[HN Gopher] The welfare effects of eviction policies
___________________________________________________________________
The welfare effects of eviction policies
Author : jseliger
Score : 78 points
Date : 2021-11-02 16:48 UTC (6 hours ago)
(HTM) web link (marginalrevolution.com)
(TXT) w3m dump (marginalrevolution.com)
| thriftwy wrote:
| I am renting out an apartment since the tenant protection law in
| my country is so permissive it is basically non-existent. I am a
| laid back landlord who can afford to rent out at slightly under-
| market rate and not try to squeeze any juice from my tenants.
|
| If there would be eviction moratorium, I will think twice before
| renting out and will only ever consider wealthy tenants and
| exclude anybody who may have any problems in the future. If there
| were anything like Paris laws where the tenant may refuse to
| evict at all, I will just take the property off market.
|
| This is basic game theory. The only reason why there's supply is
| because it comes no strings attached.
| johncessna wrote:
| I'm also a landlord and in a state that is trying to still push
| a moratorium and on top of that make it harder to evict once
| its lifted. You're right. The more strict the laws, the more
| that goes into tenant screening.
|
| Right now the only requirement for me is that you need a
| security deposit. That'll get adjusted to credit checks,
| criminal checks, and leases that allow me to void them over
| basically anything I can get away with per the law.
|
| Others, I fear, won't work within the law and start screening
| on perceptions, stereotypes, and personal history with
| individuals that get projected onto groups.
|
| In short, the quicker it is to evict someone for failure to
| pay, the less protections a landlord needs to use or worse,
| invent, to protect their livelihood.
| throwawaygh wrote:
| _> to protect their livelihood_
|
| Maybe they should grow up and get a job.
| InitialLastName wrote:
| > I will just take the property off market.
|
| And do what with it? Pay taxes for it to be empty? Sell it
| (thus providing exactly the same unit of living space to the
| market)?
| thriftwy wrote:
| I could let it stay vacant, let my friends live in it when
| they come to town, keep it for my children/old years, keep
| around as an investment, etc, etc.
|
| At the very minimum I could never consider any vulnerable
| people as tenants. And this is a red light for any housing
| policy, really!
| hash872 wrote:
| When I worked in commercial real estate in a blue state I was
| introduced to the 'right to counsel' concept, which is just wild.
| Grifters and professional con artists can successfully not pay
| rent to small-time family landlords (most rental real estate are
| tiny, unprofessional operations with 1-2 buildings- lots of
| recent immigrant owners). And when brought to court, they receive
| free attorneys from legal aid societies, while the owners have to
| pay thousands out of pocket. I found the whole concept
| outrageous. I would never want to be a landlord, the risk-
| adjusted premia just doesn't make any sense
| tehjoker wrote:
| You mean that landlords face some level of restriction in
| simply tossing people onto the street. The people on the other
| side of the transaction are at risk for their life while the
| landlord is at risk for their aspirations to the upper class.
|
| I'd also point out that "investments" in a "free market" aren't
| supposed to be risk-free. If the landlord can't hack it, whelp
| that's their problem as a speculative investor.
| AYBABTME wrote:
| The problem is that the increased risk profile is indeed
| taken into account by landlords... it makes them retreat
| higher up market, depleting affordable housing supplies.
| tehjoker wrote:
| This is why I advocate removing the market and doing a
| substantial fraction of housing as public housing. Other
| countries like Sweden (iirc) do this.
| AYBABTME wrote:
| My personal opinion is that governments should provide a
| backstop guarantee for tenants, to bear the risk instead
| of forcing landlords into making cruel choices.
|
| I think it'd make sense. It's beneficial to govt. to keep
| people productive and ultimately off the street. Hence
| (in a capitalist system) they want to encourage the
| market to provide housing to people who would otherwise
| not get it. If the government came involved into
| transactions as a guarantor for people in need, and
| provided incentives and reassurances to landlords that
| they would not be disadvantaged if they provide housing
| to those in needs, I believe there would be less homeless
| people in the street, and more generosity from landlords.
|
| E.g.:
|
| (1) if I have no upside and a high risk exposure in
| providing housing to a recovering addict, will I do it if
| I'm then unable to evict that person when they fall back
| down into addiction? No, I wouldn't, even if in my heart
| of heart I wish I could help them.
|
| (2) if on another hand, the government came and said
| "we'll guarantee this market rate, and will facilitate
| eviction proceedings and pay for repairs if things don't
| work out", would I be willing to risk it and rent to that
| person? Probably yes, there would be enough structural
| support to encourage me to do some goodwill help.
|
| The problem is that the stick presented in (1) is what's
| going on right now, and there's no carrot (2). It's
| basically the policy makers telling landlords: all you,
| don't you dare taking in tenants who are a higher risk!
| Because if you do, we'll be watching!
|
| * * *
|
| In coordination with this, I think a smart policy would
| be to combine this idea with something else: instead of
| trying to build affordable housing projects, try to
| spread these initiatives around. Avoid the creation of
| ghettos. If a govt. agency was to support someone's
| tenancy, the agency should try to spread these people
| uniformly around town, mixing them with all strata of
| society, instead of putting all these people in the same
| geographical area. This would encourage reintegration in
| a constructive environment. People living in their walled
| gardens would be annoyed, but ultimately, the people in
| need of help would be allowed a chance to heal in a safer
| environment.
| hash872 wrote:
| The total value of all US real estate is $50 trillion.
| There's not a lot of situations in life where you can
| say, even the United States government doesn't have
| enough money to make a dent here- but....
| tehjoker wrote:
| That's only if they buy it. In the civil war, we took the
| slaves and land of the confederacy without making the
| owners whole. Landlords may not be slaveholders, but they
| are parasites and exploiters, even Adam Smith said so of
| the big landlords (in fact he was against the modern
| incarnation of our economy which is highly concentrated
| way beyond imagining in his time). Rentiers make money by
| simple ownership and exclusion, not by their labor. It is
| not socially beneficial. The word "lord" is part of their
| name and most Americans, at least the common people in
| 1776, understood the American project as the destruction
| of the nobility and aristocratic privileges. While the
| formal titles are gone, the plots of land that were the
| source of the nobility's power remain.
|
| https://www.quora.com/Was-Adam-Smith-against-
| landlords?share...
| [deleted]
| kritiko wrote:
| I don't think landlords are saying "I can't risk evicting a
| poor tenant, I'll make my unit unaffordable" - it's a
| market. If the neighborhood is gentrifying, rent to
| gentrifiers. If the best you can do is Section 8, take
| section 8.
| ThunderSizzle wrote:
| Its a race to the bottom (section 8 is guaranteed money)
| or top (high income homes tend to be more stable).
|
| No one wants a medium income rental due to that. And I'm
| thinking about being a landlord - as I'm moving - and
| evicting a tenant that refuses to pay for 6 months while
| I still need to maintain the property and pay mortgage is
| prohibitive. The risk there is scary high for what
| shouldn't be risky.
| AYBABTME wrote:
| Depending where you live, if you attend some landlord
| association meetings, or read any popular literature
| about real estate investing, you'll see that this is
| basically what happens. The common advice is to try to
| bring your units higher up in the market as much as
| possible, to minimize risk because folks with higher
| incomes are seen as less likely to trash the place, less
| likely to sue, less likely to stop paying. Books go on
| for hours about how you should keep your unit vacant
| instead of renting to a risky tenant.
|
| I'm not making this up and these are not my rules or
| opinions. It's just the logical conclusions these people
| come up with, given the environment they're faced with.
| kritiko wrote:
| I don't think that you're making this up. I think that
| the advice would still be to leave units vacant and bring
| them up market even in the presence of extremely
| landlord-friendly eviction policy...
|
| this dynamic will always be true: "folks with higher
| incomes are seen as less likely to trash the place, less
| likely to sue, less likely to stop paying"
| AYBABTME wrote:
| I think government incentive should focus on changing
| this, as I attempt to describe in
| https://news.ycombinator.com/threads?id=AYBABTME#29087565
|
| Basically, this is somewhere I think govt.
| _constructive/supportive_ intervention is needed, because
| today's punitive policies creates economics that don't
| allow a humane end result.
| 6510 wrote:
| Government just needs to crank out large volume
| affordable housing. With modern tools and methods (+R&D),
| enough scale and a long term plan for maintenance this is
| entirely doable. The goal shouldn't be to house everyone
| but to create a surplus. (Lots of empty homes) Popular
| locations with insufficient space will continue to get
| more expensive, as it should be.
| AYBABTME wrote:
| I like the idea but I think the concept of using
| technology to build big, low cost volume housing is
| mistaken. The act of concentrating affordable housing is
| not desirable and easily forgotten about. It creates
| ghettos. Watching interviews about homelessness, a lot of
| homeless folks will talk about how dangerous it is to
| hang out in places like Skid Row. That it's dangerous to
| be surrounded by other people with problems. Read about
| the struggle faced by youngsters in poor neighborhoods,
| about how their surrounding were a huge strain on their
| ability to develop and escape. The environment in which
| you are located, when you're facing economic struggle,
| really dictates your odds of recovering. I grew up poor
| in a single-mom family, and lived in lower income
| neighbourhood and know first hand how their influence is
| bad for kids. My mom did all she could to pull us out of
| there, so we wouldn't be influenced too much by the
| neighbourhood. Still, had plenty of time to see sad
| things and be originally influenced in suboptimal ways.
|
| I think we should build more single unit affordable
| housing! And shove it all over the place, in affluent
| neighbourhoods! Help people leave their problems behind.
|
| This thread is getting deep for HN and it's hard to
| respond, but I had shoved my random thoughts on this in h
| ttps://twitter.com/AntoineGrondin/status/1454896147001077
| 76...
| kazen44 wrote:
| creating housing by the the government is a possibility.
| (a ton of plattenbau build straight after ww2 is still
| used in my country).
|
| if they could fix the housing crisis my bombed out city
| straight after ww2, I'm pretty sure the US is able to do
| so 80 years later with modern construction methods.
| themgt wrote:
| This one is personal because it happened to me. Abusive
| tenant refusing to pay rent and stealing from me, in a house
| I myself was living in and renting as the sole lessee and
| subletting (which was allowed).
|
| So, I was already broke from thousands in unpaid rent, then
| got notice that she was fighting the eviction and would be
| represented in court by a pro bono lawfirm. So I had to
| scrounge my last $ and remember not to fill up my gas tank
| all the way, to hire the town's cheapest attorney to go in
| and settle, letting her stay an extra month free of charge to
| agree to leave. Finally she illegally overstayed that and
| only left the day before the cops were to show up and
| forcibly remove her. This is all while she's living on gov't
| cheese and blowing her money on booze and festivals.
|
| In all I was out many thousands of dollars I didn't have and
| basically couldn't sleep in my own rented room for over a
| month, and got fought in court by fancy lawyers paid with
| tax-deducted charity money. I spent a while seriously
| considering, and my only other option would have been, to end
| my own lease and leave and let my landlord deal with trying
| to remove her.
|
| So no, I was actually at risk for becoming homeless due to
| this situation _as the "landlord"_, and I get fairly angry
| when its described in this blithe way as if the person
| fighting the eviction is always the poor little guy and the
| "landlord" is always BlackRock having to eat a 0.001% hit to
| their profit margins.
| fwip wrote:
| Having counsel doesn't mean they don't have to pay rent. It
| doesn't change the facts of the case.
|
| If the court finds in favor of the tenant, that means the
| landlord screwed up (and probably broke the law, too).
| throwawaygh wrote:
| _> When I worked in commercial real estate..._
|
| followed by a rant about the indignity of the poors having
| access to legal representation (?!?!). And an appeal to mom-
| and-pop immigrants to provide smoke cover for commercial real
| estate developers and the local landed gentry.
|
| This is where "eat the rich" comes from. I'll take my flag-dead
| for this one.
| MrStonedOne wrote:
| The counterpoint i always bring up is my college days
| """eviction""".
|
| I was 1/2 a day """""late""""" with rent (as in, it was the
| 1st, and i didn't have it when the landlord came to see me in
| the morning, as i was on my way to school) came back to find
| the locks changed, was told i was evicted and even if i paid
| rent for the next month, all it would get me was my property
| back.
|
| (reminder, they were demanding i rent for the _next_ month,
| that hasn 't happened yet, as condition to retrieve my
| property, while telling me it wouldn't result in me being
| allowed to stay in said unit i just paid the next months rent
| on.)
|
| Had to use legal counsel help to put a stop to that bullshit.
| chasil wrote:
| As a landlord, some tenants commonly did not pay until after
| the 15th. I never charged them a late fee.
|
| A few didn't pay me for the last 5 months, and things did not
| work out with the state.
|
| I will never rent a property again. This pandemic has shown
| me exactly who is disposable. No governor will again decide
| that my tenants don't need to honor their payment agreements.
|
| May landlords vanish; I am no longer among their number.
| maxerickson wrote:
| It only seems to exist in a handful of cities to date?
|
| New York City had a decline in evictions when it was enacted
| (the decline outpaced nearby areas).
|
| https://www.cssny.org/news/entry/nyc-right-to-counsel
| joe_the_user wrote:
| Rental law is not so hard that an intelligent landlord can't
| learn the basics and be in a good situation. Oppositely, a
| small grifter doesn't need a lawyer to walk over an dumb
| landlord. Since the grifter has done their thing for a while,
| the know the ropes and the law (where assigned council is just
| public defender who's job about it about ordinary defense and
| not outrageous claims).
|
| I'm not terribly sympathetic to landlord in this situation. As
| far as I can tell, it's the greedy, lazy landlords that get
| taken by these people - if you follow the letter of the law,
| keep your premises in good shape and document everything, it's
| pretty hard to be taken. Oppositely, a lot of landlords skirt
| the law on a regular basis.
| hash872 wrote:
| You're advising that a non-attorney can represent themselves
| against a professional attorney and somehow win. What are the
| odds that an amateur that's never done a job can defeat a
| professional who does it full time?
|
| The other issue is that you can't 'win' in court against
| someone with no assets. If they owe you thousands, haven't
| paid rent for months, severely damaged the apartment.... they
| don't have any assets to seize. And a judge, especially in a
| blue state, is not to authorize anything harsh. They can
| essentially not pay rent or badly damage your place with zero
| consequences
| HWR_14 wrote:
| His point was that the professional worked in a different
| specialty and also doesn't care about the work being
| performed. Take the average web programmer and tell him to
| program something in Roblox vs. an enthusiastic teen and
| see who produces what.
| AYBABTME wrote:
| I think the main issue is not whether "good" landlords are
| affected, but the impact it has on the market. If renting to
| regular people is a huge liability, the smart landlords will
| prefer keeping units vacant or bring them up high in the
| market - where tenants have more means - to avoid dealing
| with the risk. This leads to the people in need with very
| little supply they can qualify for. It essentially backfires.
| gregallan wrote:
| If housing becomes prohibitively expensive to people in
| need just because we hold landlords accountable for abusive
| actions, maybe we should consider a different way to
| allocate housing resources.
| AYBABTME wrote:
| Sure, but I think this sort of grandstanding doesn't
| serve the conversation well. We're talking about
| realistic, incremental policy changes here. The kind of
| stuff that hopefully solves the problem at hand while
| limiting the blast radius of what could go wrong.
| Throwing away how property ownership works in most of the
| world would likely cause large scale shocks and I think
| it's disingenuous to suggest these kind of things in a
| conversation about municipal policies.
| joe_the_user wrote:
| _Sure, but I think this sort of grandstanding doesn 't
| serve the conversation well. We're talking about
| realistic, incremental policy changes here._
|
| So we're saying that making it so tenants can't defend
| themselves against illegal evictions is going to increase
| the housing supply incrementally?
| AYBABTME wrote:
| I didn't say this "make it so tenants can't defend
| themselves". My argument is that punitive policies
| against landlord are about the only tool being wielded,
| and the only tool proposed, along with the only
| alternative being nuclear options.
|
| I think there's definitely a problem that needs to be
| addressed, and that many landlords are bad actors in many
| markets, and that may tenants are bad actors in many
| other markets. I'm not even sure that landlording makes
| sense, it's rather feudal. I'm pro realistic rent
| control. I just think that, short of throwing away the
| entire system and making a revolution (that would kill
| millions), we should approach the problem from a carrot
| and stick perspective, not a stick-only perspective.
| km3r wrote:
| I think it's more saying that there is a line where
| making it easier and easier for tenants to defend
| themselves has effects on the total number of houses
| available for rent, and at a certain point, may reduce
| the number of housed people. If there was a 10M fee for
| any evictions, it would certainly reduce the number of
| unjust evictions, but many landlords would be unwilling
| to assume that risk and just choose to not rent the
| property. Obviously its an extreme example, but there is
| a line somewhere where we can optimize for maximizing our
| housing supply usage.
| thriftwy wrote:
| I own an apartment. I bought it. How are you going to
| "allocate" this "resource"? Just try me.
| gruez wrote:
| >How are you going to "allocate" this "resource"? Just
| try me.
|
| Easy, by having the government send Men With Guns to
| confiscate it from you.
| thriftwy wrote:
| Well, this has been already tried in my country, and been
| survived, but yours may possibly indeed have it in the
| future.
| lliamander wrote:
| Is that solution you prefer, or are you just answering
| with what you think gregallan's intentions were?
| throwaway0a5e wrote:
| So how big a body pile are you gonna tolerate?
|
| You don't just get to send men with guns to take large
| chunks of peoples wealth without dire social and economic
| consequences. To believe otherwise is pure fantasy.
| hash872 wrote:
| You are not accounting for bad faith actors who lie about
| the landlord's actions for their direct own financial
| gain. Living rent free in a property is saving a
| tremendous amount of money! Like, as a % of income it's
| probably more than the average person pays in taxes. The
| financial incentives to abuse the system are enormous
| _delirium wrote:
| > most rental real estate are tiny, unprofessional operations
|
| The proportion of rental units owned by individuals used to be
| a large majority, but has been falling and recently dipped
| under 50%. As of the 2018 Rental Housing Finance Survey [1],
| there were 48 million rental units in the United States, with
| ownership breaking down as: 41% individual
| 37% LLP, LP, or LLC 3% real estate corporation
| 3% nonprofit organization 2% general partnership
| 2% trustee for estate 2% real estate investment trust
| (REIT) 10% other or unreported
|
| The number DIY managed by the owner or owner's
| family/associates is similarly down, to 42%, with 54% of units
| now professionally managed (4% other/unknown).
|
| I don't have numbers, but I'd imagine it looks even more skewed
| in the direction of professional landlords if you looked at
| major cities.
|
| [1] https://www.census.gov/programs-surveys/rhfs.html
| [deleted]
| the_jeremy wrote:
| My landlord has set up an LLC where he is the only employee.
| tresil wrote:
| Many properties owned by LLCs are actually small-time
| investors, individuals, and families. LLCs only became a
| popular/viable way to own real estate in the last couple
| decades. Now they are the recommended structure for most
| rental property owners - whether individuals who own 1-5
| properties, or huge institutional investors who own
| thousands.
|
| I would bet that a good chunk of the trend you're asserting
| is just small time rental property owners increasingly using
| LLCs to limit their liability.
| _delirium wrote:
| The fact that only 42% are now self-managed (54% managed by
| paid professionals) leads me to believe that the trend is
| still against the kind of small-time recent immigrant
| landlords that the post I was replying to claimed to be the
| typical landlord. I agree some of the LLCs are investment
| vehicles for individuals, who buy a property, wrap it in an
| LLC, and pay a management company to rent it out, but
| that's a bit different (these are just passive investors
| buying into an asset class managed by professionals). It'd
| be interesting to know what percentage though. By number of
| units (vs. number of LLCs) my bet would still be towards
| most being larger-scale operations.
|
| In fact, as of the time of that report, one of the largest
| real estate investors in the US, Blackstone Group, was
| organized as an LP and went in that category (they changed
| forms to a Corporation in 2019). A few large real-estate
| investors still organized in the LLC/LP/LLP form are the BH
| Companies, UBS Realty Investors, Harbor Group
| International, AEW Capital Management, and Invitation
| Homes.
| hash872 wrote:
| >I agree some of the LLCs are investment vehicles for
| individuals, who buy a property, wrap it in an LLC, and
| pay a management company to rent it out, but that's a bit
| different (these are just passive investors buying into
| an asset class managed by professionals)
|
| None of this is correct. An LLC is just a legal structure
| you create for a few hundred bucks using a two page
| document online. They're not 'passive investors buying
| into an asset class'.... you can still be a mom & pop
| with an LLC. I'm sure most tiny retail businesses are an
| LLC too.
|
| I didn't personally see the statistics about professional
| 'management' on the page that you linked, but that
| doesn't make one a large-scale investor either. Property
| management companies usually collect 5-10% of the monthly
| rent, which is a tiny amount of money, so they're
| incredibly small scale or shady fly-by-night operations.
| I suspect you saw a statistic that includes the guy that
| mows the grass and patches the roof, and thought that was
| 'professional management'.
|
| I think a better/more focused stat would be to understand
| how many properties or units each investor owns, rather
| than continuing to misread this table about an industry
| you're not familiar with. If you own 1-2 small buildings,
| you meet my personal definition of 'mom & pop operation'
| throwawaygh wrote:
| Why does this discussion even matter? Rent seeking is
| rent seeking.
| loeg wrote:
| > I agree some of the LLCs are investment vehicles for
| individuals, who buy a property, wrap it in an LLC, and
| pay a management company to rent it out, but that's a bit
| different (these are just passive investors buying into
| an asset class managed by professionals).
|
| No, creating an LLC for your RE business does not require
| the use of a management service. The exact same
| individual landlords can own properties through LLC as
| without; the LLC just grants them some liability
| protection.
| [deleted]
| _delirium wrote:
| It doesn't require it, no. Nonetheless, the majority of
| properties are professionally managed, so it is simply
| false that most landlords are small-time individual
| owners doing it themselves. If everything under
| "individual" and "LLC/LC/LP" ownership were small-time
| individuals doing it themselves as a family business,
| we'd expect to see closer to 78% of properties be self-
| managed, not 42%.
|
| The rate of increase of professional management is also
| pretty high: the 2015 survey had 43% of properties
| professionally managed, which had risen to 54% by 2018.
| I'd be willing to bet it's more like 60%+ now as there's
| been quite a bit of buying into the rental market by
| large investors.
| nsxwolf wrote:
| A lot of small-time individual owners with single
| properties pay a management company a monthly fee to
| handle leases, maintenance calls, stuff like that. It
| saves a lot of headaches. Is that what you're considering
| "professionally managed"?
| [deleted]
| [deleted]
| joe_the_user wrote:
| And personally/family managed doesn't imply that a landlord
| is small. Some people with a considerable amount of property
| still manage it themselves.
| glogla wrote:
| Yup, I know a slumlord who owns 26 apartments just between
| him and his wife.
| PragmaticPulp wrote:
| > 41% individual
|
| > 37% LLP, LP, or LLC
|
| All of the individual real estate investors I know wrap their
| rental properties in an LLC. It's trivially easy to set up
| and manage an LLC these days.
|
| Unless those numbers are somehow separating out individual
| LLCs, I would assume a lot of those LLCs are owned by
| singular individuals.
| hash872 wrote:
| Yes, as the other commenter mentioned, anyone can set up an
| LLC so that doesn't mean much. The fact that 41% of landlords
| have the property in their names & not an LLC just shows you
| how unprofessional and small-time these operations are
| hyuuu wrote:
| The policy + moratorium will end up lowering the percentage of
| mom and pop landlords, and increasing the share of larger
| corporations. I draw the analogy just like what's happening to
| the mom and pop shops vs Amazon. If tenants think landlords are
| leeches now, well, they are exchanging it with snakes, with
| lawyers on retainer.
| heavyset_go wrote:
| Many mom and pop landlords are exempted from housing
| regulations, and are afforded much more leeway in terms of
| rights and discretion than larger landlords are.
|
| Almost all of the issues I've had while renting were with
| small landlords. Corporate landlords at least held up their
| ends of leases in my experience.
| ThunderSizzle wrote:
| I've been looking at SFH rentals recently. 4 beds. The
| companies that bought all these up are running them into
| the ground. It's sad what is being passed as proper. And
| it's not like it's dirt cheap either.
| kingTug wrote:
| Seems reasonable in the context of going to court with a mega-
| corp landlord, though. Which is increasingly common.
| rootusrootus wrote:
| Perhaps there ought to be an adjustment to the regulation
| that differentiates between megacorp landlords and the small
| landlords who only own a few properties. Maybe some threshold
| below which both sides qualify for right-to-counsel.
| [deleted]
| seanmcdirmid wrote:
| > Seems reasonable in the context of going to court with a
| mega-corp landlord, though.
|
| The mega-corp landlords are much more savvy when it comes to
| dealing with grifters and con artists, to the point that they
| will usually avoid taking them on as tenants (e.g. via
| extensive background checks). Small-time landlords are
| getting savvier, but not at the same speed.
|
| > Which is increasingly common.
|
| And given the above, they will be probably become the norm in
| a decade or so.
| hbn wrote:
| How convenient that existing laws only "seem reasonable" in a
| world where mega-corps own all real estate
| 8note wrote:
| I'm not sure why small unprofessional landlords should be
| allowed to mistreat their tenants. Being a small landlord still
| puts you in a position of power over somebody else
| jackorange wrote:
| Why is it assumed that because they are a landlord that they
| are mistreating someone?
| wolverine876 wrote:
| > Grifters and professional con artists
|
| Everyone that has a dispute with a landlord is a grifter and
| con artist? That's a strawperson to beat all strawpeople.
|
| > When I worked in commercial real estate
|
| Is that the attitude toward renters in your industry?
|
| Why would landlords be expected to be any more honest? IME,
| everyone who has had a legal dispute with a landlord has been
| an honest person with an honest claim (though not always
| legally supported), and landlords have had enormous power over
| them. I have no doubt there are some bad people in both camps.
| nineplay wrote:
| If it comes up, I'm pretty sure I'd leave my home vacant rather
| than renting it out. The loss in rent can be accounted for. The
| cost of a property manager can be accounted for. The costs of
| tenants who will not pay rent, who will fight eviction, and who
| will damage the house in a fit of pique upon leaving is
| immeasurable.
|
| This decision isn't made though vague horror stories, there are
| people I know who've had tenants do thousands of dollars worth of
| damage before they're forcibly evicted. It's not worth the risk.
| eikenberry wrote:
| > If it comes up, I'm pretty sure I'd leave my home vacant
| rather than renting it out.
|
| I'm not sure if it's everywhere, but in some states you legally
| cannot do this if you still owe a mortgage. The mortgage
| requires home owners insurance, and the insurance companies
| won't sell you home owners insurance on an empty house. We were
| forced to rent our house when we needed to move (during the
| slump, so no buyers) due to this.
| [deleted]
| gigel82 wrote:
| Do we have numbers on how many tenants are making use of eviction
| moratoria?
|
| I know a few folks that are apprehensive of the markets just
| cashed out, took a mortgage and bought a condo to rent.
| Especially if they bought a couple of condos I can't imagine
| they'd otherwise have the income or reserve to pay out-of-pocket
| when their tenants refuse to. I'm as liberal as they get but this
| kind of thing feels like over-stepping from the government; I
| agree tenants need to be helped, but not by moving the hardship
| upstream in the economy - maybe the government should pay their
| rent instead. Dunno, feels very strange.
| UglyToad wrote:
| Just to voice an opinion opposite what seems to be the
| prevailing one in this thread.
|
| So what.
|
| They bought a spare house and wanted to farm people for what
| they felt was a safe 8% while doing minimal work themselves.
| The situation changed. Life sucks doesn't it.
|
| We don't bail market investors out in a market crash and at
| least they're (outside of REITs, and you can guess my views on
| those) not speculating on the essentials of literally living.
|
| Why should we offer landlords a bung off the back of hard-
| working taxpayers who are, a large minority, already handing
| over vast amounts of their take-home to landlords anyway.
|
| Worst comes to the worst they foreclose on their spare home and
| the bank who took a stupid risk lending eat the loss from the
| tenant.
|
| Every annual company statement contains a risks section which
| usually includes the unforeseens such as changes to
| legislation. That's what's happened here, why should rent
| seekers get kid gloves?
| troupe wrote:
| The market changing is different than the government
| commandeering your property and requiring you to let non-
| paying tenants live in it.
| gigel82 wrote:
| That's not an accurate comparison. Risk is risk of course,
| the rental market could crash but what I find weird is the
| government stepping in like this.
|
| Imagine you wanted to sell your Facebook stock once it starts
| crashing (to buy another stock that maybe performs better)
| but the government says no you can't because Facebook
| employees will be affected so not only are you obligated to
| hold the stock, but you'll also need to pay out of pocket to
| keep it.
|
| Just to be clear, I have no sympathy for the slumlords and
| rental corporations, I'm talking about regular folks that
| chose the rental market as more risk-adverse investors and
| maybe put all their savings into a single property that they
| fixed up and are maintaining themselves.
| sharkmerry wrote:
| >> I'm talking about regular folks that chose the rental
| market as more risk-adverse investors and maybe put all
| their savings into a single property that they fixed up and
| are maintaining themselves.
|
| I think more risk-averse people would avoid a single
| property as their entire investment portfolio.
|
| Everyone says "diversify" your investments. if you are
| more-risk averse, you should not be putting all your money
| into 1 bet or 1 property.
| UglyToad wrote:
| I can certainly understand your view despite my almost
| pathological hatred of landlordism. I just think a once in
| a century pandemic is the type of event where it's useful
| for the government to step in and safeguard essentials for
| the population.
|
| And asking landlords not to throw people on the street at
| no additional cost (let's say they do evict, who is going
| to be doing viewings at the height of the pandemic?) to
| them is a very low impact ask.
|
| Edit: I think the root cause disagreement is how we
| categorise housing, as an essential or an investment. I can
| see why you'd be squeamish about such heavy-handed
| intervention with investments but my view is that's a
| category error. This is like wartime rationing, people need
| to eat and they need to live.
| Mountain_Skies wrote:
| A slight tangent: I wonder what is going to happen to rents over
| the coming year now that most of the moratoriums have expired and
| the evictions are starting to work their way through the court
| system. Some landlords are going to try to work with delinquent
| tenants on some sort of payment agreement. Some of these will
| work out, some won't, which will mean more evictions in the legal
| pipeline. The people who are evicted aren't going to be able to
| easily rent another home so there should end up being a glut of
| rental properties on the market. In theory this should drive down
| prices as landlords compete for tenants with clean rental records
| but maybe inflation will end up eating the downward price
| pressure. Some percentage of those evicted won't be able to find
| alternate living quarters and end up on the street or living in a
| vehicle.
| [deleted]
| gumby wrote:
| Summary: moratoria are popular because they don't cost anything
| (actually they shift unfunded mandate onto landlords who respond
| to the new market risk) or cost a bit when tenant lawyers were
| supplied. This increases homelessness.
|
| Market stabilization against short term shocks (i.e. temporary
| rent subsidy) functions like unemployment insurance, stabilizing
| the entire market and not increasing homelessness.
| GaryTang wrote:
| How is shifting the burden to landlords via moratoria different
| from shifting the burden to landlords via tax increases? Unless
| you could forego tax increases by printing more money or by
| generating more revenues by falling towards the inflection
| point on the laffer curve.
| maest wrote:
| Presumably, it's not just landlords that are shouldering the
| risk. Also, the US budget is huge and has a lot of buffer
| room. Worst case you're trading off investing in future
| development projects with keeping the market stable.
| harimau777 wrote:
| I could see several possibilities:
|
| The effect of a tax increase is more distributed so that it
| is less likely to be directly passed on to consumers.
|
| Increasing taxes shifts the burden more indirectly so it is
| less likely to be directly passed on to consumers.
|
| With rent assistance the landlords continue to receive rent,
| so it may be easier for them to absorb the costs.
|
| Since people receiving rent assistance can keep receiving the
| assistance if they move to a better deal, competition between
| landlords is still in place.
| gumby wrote:
| Your question shows the limits from reductio analysis. You
| have to look at it systemically.
|
| Shifting the burden to the landlord, especially at a time of
| transient shock, is not only a direct tax, it's a tax when
| they may be themselves suffering a revenue shock just as
| their tenants are. Even replacing a tenant isn't automatic;
| there are transient costs and it can take time. While
| subsidizing the tenants takes cash from a large base
| (including debt, borrowed at a much lower rate than a
| landlord can get). That's the surface difference.
|
| But you may ask "who cares? Why do the landlords a favor?"
| Well there's a systemic issue in such a shock (think of
| swimming in the ocean when a wave drops you then lifts you
| independent of your swimming). Keeping the tenants in situ
| means the landlords can continue economic activity (doing
| repairs, buying lunch, going on vacation, etc). The tenants
| can too -- if nothing else they can look for a job rather
| than looking for a job AND looking for a place to live. Or
| they may not have actually lost their job, but just suffered
| from transient reduced demand (e.g. fewer haircuts) which
| might end up being complete job loss if they lose housing.
| Essentially you are preventing a liquidity crisis.
|
| And there are second order consequences as well: as the paper
| shows homelessness increases; this is a general tax on
| everyone not just in social programs but in all the followon
| consequences of having a lot of people on the streets.
|
| It's the same argument for subsidising farmers, even if most
| of them these days are big businesses: they suffer a lot of
| transient economic pressure (busts and booms) but we need a
| reliable food supply. So we engage in dreadfully wasteful
| behavior because we've decided it's better to pay that than
| suffer a food supply shock.
| lotsofpulp wrote:
| I know hotels owners that have restricted anyone from staying
| at the hotel long enough to qualify as a tenant (usually ~30
| nights). So due to these moratoria, everyone now has to
| depart prior to 30 nights and stay somewhere else because
| otherwise the hotel will literally be unable to remove a non
| paying and likely even problematic person from their property
| for the foreseeable future in some states.
|
| I saw a video of one guy threatening hotel staff who the cops
| would not forcibly remove and the courts are not requiring it
| because it was not deemed threatening enough. He is still in
| the room months after the incident, not paying, with the
| individual hotel owners and staff eating the cost.
| larsiusprime wrote:
| Who it's shifted on and how it's passed on depends on the
| kind of tax.
|
| If you impose a tax on buildings, that gets shifted onto
| tenants. If its a tax on land (ie, the rental value of the
| location), the landlord has to eat it and it gets fully
| capitalized into the price, which means the landlord can't
| pass that on to the tenants and it actually brings the price
| of the land and rents down. There's a long string of
| empirical studies that back up this finding, the latest being
| this one out of Denmark:
|
| https://www.zbw.eu/econis-
| archiv/bitstream/11159/1082/1/arbe...
| nradov wrote:
| That makes no sense. Landlords are going to charge the
| maximum rent that the market will bear, regardless of how
| much they pay in taxes for the land and building. And if
| they can't make a profit at that rate then they'll
| eventually sell the property, or develop it for a more
| profitable use.
| larsiusprime wrote:
| All I can say is read the empirical results! It's what
| happens in actual reality in plenty of studies I can
| cite. Landlords charge the maximum rent that the market
| will bear, but the land taxes shift what the market will
| bear, because you can't make more land, and changing how
| much we make of something is how producers are able to
| pass on taxes to consumers.
|
| > If they can't make a profit at that rate then they'll
| eventually sell the property, or develop it for a more
| profitable use.
|
| This is exactly the political purpose of land value
| taxes, by the way! Under a sufficiently high land value
| tax, the only way to make land more profitable is to
| IMPROVE it by building useful stuff on it. So if the
| improvements go untaxed (you don't get penalized for
| building stuff), but the location is taxed, you
| incentivize people to build stuff lots of people need,
| such as dense housing rather than parking lots and single
| family homes.
| jedimastert wrote:
| > If you impose a tax on buildings, that gets shifted onto
| tenants. If its a tax on land (ie, the rental value of the
| location), the landlord has to eat i
|
| I'm not quite sure I understand the difference here, but I
| may be misunderstanding why a tax on the buildings and a
| tax on the land is different? Are you saying a tax based on
| rental prices? Otherwise I would assume any cost to the
| landlord would eventually get passed on to the tenet, being
| the source of revenue.
| larsiusprime wrote:
| This is a good question! So a standard property tax is a
| tax on the value of the building and the tax on the land.
|
| The landlord has to pay the tax whether they're renting
| it out or not, but what kind of tax you're assessing
| affects how much they can charge in rent to their tenant.
|
| When you tax something, the cost typically gets "passed
| on" because you are changing the marginal profitability
| of that thing, and this causes the supply to decrease,
| which drives up the price.
|
| We can make more buildings. But we can't make more land
| (locations).
|
| So theory has long held that a tax on the value of land
| (also known as a site value tax) cannot be passed on to
| tenants, because it's not like someone says "well the
| cost of holding land went up this week Charlie, better
| make slightly less land this quarter." Though they can
| and absolutely do in fact do that with regards to, say,
| housing construction (and gasoline, and cigarettes, and
| sirloin steaks, and plush dolls, and anything else you
| might want to tax).
|
| And this is exactly the empirical effect that the
| referenced research paper (and many more like it) find in
| practice. If you assign a split-rate property tax which
| taxes two things: land, and improvements (buildings,
| essentially) at different rates, and you have a natural
| experiment where you randomly vary the tax rate on the
| improvements and the tax rate on the land, you will find
| that the price of the property goes down proportionately
| to the tax rate on land (full capitalization of land
| taxes), but that doesn't happen with the portion of the
| tax rate that falls on buildings.
|
| See this for more on the underlying theory:
| https://astralcodexten.substack.com/p/your-book-review-
| progr...
|
| If you want more sources on the empirical findings I'm
| happy to provide that to.
| pjmorris wrote:
| > How is shifting the burden to landlords via moratoria
| different from shifting the burden to landlords via tax
| increases?
|
| In the case of a moratorium, the landlord takes an immediate,
| complete, revenue hit. In the case of tax increases, the
| landlord pays something extra, spread out over both time and
| the taxed population.
|
| It's like the difference between not getting a paycheck and
| having your rent go up.
| fennecfoxen wrote:
| Making landlords take all the risk individually also means
| that the market will reward those with increased risk
| tolerance, i.e. small landlords suffer and exit the market
| in favor of big landlords.
| somnic wrote:
| Firstly, it wouldn't necessarily shift as much burden onto
| landlords, depending on the tax. The burden would be spread
| around all earners if it were an income tax hike, or all
| consumers for a sales tax or VAT. The extent to which it does
| affect landlords, rent subsidies would more than compensate.
|
| Secondly, how much landlords pay in tax is less relevant than
| what incentives the policy sets up. On the part of landlords,
| eviction moratoria incentivise not renting to higher-risk
| tenants at all. Higher taxes + rent subsidy would have the
| opposite effect, with _more_ reason to rent to high risk
| tenants, and renting out properties that might be marginal
| otherwise.
|
| I don't know all the details of this, obviously, but this
| sort of policy analysis is much more about how it shifts
| incentives on the margin, rather than who pays more and who
| pays less.
| carom wrote:
| A tax would be evenly distributed among all property owners.
| An eviction moratorium or rent stabilization places the
| burden on random individuals to subsidize poor housing policy
| (restrictive zoning).
| cronix wrote:
| For one thing, the tax burden wouldn't be equal to a months
| rent, and then multiplied by however many months the
| moratorium lasts. If you were renting out a house for $1,500
| a month, and not able to collect rent for over a year, that's
| over $18,000 including property taxes. That's quite a tax
| there, only on landlords. Many of whom not only rely on a
| small bit of income from them, but are also responsible for
| paying the mortgage. Likely the bulk of that $1,500 is going
| to a bank, not a landlords pocket. Not all landlords own the
| building outright. I doubt most do.
| klyrs wrote:
| Sadly, the moratoria were supposed to be buffered with rental
| assistance programs. But administration was left up to
| individual states, and many did nothing, or hired apparently
| incompetent contractors. As of July, only 11% of the allocated
| rental assistance was disbursed.
|
| https://www.usatoday.com/story/news/politics/2021/08/25/89-f...
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