Oh my God oh my God if the landlords have to sell, that would be… Check notes… That would be really good for people who want to buy houses.
this is what is known as “a feature, not a bug”
But worse for those looking for a rental.
Rent control is a bandaid on a real problem that makes things worse long term. What California needs is build more, which means end the NIMBY and unfreeze property taxes so those seating on underutilized land are forced to develop it or sell.
Would property taxes actually do much? They’re so little even in high property-tax states that I think you’d need to do a lot more than that to FORCE rich people to utilize their other properties. High taxes would potentially push more costs on renters. Maybe we should just outlaw having more than 1 or 2 homes… including for real estate companies and banks :)
High taxes would potentially push more costs on renters.
Potentially, but I think here not so much. Competition drives prices down. In a perfectly competitive market, prices are pretty much equal to the cost of production. In that case, any tax would be completely passed on to the customer. But you can’t produce land at a certain location. My guess is that rents are largely determined by willingness to pay.
I keep wondering how to make the law do that. Making a company is like $100, that’s nothing compared to the house price. They would just have shell companies all over each owning a single location. 123 Fake St., LLC; 124 Fake St., LLC; etc.
You’d limit Ultimate Beneficial Ownership of the properties, not direct ownership.
I’d probably do something like: No individual or private entity may have Direct, Indirect or Ultimate Beneficial Ownership exceeding or of multiple of any of X(2-5?) Single Family properties, Y(2-3?) low density Multi-tenant properties, or Z(1-2?) high density Multi-tenant properties. Excluding the first wholely and solely owner occupied property. Excluding Ultimate Beneficial Ownership of less than A(.01-5?)% of a property. Excluding Ownership less than B(30-180?) days. Failure to comply results in forfeiture of newer ownership to REGULATOR-TBD until compliance is met. Multi-tenant properties have C (5-10?) residences
IANAL, probably some other loopholes that need closing. But the intent would be to limit consolidated ownership of many properties. But not impact several of the more reasonable ownership structures, nor impact churn of properties. The regulator would sell whatever extra it gets to fund housing programs.
You forgot the part about where the individual in question goes to jail when caught. That part is important.
How will that work for individuals who own .00001% of hundreds of homes (by owning shares of several real estate holding companies)?
Also, mega rich people don’t to legally own anything. It is owned by a trust with undisclosed beneficiaries. It is also routed via multiple offshore dummy corporations. It is set up this way so that tax agencies can never figure out incomes and inheritances.
Law with two parts, only a specific type of company may own rental properties. And you may not own or be employed by more than one property; including holding stock. The same rules apply to property management companies that service land lords with few properties; possibly with larger limits on how many properties they can manage at a time.
With that basic structure we can decide how many buildings/units each company can own. For example the limit could be 100 single family homes, or 3 mid sized complexes, or 1 large tower. Then we should be able to have a system that keeps landlords from going big. Makes the system so decentralized market concepts must work and monopoly power is effectively destroyed.
LVT, not property tax. You want to tax the value of the land, not the value of the property built on it.
Hmm build more. I’d be curious to see the stats on this. California has probably built 10 times more than the rest of the country combined over the last decade or so. People need to GO THE FUCK BACK HOME.
Good. Bye bitch.
Is there a downside further in the article or is it just all positive news?
The downside is they’ll just be bought up by corporations who will be even shittier landlords.
If the market is adequately regulated they wont be shittier landlords. There somehow is this romantic idea of smaller scale landlords to be like the good old guy that want to help a family find a good place and accept a modest profit. They exist, but the majority are just equally cutthroat like large corpos. Difference is that large corps have more means to be strategic about it and accept risks like 5% of tenants suing successfully while the rest just accepts the illegal treatment.
If the market is adequately regulated
Well there’s your first mistake lol
It is not an argument against regulation though. Regulation of markets like housing and healthcare, is reasonable and necessary. These cannot work as free markets because the one side has their life depending on it, wheras the other just can have another customer.
Let me tell you how it works in the real world right here right now in the UK. Large corpos set targets on how many rentals they want to acquire. For example, Lloyds announced a few years ago that they’re building a portfolio of 50k properties. Yes, fifty fucking thousand homes!
And so small landlords are forced to sell due to changes in the law. Corporate investors buy them in an instant at full asking price or even higher to ensure that property value doesn’t go down and so you, a mere mortal, can’t buy shit.
Next, they freeze the properties and don’t release anything on the market. That creates an insane housing shortage and rental prices go through the roof. A few years later they will start introducing their portfolio to the market slowly to avoid crashes at 2-5x price compared to just last year. People are desperate and pay through the nose.
Boom! Mega profits! What is your 3% yearly cap when they just jacked up the price five times? It will take many years to make a dent.
You know what would help against that? regulating how much property a company can acquire in an area. within a certain timeframe. Or regulating that the land tax and similiar things go up after having say more than a hundred or a thousand properties.
This is arguments for regulation not against it.
Land tax would be grand!
Idk about that. Almost all renting horror stories are with small private landlords.
Good?
good, get a real job
My mom is in her sixties, not everyone wants to work until the day they die
In LA County, looks like the median home price is $1M. The proceeds of such a sell, combined with presumed other typical sources of retirement income and social security should provide for an above-average retirement lifestyle.
I’m not talking about LA county, which this article is about, but just the general idea that every landlord can just go and get a job.
Also, 1 million only lets you take out a maximum of $40,000 per year safely which is not above average. Social security? Is that still $900 a month? That’s way below the median income in LA county even when added together.
You’re also assuming the mortgage is completely paid off
Considering the proposal is only about LA county, figure I’d use that, but we can consider things either way.
I would expect that whatever means had the retiree have both a home and at least another property left them with other typical sources of passive income. So in aggregate, I would expect social security, with retirement savings, plus the value of the house produces an overall viable income.
Whether the mortgage is paid off or not is immaterial unless they are somehow “upside down” on it. If the mortgage is not paid off, then selling it also removes the mortgage payment.
But let’s say that it is unreasonable to sell, maybe somehow the person has all of their money tied up in the property and can’t sell the property for an amount to get enough passive income. This measure would not force her to sell, it simply caps her rental income increase to 3% a year. Her property value may go up, but that doesn’t make her mortgage go up (if she even has one). County assessments would make her tax bill increase some, though generally a pittance. Even if you are concerned about the tax bill, you could have some clause that assessments or property tax for people with rental properties is similarly capped if the owner is subject to a rental income cap. In most contexts, the ability to guarantee oneself a 3% a year raise would be pretty respectable.
The retirement savings is what she used to buy the property, so the property IS the retirement savings
3% a year is fine, but only when the inflation is below 3%. If this affected my mom when the inflation was 10%, then of course it wouldn’t pay for her increased costs of living
Guess she should have saved for retirement then like the rest of us have to do.
How does a housewife save for retirement?
With the money that put a roof over her head and food in her mouth, same as the rest of us.
My dad’s no longer paying anything to her, and he wasn’t contributing to any retirement account for her when they were married
Guess he should have been doing that. And maybe she should have been somewhat aware of their financial situation. It sounds like your mom is a product of her own poor decisions.
She’s doing fine as a landlord, thank you
Introduce additional legislation that limit property sales to corporations and I’ll donate to yer campaign
3% was the top annual pay increase at the Fortune 500 company I used to work at. 3% max increase for those that “exceeded all expectations”. Probably less than 1/3 of employees.
So if it’s good enough for a Fortune 500 company, it’s good enough for every landlord. 3% max, and only to max 1/3 of their locations/rooms.
My old company’s “top” level required the VP to sign off on. So maybe 1-2 people in a department of 150 got it.
One of the issues is if material costs to maintain the property increase steeper than this cap.
Though the solution is pretty practical – cap it at inflation.
Don’t really care honestly, since the prices they’re charging now are nowhere near their operating costs as it is.
They can take a hit to their profit. Or sell an “unprofitable” property.
Good riddance
I fail to see the downside.
Homelessness is a downside.
Those new tenants (if the new buyer is a landlord) will have to pay a higher rate
Sure, the landlords are going to sell each otger the houses every year to be able to raise the rents. Lol!
There’s an average renter turnover. If the market would usually see a 5% increase yoy, and average stay us 5 years, this 3% policy means you’d have tenents “underpaying” by about 13%. So, to compensate, instead of new leases being 27% more expensive, they’ll be 40% more expensive after 5 years.
The root cause of all the raising home prices and rents is always the same: nimbys and lack of housing supply. Rent control works for people who are already in a home, but makes the problem worse for everyone else (who move, or become adults, etc)
Maybe everything should be capped at 3% since that’s the standard BS bonus we all get each year.
You get a bonus?
Aww… Yeah, if you don’t, move to a different job 😉. Easier said than done, I know. My dad and mom never got bonuses of significant value but when they did get extra money as bonus they were so happy. I get a bonus but I’m not really money driven. It makes my wife happy.
https://www.bls.gov/news.release/prod2.nr0.htm
4.2% increase in hourly compensation since 12 months ago
Sounds like that’s by design. If they all wanna sell prices come down on that front as well. Sounds like it should be capped at 2 percent to me.
0%. Rent when established is the rent for the unit in perpetuity.
Decide to rent? You get to rent it out until it’s no longer worth it, then it becomes owner occupied forever or torn down for high density housing. Sounds great to me!
“This would never work!1111oneoneone” - my last apartment was $1425 when I moved in and $1500 after I moved out 10 years later. If they rent it out again as-is it would be all of $1800 at most… but they could still make money at $1425/mo, or even less, after water/insurance/property taxes and income tax.
Cheaper homes in L.A.? We can’t have that!
Landlords say that would push them to see
Good. Do it. DO IT.
