably pay those rents. The
| hypothesis speculates that, if a building's assessed value
| is lowered, it could trigger conditions in loan contracts
| that penalize the landlord or investor. Because of this,
| there may be an incentive for the landlord to keep
| buildings vacant instead of lowering their prices to market
| rate.
|
| [1] https://www.youtube.com/watch?v=xfHQZj3_TX4&t=580s
|
| [2] https://www.reddit.com/r/nyc/comments/innhah/nearly_two
| third...
| silexia wrote:
| I am not a housing investor, but I see many misguided
| articles claiming housing investors are driving prices
| up.
|
| The factors that primarily control pricing in the housing
| market are supply and demand.
|
| In Seattle, London, Los Angeles and elsewhere demand has
| risen steadily but supply has not. This causes prices to
| increase sharply.
|
| The solution is to increase the housing supply. If the
| government removes regulations preventing developers from
| building new houses and apartments, many more will be
| built and prices will drop.
|
| Many young people prefer to live in inexpensive high
| density housing. I remember looking at renting an
| apartment without a kitchen (there was a big shared
| kitchen for the whole floor) and without its own bathroom
| in my early twenties. Monthly rental price on this is
| around $300 per month as compared to $1,600 for a single
| bedroom apartment. Why aren't there more of these?
| Government regulation prevents them from being built.
|
| Government permitting processes take years to go through
| and cost millions of dollars for big new apartment
| buildings or for residential developments. If we lighten
| / remove these regulations, housing supply will decrease
| dramatically.
|
| If you don't want housing investors bidding up housing
| prices, then allow the supply to continuously increase.
| This will continuously drive down prices and no investors
| will want to buy.
| mancerayder wrote:
| Well, when you apply for loans the bank will want to know
| (and will send an appraiser) to estimate sales and rental
| values. If the developer's expectations on rental or
| sales income on a multifamily property are higher than
| the reality, and they lower sales prices (condos) or
| rental amounts, there's potential for them to get called
| to provide more capital. Because they may reappraise.
| What I've just explained probably has its own vocabulary
| I'm not using in the commercial real estate world, but my
| experience here is that my building has this problem and
| the brokers explained why they preferred to leave things
| vacant.
|
| As it turns out, after 18 months, as the city comes back
| after the pandemic, the vacancies are now suddenly much
| lower. The building for 1/3 full for years.
| bdowling wrote:
| > The hypothesis speculates that, if a building's
| assessed value is lowered, it could trigger conditions in
| loan contracts that penalize the landlord or investor.
|
| This is the issue exactly. A commercial mortgage lender
| will insist on a certain maximum Loan-to-Value ratio. The
| value of the property is directly related to the long-
| term income that it generates (i.e., the net present
| value of all future cash flows). If the amounts of cash
| flows go down, then the value of the property goes down
| and the loan-to-value ratio goes up. In a commercial
| loan, the lender can often call the loan due at certain
| times during the term of the loan for any reason. One big
| reason to do so is if the loan-to-value ratio goes up
| beyond the level that the lender was comfortable with.
| Refinancing in such a circumstance could be very
| expensive. Thus, it may make more sense for an owner to
| keep a property vacant and lose money temporarily than to
| take on a tenant at a lower rent and possibly cause the
| lender to call the loan.
| ForHackernews wrote:
| That's a self-correcting problem, isn't it? Either those
| cafes and shops will raise prices and pay their staff more,
| or they'll close down. I've never understood why we're
| supposed to feel bad for "small business owners" who won't
| find staff when paying peanuts for their crappy jobs.
| aikinai wrote:
| You think those small business owners are packing away
| substantial profits they could use to pay staff
| significantly more?
| imtringued wrote:
| From my gut feeling it doesn't seem that small business
| owners actually get the funding they deserve from banks.
| Only big businesses actually get those low interest
| rates.
| emodendroket wrote:
| If a business can only exist by having serfs it wildly
| underpays then maybe it deserves to lose out to the big
| chains.
| HelloNurse wrote:
| Compared to a small business the "big chains" might be
| able to operate with smaller profit margins, or have
| lower non-labor costs, or profit from owned real estate,
| but it isn't enough for long term viability. Excessive
| rents are going to turn any neighbourhood into a desert
| like South Kensington.
| seanmcdirmid wrote:
| Or they could turn to automation, eliminate their labor
| costs substantially. Eg that cafe can turn into a bunch
| of vending machines.
| emodendroket wrote:
| Sure, they could do that too.
| llampx wrote:
| Big chains aren't exactly known for treating unskilled
| workers with kids gloves. Amazon comes to mind, as does
| Walmart.
| emodendroket wrote:
| And yet they pay substantially better wages with better
| benefits on average. Even labor law compliance is much
| better (not to mention that small businesses are exempt
| from many regulations in the first place).
| redis_mlc wrote:
| oh, the newb HN Econ 101 argument again.
|
| > we're supposed to feel bad for "small business owners"
|
| Yes, you should.
|
| What will happen is this. When their commercial lease
| comes up for renewal, the small business owner won't
| renew. Then you'll write even more idiotic posts like,
| "Why's there no entertainment venues in the area?"
|
| HN is so out-of-touch with businesses on the other side
| of the keyboard.
|
| Here's a clue, Marxist. As corona recedes, the news will
| start reporting on the craggy shoals of bk's and suicidal
| small business owners that surface. You know, the people
| you have no empathy for, but make up the character of a
| city.
|
| You can watch Louis Rossman's Youtube channel on how
| retailers have abandoned the most prime New York
| locations in the world to see how it plays out.
|
| "Madison Ave. is 39% empty"
|
| https://www.youtube.com/watch?v=xfHQZj3_TX4
| limograf wrote:
| Sure, they can raise prices but the customers who paid
| PS350,000 for their charming holiday cottage won't pay
| PS35 for a cup of coffee. The house prices are so out of
| touch with the rest of the economy, there's no way to
| catch up for normal people. So the cafe closes.
|
| The self correction should actually be the house price
| crashing, but the UK government consistently props up,
| and pumps, the market.
|
| The average house price in Salcombe (Devon) is PS950,000!
| That's 30 average salaries.
| Spooky23 wrote:
| We're in a suicide spiral where fiscal policy has staved
| off economic malaise by kicking the can down the road.
|
| Interest rates have been kept low, which drives real
| property prices up. Everyone intuitively knows that
| collapse or high inflation is the endgame, so money
| flocks to property, which drives up demand.
|
| The issue isn't the coffee shop in the fishing village,
| it's that the fishermen are selling real estate now and
| nobody actually lives in the village.
|
| You can see this in many places. Lake George, NY is a
| great example - beautiful village, great location, but
| can only support tshirt shops from Memorial Day to Labor
| Day. Manhattan is the same way -- the Lower East Side is
| like a museum of what Manhattan was like, with $2M condo
| apartments being randomly dropped in and 1/3 of the
| storefronts vacant.
| imtringued wrote:
| Low interest rates have made everything cheap but the
| supply of housing (specifically land) is extremely
| inflexible. You can make more cars but not land. The
| location value of your house skyrockets at the expense of
| everyone else.
|
| However, make no mistake. The problem isn't money. Even
| if you buy your house with Bitcoin you will run into the
| same problem. The problem is that location is a a
| monopoly. You can tax it or let it run wild.
| devdas wrote:
| Nothing that a wealth tax on the current value of land
| won't fix. Make property taxes to the value of the number
| of people that land should support in a highrise
| configuration, and let the current owners pay it.
| Spooky23 wrote:
| I'm not making any mistake, cheap money is absolutely the
| biggest problem that we have today.
|
| My former mentor bought a house on Nantucket for $150k in
| 1990, sold for $3.5M earlier this year. That appreciation
| isn't due to inflation or the constrained supply of homes
| -- it's always been constrained. It's due to increased
| demand fueled by excess capital.
|
| There's no money in traditional banking. Even with
| negligible interest, the spread is very tight. The only
| way to compete is with volume, aggregation and fee for
| service, and the only way to get volume is to lower
| standards.
|
| IMO, we're in an economic time period similar to the
| 1860's.
| com2kid wrote:
| > My former mentor bought a house on Nantucket for $150k
| in 1990, sold for $3.5M earlier this year.
|
| That is literally a luxury good with a fixed supply. As
| the # of people who desire that good has sky rocketed
| generation to generation, of course the price went up.
|
| There are limited production run cars from that era that
| underwent similar price inflation.
|
| For someone who wants to live in Nantucket, there is
| literally no substitutable good!
| Spooky23 wrote:
| > That is literally a luxury good with a fixed supply. As
| the # of people who desire that good has sky rocketed
| generation to generation, of course the price went up.
|
| We're arguing the same thing. Everyone wants to go to the
| beach. The ability to get cash to do so increased demand.
| com2kid wrote:
| > You can make more cars but not land.
|
| Lots of land exists, the issue is desirable cities, and
| western countries have gotten really bad at making those.
|
| China spent the first decade of the 21st century creating
| urban cities left and right, ignore the western
| propaganda of "ghost cities", and also spent time
| urbanizing what America would consider "suburban" towns.
|
| Meanwhile western nations are dead set on never
| increasing the # of desirable urban environments, and
| then it is all surprise Pikachu when house prices
| skyrocket.
| mrkstu wrote:
| Whole states like Idaho and Utah have seen skyrocketing
| prices for homes- this is in no way limited to specific
| urban environments.
| spockz wrote:
| The point is that before there existed an ecosystem. That
| "peanuts" is what the business owner was able to afford
| to pay which was enough for the employees to make a
| somewhat decent living. Now that isn't possible anymore.
| The objection is to the change/disruption of a local
| ecosystem by outsiders.
| chrisseaton wrote:
| Blaming outsiders - classic strategy, can't go wrong!
| imtringued wrote:
| We are blaming outsiders for giving us too much money.
| Where is all that money going if not into the hands of
| locals who are selling their property?
| im3w1l wrote:
| Consider a community of 10000 households. 5000 rent their
| housing, 4500 own their own place, and 500 own more than
| one place. Now outsiders enter the picture and buy
| property driving up the prices. The 5000 renting
| households are now in trouble. If rents go up they are
| squeezed that way. With rent control there are still
| issues: Their kids are unable to move out, and
| separations become tricky. For the 4500 it's a mixed bag.
| They have the same issues with splitting the household,
| but they also have advantages. They can do a reverse
| mortgage and live well. Or they call sell and live well
| elsewhere. For the 500 elite households it's a pure win,
| they can buy more yachts than before.
| chrisseaton wrote:
| > Now outsiders enter the picture and buy property
|
| Buy it from who? Locals. So who gets the money? Locals.
|
| But anyway the point was don't divide people into
| insiders and 'outsiders'.
| ClumsyPilot wrote:
| Your solution is the problem. The house prices are a
| blood-sucking squid, and you are pay for them every time
| you get a coffee or get any service - half the money is
| going to the labdowner that contributes nothing to the
| economy. That's why a coffee costs PS5 and a plumber
| charges PS100 an hour
|
| But we have fools that celebrate rising house prices
| because their nominal net worth went up
| ipaddr wrote:
| If prices were going down would things be better? You
| bought a 500,000 and in ten years it will be worth
| 100,000 would you still make that investment?
|
| Everyone wants prices to remain the same forever. That
| takes a neutral population growth or more supply
| imtringued wrote:
| >If prices were going down would things be better? You
| bought a 500,000 and in ten years it will be worth
| 100,000 would you still make that investment?
|
| The idea that holding a property and doing absolutely
| nothing with it is an "investment" is absurd. The only
| people who would buy that home are those who want to live
| in it or who want to rent it out to someone who wants to
| live in it.
|
| No I wouldn't make that "investment". I would just rent
| the property out without "investing" the property.
| mellavora wrote:
| I've read that in many Asian countries houses are seen as
| a depreciating asset.
|
| And I've noticed that in the US, the observations that
| cars are typically depreciating assets never really
| stopped people from buying them.
| tsimionescu wrote:
| By this logic no one would buy food, as it drastically
| depreciates in a minuscule amount of time.
|
| The real economy is the one that fulfills people's needs.
| Real-estate investment is parasitic to the real economy -
| it locks money away and artificially increases the price
| of a basic necessity. This has always been recognized in
| even basic economics with the concept of "rent-seeking" -
| unproductive activity that still makes money, such as
| literally charging rent.
| andrepd wrote:
| >investment
|
| That's exactly the problem right there. A house can be a
| place to live or an investment, but not both. I myself
| think it's a bit to silly to spend labour and resources
| building a concrete box for the latter purpose, so I'd
| much rather houses fulfill their purpose as homes for
| people to live in.
| panarky wrote:
| > but not both
|
| Certainly a place to live can also be an investment.
|
| Just like a work of art can also be an investment.
|
| And a plumbing business can be an investment and also fix
| your pipes.
| ClumsyPilot wrote:
| You missed the point - a plumbing business is an
| investment, just like a construction business. But no-one
| buys an old set of pipes and calls that an investment,
| and we understand that would be dumb.
|
| If houses are to be an investment, their prices will keep
| rising and they become unaffordable. When consumer goods
| themselves are an investment, standards of living fall
| ClumsyPilot wrote:
| Certainly yes, it would be better - the value of a car
| goes down, do you still make an 'investment'? No, you buy
| a car if you need a car, we don't call buying a car
| 'investment', we don't encourage people to hoard cars
| they don't need, it contributes nothing to the economy.
|
| The optimal situation is for cars and houses to be as
| cheap as possible relative to earnings, that's what we
| call economic growth and improved quality of life.
| seanmcdirmid wrote:
| Housing (the structures) depreciates in Japan now of
| days, and so they mostly don't have this problem.
| cutler wrote:
| And driving wages down is the answer to what, exactly?
| nkrisc wrote:
| >it's all the fault of Brexit driving away the foreign
| workers who had to do the jobs
|
| Forgive me since I'm American, but wasn't getting rid of
| foreigners taking jobs one of the selling points of Brexit?
| fxtentacle wrote:
| It was, but now that they're gone it's only become more
| obvious that locals simply don't want those jobs.
| user5994461 wrote:
| Of course nobody wants these jobs. A lot of positions
| were filled by tourists and travelers who stayed there
| for a little while and worked a bit to earn side money.
|
| - Staff at a restaurant is PS8 an hour, that is minimum
| wage.
|
| - Expect two shifts far apart, around 11am-2pm and
| 7pm-11pm.
|
| - Work on Saturday and Sunday and some of the week. You
| will never know more than a few days ahead when you are
| expected to work.
| flir wrote:
| Yup. Immigration was _the_ issue. Bunch of other stuff
| around the edges like English exceptionalism.
|
| Note that laurent92 talks about "Englishmen" not "British
| voices". That's incredibly telling.
| makomk wrote:
| It was, especially getting rid of the kind of immigration
| that turned blue-collar working-class jobs into something
| that no-one local could possibly live on. Perhaps more
| importantly, all the educated influential opponents of
| Brexit insisted that this wasn't happening, that the idea
| EU immigration was driving down wages was a cynical lie.
| I'm pretty sure that it is not lost on most of the
| supporters of Brexit that the media is trying to spin the
| fact companies are having to put up wages now we've left
| as further proof Brexit was based on lies.
| mmarq wrote:
| > that the idea EU immigration was driving down wages was
| a cynical lie
|
| It was a lie, EU citizens in the UK earn significantly
| more than the locals. If I wanted to be a member of the
| underclass, say a cleaner, I'd be in Germany, where I
| wouldn't have to pay 6KPS for pregnancy and 12KPSpa to
| send a child to a half-decent primary school.
| yardie wrote:
| The primary driving force was nativism. Even right up to
| the end the UK wanted to remain in the common market, but
| part of being in the common market is freedom to migrate.
|
| It also exposed the loss of influence the UK had in the
| EU. Many provisions were carved out for them in the 80s.
| But when it came to the EC the EU was not making any
| exceptions for them this time.
| laurent92 wrote:
| No, it was recovering the freedom that was getting eaten
| by Europe, and listening to the vote of the UK people
| again. Whether it ends up in "getting rid of foreigners"
| or anything else would only be a second-order result of
| listening to the Englishman's vote, if that is what they
| still vote for in 10 years. The goal of Brexit was
| democracy, not particular measures left or right.
| sideshowb wrote:
| Amusing you equate democracy with the English vote.
| Sincerely, Scotland, Wales and NI
| rfrey wrote:
| I understand there are other factors at play (to say the
| least) in NI, but can you explain the incentive Scotland
| and Wales have to stay in the UK? I'd have thought they'd
| be gearing up for full scale separation referendums by
| now.
| Filligree wrote:
| It's the same incentives the UK had to stay in Europe.
| Ninety plus percent of their trade is with each other.
| laurent92 wrote:
| I'm equating democracy with listening to the most
| numerous. You have been thoroughly defeated with 3
| blatant-majority votes in 4 years. If you don't like it,
| you were never in favour of democracy, and if you are not
| in solidarity with your English mates, tell me about
| solidarity with an entire continent.
|
| Name a single country that succeeded to leave EU without
| retaliation from said EU and I'll eat my hat. EU is not a
| choice for most of us on the continent. We're not free to
| leave, and we were manipulated into joining.
|
| Long story short: The simple fact that it required not 1
| but 3 blatant-majority votes for elites to register that
| yes, UK people wanted to leave EU, is a sufficient proof
| that EU is not listening to the most numerous.
|
| And let's not even talk about the quantity of funding,
| sponsorship and 4x3 billboards it took to swerve
| Scotland's, Wales and NI in favor of EU. Manipulation is
| in plain sight here.
| dmje wrote:
| Personally I see the b/s scaremongering, the likes of the
| Farage bus and the hateful rhetoric of the Daily Heil as
| the "plain sight manipulation" in creating a manufactured
| problem with the EU which simply never existed, but each
| to their own.
| [deleted]
| onlyrealcuzzo wrote:
| AirBNB, second homes, and rentals aren't pushing up rents
| and house prices even a fraction as much as central banks
| artificially lowering interest rates, zoning laws, and
| NIMBYism.
|
| Population growth and lower family formation rates - which
| is hard to blame on anyone but women actually having a
| choice for their own lives - are much bigger reasons for
| price increases than AirBNB and second homes pretty much
| everywhere outside of the most touristy vacation
| destinations.
| heresie-dabord wrote:
| Wages have been stagnant for _decades_ while the cost of living
| has increased... and now housing has become a _privilege_.
|
| Yes, there are "rich foreigners" and some corporations are
| strategically acquiring the places and spaces where high rent
| can be extracted. But what has driven housing cost in the
| market of individual homes is simply that some citizens can
| afford to borrow at low rates, and other citizens are seizing
| the opportunity to _realise gains_ that they could not attain
| through a lifetime of work, wage increases, and other
| investing.
|
| It is grim to work for years and have nothing else to show for
| it.
|
| Young families, workers, the elderly, and the poor will be
| unable to afford even tenancy in the big cities. (To turn dark
| for just a moment, we only really seem to have a _plan_ for the
| elderly.) The future control of crucial urban voting-blocks in
| Western democracies will be in the hands of _landlords_.
| bushbaba wrote:
| The governments are to blame. If conventional mortgages were
| capped to 1 per person. And a minimum of 80% ltv was
| required. Then houses would be cheaper.
|
| Instead the government is letting people put low money down,
| low interest rates, and buy up many houses at once. That of
| course inflated housing costs.
| heresie-dabord wrote:
| > The governments are to blame.
|
| Governments are reluctant to oppose profiteering. And with
| stagnant wages and rising COL, working people are being
| squeezed out of ownership.
|
| The British band XTC had a prescient song -- "Where did the
| ordinary people go?" They couldn't afford to live in their
| hometowns anymore!
| [deleted]
| ericmay wrote:
| I like this idea. I'd add in though you gotta do something
| about corporate ownership though.
| [deleted]
| toomanybeersies wrote:
| Has it ever been possible to buy a house on minimum wage?
| varjag wrote:
| I moved here years ago and was having doubts if it's the
| right time to buy at these insane property prices. A coworker
| said "I know some people who've been holding out for fair
| housing prices since 1949, they are still waiting".
| cutler wrote:
| Anyone remember Fair Rent tribunals in the UK? Abolished by
| the Conservatives in the late 80s along with higher
| education grants. The 70s and early 80s were a golden age
| for more than just music.
| Ekaros wrote:
| Not sure about minimum wage. But certainly for regular blue
| collar labour it was. And I don't see why it should not have
| been.
| te_chris wrote:
| UK's also only had a min wage since Blair
| lsiebert wrote:
| Yes, depending on where you buy. Many homes are much cheaper
| outside of major cities.
| chrisseaton wrote:
| That'd have to be a PS60k house.
| taffronaut wrote:
| They do exist. If you can work remotely or don't mind the
| commute to Cardiff - welcome to Merthyr!
|
| https://www.rightmove.co.uk/house-
| prices/detailMatching.html...
| sideshowb wrote:
| Not a very popular view among the Valleys LAs though who
| aspire to be something other than dormitories for Cardiff
| kingludite wrote:
| 40 years ago some family homes in NL cost 35 k guilders
| or 16 k euro. 2 floors, 2 bedrooms, front and back yard.
| [deleted]
| inter_netuser wrote:
| Yes. I even knew welfare recepients who bought a property
| while on welfare.
|
| Pepperidge farms remembers.
| traceroute66 wrote:
| > spending time in South Kensington - walking back to hotel at
| night, only about 30% of houses had any lights on.
|
| South Kensington is a bit of a curiosity.
|
| It is predominantly bordered by Chelsea and Knightsbridge.
|
| Chelsea is Russian country, if you are a wealthy Russian,
| Chelsea is the place to be. Unless you are a Russian oligarch,
| in which case there are one or two spots a bit further away
| where you can splash super serious cash on rarer properties.
|
| Knightsbridge is wealthy Arab country, when it gets too hot in
| the Middle East summer, they flock to Knightsbridge with their
| imported Ferraris to stay in their London houses.
|
| But South Kensington is a bit different. Its not attractive to
| the Russians or Arabs. Not many of the properties there remain
| single occupant, they've been mostly subdivided in to
| individual flats or re-purposed for office (or educational use
| ... there are lots of cram-schools, colleges and nurseries
| round there).
| yawaworht1978 wrote:
| What about Notting hill, a bedsit can go for 2000 quid per
| week there, it's in Kensington. Average London rent prices
| are 1600 quid, that is before council tax, internet and the
| dreaded tv licence. A more granular overview is Location
| Studio One bedroom Kensington and Chelsea PS1,427 PS2,062
| Islington PS1,383 PS1,565 Tower Hamlets PS1,398 PS1,547
| Westminster PS1,371 PS2,113 Lambeth PS1,240 PS1,595
|
| One bedroom is not sufficient to raise a family, I think
| that's safe to say.
|
| So let's move on to the 2 and 3 bedroom properties
|
| Location Ttwo br 3Wbr swestmisnsterPS 2,920 PS4,152 Camden PS
| 2,254 PS2,880 Kensingtonelsea PS3,030 PS4,938 Islington
| PS1,934 PS2,487
|
| Hammersmith a 1,922 PS2,653
|
| Sorry for the formatting.
|
| Cheapest
|
| BBexleyPS. 1,105 PS1,281 Havering PS1,120 PS1,384 Redbridge
| PS1,293 PS1,589 Sutton PS 1,163 PS1,498 Waltham Forest
| PS1,364 PS1,649
|
| These are before council tax and other costs, which are gonna
| be laughed at by oligarchs but they do count for normal
| people.
|
| The new houses nnextto Westfield shopping centre cost around
| 2000 quid before council tax , zone 3 classic houses with a
| garden go for 1500 before council tax. its really bad in all
| London, unless you make 50k after taxes and most devs don't
| make that money there. t
| traceroute66 wrote:
| > its really bad in all London
|
| I don't disagree with you there.
|
| Aside from the Chelsea and Knightsbridge style stories,
| overall London suffers from a problem of (a) too much buy-
| to-let nonsense going on (b) off-plan new-build
| developments which are sold off-plan predominantly to
| offshore buyers (mostly Chinese using it as a way to get
| chunks of money out of China, but also other nationalities
| too). All those new-builds South of the River for example,
| almost exclusively off-plan jobs.
|
| The present government is not helping either. They are
| unashamedly on the side of the property developers out
| there to make a quick buck, not Londoners.
|
| I absolutely do feel for those on low / minimum wage in
| London who are pushed out of the market and having to face
| horrible commutes to be able to live somewhere remotely
| affordable.
| OJFord wrote:
| Yeah a lot are not residential, a lot of those that are are
| subdivided into flats, and a chunk of those that remain may
| just not be occupied outside term time or during a pandemic.
|
| But mostly it's that they're not residential to begin with.
| Many more are linked to an embassy, restaurants, clubs,
| nurseries, storage, etc. than you'd realise from 'walking
| back to hotel at night'.
| headmelted wrote:
| I mean, it's an easily fixable problem.
|
| Punitively heavy land taxes on non-primary dwellings solves
| this overnight. It also raises a lot of capital that can be
| used to provide services in the area.
| taffronaut wrote:
| Unfortunately the wealthy tend not to want to be taxed and
| they're not averse to fighting back. They've learned that
| they need to lobby even small local tax-raising authorities
| to obstruct these kinds of actions. In Wales, local
| authorities are allowed to raise a local tax premium of up to
| 100% on holiday homes [1], but few, if any, charge a premium
| of more than 50%, even in affected areas considered to be in
| crisis. There's also a loophole that a second home can be
| declared as a holiday rental property business, without any
| real intention of letting it out. Welsh authorities work hard
| to police this by asking to review evidence of lettings (I
| know this as I own a legit holiday rental property in an
| affected area) but the enforcers need extra funding to police
| the tax dodgers.
|
| I don't dispute your underlying point that punitive taxes are
| a big part of the solution, but I take issue that it's an
| easy or overnight fix unfortunately because of the interests
| aligned against imposing them.
|
| [1] https://gov.wales/welsh-government-announces-three-
| pronged-a...
| imtringued wrote:
| The fundamental problem isn't that investors vote against
| land value taxes. The problem is that the small homeowner
| doesn't want to pay them either so he will vote for the
| benefit of the investors.
| 6510 wrote:
| Use the money for a basic income.
| mrjin wrote:
| Yes and no. Yes, your proposal can solve the problem for
| sure. No, you just can hardly implement it anytime soon. I'm
| in Australia and Labor lost last election just because they
| were swearing to remove so called NG(Negative-Gearing, which
| allows the property investors to offset their income with
| losses from investment property) before the ballot day,
| despite NG itself is actually a bizarre idea: why would tax
| payers cover the asses of the property investors and what's
| more, in fair amount of NG claims, the so claimed losses were
| not actually rendered but rather losses in accounting term.
| If you opt to a different accounting method, they were
| actually making a profit.
|
| So your proposal will for sure hurt those vested interests,
| and I would expect it be very hard to pass the parliament.
| It's great to see Dutch cities actually made that far, I'll
| keep my eyes wide open to see what's next for them.
| chii wrote:
| You made negative gearing sound so bizarre, but it's really
| just business investment deductions, which applies to every
| type of investment, not just real estate.
|
| If your business made a loss, you get to deduct that loss
| from your revenue, before getting taxed.
|
| This is the exact same concept, but applied to investment
| properties. As for the "dodgy" accounting methods - it's
| not really dodgy, but merely depreciation of the property
| at play. Depreciation is real. After all, a house doesn't
| last forever, so why shouldn't depreciation be allowed for
| investment properties when it is allowed for all other
| business capital expenditure?
|
| People like to argue that by taking away negative gearing
| for property (i.e., treat it differently), that it would
| increase affordability. It won't make a big difference.
| IkmoIkmo wrote:
| Not sure why the amen is applicable to Dutch cities. I'll take
| the local perspective from Amsterdam as an example, but it
| applies more broadly to the other cities as well here.
|
| Regarding point 1:
|
| There's no real issues with long-term vacancies (the
| municipality already has laws in-place which fine owners of
| vacant homes), typically sits between 1 and 2%. That should
| obviously go down to 0 as much as possible, but it's clear that
| (1) the problem has an extremely minor effect on the market,
| (2) it's not exclusively caused by investors, a lot of them are
| pied-a-terres or homes owned by temporary migrants working
| abroad and (3) the problem of vacant homes that can be
| attributed to investors, can be addressed in many other ways
| than a total ban.
|
| In other words, not an effective or suitable policy on this
| point.
|
| Regarding point 2:
|
| The price increases aren't caused by investors in Amsterdam,
| studies have shown this over and over again. If buy-to-let is
| banned, rental supply drops, rental prices go in overdrive, and
| there'll be more pressure to buy under any circumstance. The
| have-nots who're unable to buy will be even worse off. There's
| no magical panacea to a lack of sufficient supply.
|
| You mention a couple points around 2nd homes, which are fair. I
| think in a world where there isn't enough housing for everyone,
| we should at minimum disincentivize owning second homes that go
| unused most of the time. But apart from the fact that Amsterdam
| is the capital, a working town, not a place where people have
| second homes that they enjoy on the weekend, this policy
| doesn't address 2nd homes at all. You're not banned from buying
| and owning a 2nd home in Amsterdam after this policy goes into
| effect.
|
| In other words, an entirely ineffective policy regarding point
| 2.
| crote wrote:
| About point two:
|
| Both supply and demand are incredibly constrained: building
| new houses is slow and not exactly being stimulated by the
| government, whereas demand is fixed because people _need_ a
| place to live.
|
| Property rental is an extremely attractive investment
| opportunity. Demand is guaranteed and due to the low cost of
| obtaining money it is basically risk-free. Even at near-zero
| rent you'll still make a profit - as long as the housing
| market doesn't crash.
|
| On the other hand mortgages always carry some risk, and banks
| are aware of this. There are quite strict limitations on the
| amount you are allowed to borrow. This directly means that
| individuals will always be outbid by investors.
|
| This directly results in price increases. Individuals are now
| no longer able to buy a home, forcing them to rent.
| Landlords, in turn, are happy to let you rent a property
| which you wouldn't be able to afford because it is way easier
| to evict you. And because demand is higher than supply,
| they'll happily increase the price. Rent prices are already
| in overdrive.
|
| So now you're paying EUR1200 in rent instead of EUR800 in
| mortgage payment - for the same property.
|
| Banning buy-to-let would result in a sale of the properties
| currently being rented out - which means a drop in the
| housing price. Rental supply will drop, but those houses
| don't magically disappear! People who previously were unable
| to get a mortgage can now suddenly afford to buy instead of
| rent. This lowers the demand for rentals, which decreases
| rent.
|
| People don't need landlords - they need homes. With the
| exception of a very small number of short-term rentals,
| landlords provide zero value. Removing them from the equation
| decreases the prices for everyone.
| berkes wrote:
| Studies have shown that in the Netherlands only a tiny part
| of the rapidly increasing price is due to shortage and the
| majority due to investers. The exact opposite of what you
| say.
|
| I'm not saying you are wrong. I'm saying that what you pose
| as established facts are highly debated in the Netherlands at
| the least.
|
| I'm on mobile, so finding English studies is hard. Maybe
| parent author could cite some of the studies (s)he mentions?
| https://www.eigenhuis.nl/huis-
| kopen/starters/artikelen/beleg...
| https://www.kadaster.nl/-/opkomst-particuliere-
| investeerders...
| IkmoIkmo wrote:
| So the study you referenced was ordered by the Minister of
| the Interior, and it's been the most heavily cited study in
| the past few years.
|
| If you read it, you'll find it explicitly states they could
| not establish a causal relationship between investors and
| increased prices. (i.e. it says exactly what I stated).
|
| They do find a correlation (which is heavily referenced in
| the news and misinterpreted), which would be expected.
| Investors who study the market and are investing
| professionally, are more likely than the average, and
| definitely more likely than below-average, to invest in
| neighbourhoods which turn out to see more price increases
| than neighbourhoods that investors chose not to invest in.
| That's of course because it's their job and their
| expertise. It doesn't mean they're causing the price
| increases.
|
| It's a bit like saying there's a correlation in prices
| between prices of stocks of companies that professional
| investors choose to invest in or not. That's obvious,
| professional investors seek returns, and are expected to
| invest in such companies. But the investors aren't causing
| the tech stocks to become valuable. They simply are, by way
| of their profits. Google (once established) isn't high-
| value because investors choose to buy its shares. Investors
| detect the value and pursue to own it. Real estate is no
| different. Which is why the study found a correlation, but
| explicitly did not establish a causal relationship.
| brnt wrote:
| Show your sources. I've read the exact opposite of what you
| claim.
|
| The CIA even lists the Dutch housing market as the largest
| risk factor in the stability of the Dutch housing market.
| belter wrote:
| The problem is not only in Amsterdam, and for anybody
| wondering how crazy the situation is at the moment this is a
| realistic, up to date view:
|
| "The WILD Dutch housing market and our home buying flop |
| American in the Netherlands"
|
| https://youtu.be/dFXsfeEEVAM
| einpoklum wrote:
| > If buy-to-let is banned, rental supply drops
|
| This seems to contradict your earlier claim that:
|
| > the municipality already has laws in-place which fine
| owners of vacant homes
| IkmoIkmo wrote:
| I don't see the contradiction, could you explain?
| einpoklum wrote:
| If "rental supply drops", that means the people who own
| apartments they don't live in won't let them out. If they
| don't let them out, they're subject to the anti-empty-
| apartment laws.
| [deleted]
| cortesoft wrote:
| The problem is that there can be NO new rentals on the
| market, because you can't buy a home and rent it out. If
| someone is renting out a property and then decides to
| sell it, that is one less rental on the market that can't
| be replaced. Any house that is bought can't be rented out
| ever, so there is no new rentals.
| fmajid wrote:
| No, the owners who are grandfathered in rub their hand in
| glee, as over time only own-to-occupy buyers are allowed,
| thus the supply of rentals goes down and rentals become
| more expensive, thus making their rents higher and more
| lucrative.
|
| The answer is to reduce the centralization of jobs and
| other factors that cause everyone to want to live in
| Amsterdam, e.g. building out Lelystad or Buitenveldert.
| To a certain extent, COVID and WFH has started doing
| that.
|
| I lived in Amsterdam in 1999 and house prices there
| seemed quite reasonable to me compared to Paris where I
| was coming from, but of course many things may have
| changed in two decades.
| einpoklum wrote:
| > thus the supply of rentals goes down
|
| You're sort of "begging the question" here.
|
| > The answer is to reduce the centralization of jobs and
| other factors that cause everyone to want to live in
| Amsterdam
|
| Obviously I'm not against that happening but it's not
| either-or.
|
| > but of course many things may have changed in two
| decades.
|
| Oh, you have no idea. It was hard to even get the owners
| to get back to you, because they'd already accepted an
| offer; and I was being asked for 1,500 EUR - 1,650
| EUR/month for a bedroom+living room apartment. And while
| that wasn't in Diemen or Bijlmer, they weren't in posh
| super-central locations.
| Filligree wrote:
| A house which is being rented isn't vacant.
| MomoXenosaga wrote:
| The Netherlands is just too rich that it is working against
| itself. We have created a society where every person wants
| their own house- 17 million people 10 million houses. And the
| Netherlands is a magnet for migrants- compared to most of the
| world the streets are paved with gold.
|
| And no matter how much the prices go up people can and will
| pay. Unless there's a mayor economic recession things will
| not get better.
| zamfi wrote:
| > 17 million people 10 million houses
|
| Wait, you're making it sound like this is an obvious case
| of not enough supply -- which could potentially be solved
| by building more homes! -- but in fact, it's the total
| opposite: the average Dutch household has 2.14 people, so
| that's 8 million households vs. 10 million houses! (I
| assume this is overwhelmingly folks who want to live
| together: partners, kids, etc., not just folks who can't
| afford to live alone.)
|
| Sounds to me like there are 2 million extra houses, not 7
| million missing ones.
|
| So what, exactly, causes the problem? Presumably, those 2m
| extra houses just aren't in the right places?
| 6510 wrote:
| there are 7.9 million homes in NL. The shortage is
| 279.000 vs 331.000 before corona (killing 18.035)
|
| 2.14 per home vs 3.54 in 1961.
|
| I have no explanation why 17280000 / 7900000 = 2.187
| BlargMcLarg wrote:
| People pay because it is still the best choice for the non-
| financially-savvy to secure their net worth given the
| policies our government has made the past few years.
| Someone else already explained how renting costs way more,
| and people would argue the break-even point for renting vs
| buying is only about 1 to 2 years. That's without taking
| into account all the restrictions landlords are putting up.
|
| Once you get past the hurdle, banks give you insane amounts
| of money to buy these insanely priced houses with. And due
| to the low rent, you're not that much worse off than 5
| years ago. Since no one who buys a house today wants to end
| up losing out, many homeowners will vehemently oppose any
| measure which could make the prices sink, so more borrowed
| money, so even higher prices as long as there isn't a
| suitable alternative (cheaper/affordable and easy to attain
| rent).
| nine_k wrote:
| I wonder if Amsterdam specifically is filled with single-
| family houses. I suppose some larger apartment houses must
| exist, housing a few families.
| devdas wrote:
| There are apartments, but construction in the desirable
| areas is limited.
| saddlerustle wrote:
| Your first point is a misleading anecdote given there's
| actually data on this. The amount of empty homes in London is
| at a historical low [1]. Broadly, cities with the highest
| amount of empty homes tend to have the _most_ affordable
| housing, because obviously that indicates there 's more than
| enough housing to go round.
|
| [1] https://i.imgur.com/jX1OpmS.png
| brailsafe wrote:
| True, but citing data from 2017 is also a little misleading,
| considering theirs was a very recent anecdote. It's still
| probably relevant though.
| yodsanklai wrote:
| It also depends what we call "empty house". Your link doesn't
| provide a definition. Is a house occupied a few weeks a year
| considered empty?
| throw0101a wrote:
| Contra:
|
| > _The Square Mile has the highest percentage of empty homes
| in the entire country, fresh data states._
|
| > _Some 42.4 properties per 1,000 sit unused in the City of
| London, leaving it top of the charts and the only London
| authority to feature in the nationwide top 10._
|
| > _Data compiled by insurer Admiral also shows that as many
| as 29,242 London homes have been unoccupied for at least six
| months, to a collective value of roughly PS15 billion._
|
| * https://www.citymatters.london/vacant-homes-city-london/
| marcinzm wrote:
| 4.2% is a lot less than 70%.
| Freak_NL wrote:
| That's because real vacancy (as in, untenanted) only
| makes up a small percentage of the empty houses. The rest
| are owned by wealthy foreigners who reside there a few
| weeks in the summer and leave it to the care of a
| caretaker (who does not live there of course) for the
| rest of the year. Some of the obscenely wealthy may even
| have a live in concierge who lives in his own rooms
| keeping the rest of the house ready for its owners all
| year round.
| sparks1970 wrote:
| South Kensington is also home to Imperial College London. See
| this map to get a feel for the extent of it in the area:
| https://www.imperial.ac.uk/media/imperial-college/visit/publ...
|
| You did explicitly say houses but possibly the area is quieter
| and less inhabited out of term time.
| m0llusk wrote:
| That is a complex problem, though. The main issue is land
| investment that effectively prevents or greatly limits
| potential new construction. With new construction thwarted even
| modest growth over time causes extreme prices per unit.
|
| Preventing properties from being treated as bidding chips or
| bonds issued this could greatly improve the situation, but
| without addressing land use and land banking then the lack of
| new construction will continue to unbalance property markets.
| dmarinus wrote:
| There is also a law in the works called "Prince Bernhards tax",
| our Prince owns a lot of expensive property in Amsterdam.
| belter wrote:
| 600 of them ...He says its for his pension.
| https://www.stolker.nl/portfolio/items/prince-bernhard-jr/
| FpUser wrote:
| Please, please make the same thing happen across Canada
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