Lower demand for the product globally. If their asset has a higher vacancy rate, raising rent all the time can't solve the problem.
However, tax rates give perverse incentives. What you'll probably get is a lot of commercial slumlords as repairs are seen to increase the value, thus the tax.
It wasn't a recommendation to magically wave a wand to lower demand on a global scale. It was pointing out that the action would lower demand generally.
If they could raise rents by the amount they would've been taxed, they would have. I'm happy to see more incentives against buying up houses for literal rent seeking.
>If they could raise rents by the amount they would've been taxed, they would have
They can’t raise rents higher because they are in competition with other rental properties. In equilibrium, if all commercial properties have taxes raised on them, (a) the majority of the market will raise rents to cover the cost of the tax and (b) those rental units that are no longer financially sustainable at the higher rate will exit the market (e.g. sell the homes to an owner occupant or redevelop the property if allowed to by zoning). Some fraction of property owners might take a haircut on their capital returns in the short run (the housing market is fairly illiquid) but the market will return to equilibrium in time.
No. The suppliers (landlords) as a whole have always been charging the maximum that the market is able to bear. Just because rents are raised everywhere doesn't mean the market can bear it. It would push every renter to cheaper smaller worse units and push the poorest renters to homelessness.
Is the implication the only path is to design the economy around keeping landlords as happy as possible? Its similar to the fear of a wealth tax driving the rich to move, you can just say out loud who our true masters are.
Lower demand for the product globally. If their asset has a higher vacancy rate, raising rent all the time can't solve the problem.
However, tax rates give perverse incentives. What you'll probably get is a lot of commercial slumlords as repairs are seen to increase the value, thus the tax.
> Lower demand for the product globall
oh shoot why didnt anyone think of this. genius.
It wasn't a recommendation to magically wave a wand to lower demand on a global scale. It was pointing out that the action would lower demand generally.
If they could raise rents by the amount they would've been taxed, they would have. I'm happy to see more incentives against buying up houses for literal rent seeking.
>If they could raise rents by the amount they would've been taxed, they would have
They can’t raise rents higher because they are in competition with other rental properties. In equilibrium, if all commercial properties have taxes raised on them, (a) the majority of the market will raise rents to cover the cost of the tax and (b) those rental units that are no longer financially sustainable at the higher rate will exit the market (e.g. sell the homes to an owner occupant or redevelop the property if allowed to by zoning). Some fraction of property owners might take a haircut on their capital returns in the short run (the housing market is fairly illiquid) but the market will return to equilibrium in time.
No. The suppliers (landlords) as a whole have always been charging the maximum that the market is able to bear. Just because rents are raised everywhere doesn't mean the market can bear it. It would push every renter to cheaper smaller worse units and push the poorest renters to homelessness.
Is the implication the only path is to design the economy around keeping landlords as happy as possible? Its similar to the fear of a wealth tax driving the rich to move, you can just say out loud who our true masters are.
> keeping landlords as happy as possible?
In this case, landlord is neither happy nor sad since it the tax is irrelevant to them.