Comment by em-bee
15 hours ago
another possible remedy would be to find ways to change the conditions of the loan so that building owners can continue to pay off their loan at better rates that match the income they can make from rent.
15 hours ago
another possible remedy would be to find ways to change the conditions of the loan so that building owners can continue to pay off their loan at better rates that match the income they can make from rent.
Then you'll most likely get moral hazard. That is, rather of people acting in their own limits, as responsible business parties, they would instead be encouraged this way to make deals which they know won't be able to carry through, then after getting this metaphorical foot in the door, they'll expect "to change the conditions of the loan", i.e. beneficial intervention on their behalf (and a kind of bait-and-switch).
how is that a moral hazard if the consequence is that we avoid shops staying empty? because that's the goal from the city's perspective.
and isn't investing into a property that they then fail to rent out in a profitable manner also already a failure to act within their own limits?
If the banks would prefer to adjust their loans instead of defaulting on them I think they would just naturally do that? They may not want to take a longer loan though.
the question is, why don't they prefer that? what is influencing that decision. for the building owners, if they don't want a longer loan then that's their choice. but we want the building filled, so if forcing them to lower the rents will cause them to go bankrupt because they refuse to accept a longer loan with lower monthly payments, then that's also their choice. and if the banks don't want to offer such a loan, the question is also "why?". if there are legitimate reasons then we need to fix those. if there aren't then it's probably just greed.