Not sure if this counts as politics or not; let me know.
One major brick in the toilet tank of the rental market is apparently investors just ‘parking their money’ in properties and leaving them vacant longterm, with an eye to selling them later at an inflated price - with rental income being not worth the hassle.
Some people have suggested a tax on vacant properties to give more incentive to rent them out.
Good idea, but I say we go one better.
- Put a hefty tax on all properties that aren’t owner-occupied.
- Give a rebate for renting them out, proportional to the percentage above or below the average rental for comparable properties.
If you charge above-average rent, you get a small rebate.
If you charge average rent, you get a medium rebate.
If you charge below-average rent, you get a large rebate. This could even exceed 100%, using the funding from the other categories.
People chasing the large rebate will drive the average down over time, ate viola, we have a race to the bottom and the consumers reap the benefits.
There’s probably a dozen reasons why this wouldn’t work, but I like it anyway.
Housing costs, rental or purchase, are only resolved by supply and ending real estate’s position as an investment vehicle.
That means large scale public housing investment to the point that it actively devalues property on a capital value bases. Rental yields are already a poor investment on their own. That leaves the “just park the money” crowd with a simple choice: sell now or watch it depreciate.
Yep. I bet my landlord is barely, if it all, breaking even on yield. Whereas I’m sitting on my arse investing in ASX: VAS getting 12%.
Why people go the lengths to get a loan, buy a flat, find a tenant, do all the maintenance and paperwork, all to get 0.1% yeild, and maybe an increase in value? I mean the last 30 years yes it would be wise, but you can’t just say it’ll be like that in the future.
Also, if I need the equity, it’s liquid, unlike houses.
Eh, I don’t agree. Supply is super important, and we definitely need to see a lot more of it. We need a doubling or tripling of the amount of government housing. We need zoning regulations to allow medium density at least in all cases. We need higher density in inner suburbs and near train stations.
But regulation protecting tenants is also useful. Vienna is probably the gold standard, with multiple different tiers of pricing regulation for different kinds of property and different needs. Other kinds of non-price regulation, like bans on no-grounds evictions, protections for tenants on quality and repairs, and rights to make minor modifications, are also important regulation. These go very well hand-in-hand with a levy like OP proposes, because the levy stops an owner from throwing up their hands and saying “I don’t want the tenant to have these rights, so I just won’t bother renting it out.”
There’s also just the simple fact that even with the very best of intentions, increasing supply is a years-long endeavour. Price controls can be done right now and take near-immediate effect. In a crisis, we can’t afford to wait around for the long-term solution. We need something that works right now, in addition to addressing the root cause.