A few choice paras (if people don't read the full article):
"The forthcoming general election is once again likely to be dominated by claims about a housing shortage and a dire need to build more homes. Housebuilding is an article of faith across the political spectrum. The evidence, however, does not support this thinking. Quite the reverse. Over the last 25 years, there has not just been a constant surplus of homes per household, but the ratio has been modestly growing while our living situations have been getting so much worse. In London, as the Conservative Home blog notes, there is a terrible housing crisis “even though its population is roughly the same as it was 70 years ago”, when the city was still extensively bomb-damaged by the second world war."
"The supply issue continues to dominate the discourse despite the US having more homes per capita than at any point in its history, and the UK’s homes-per-capita ratio actually exceeds the US’s."
"In terms of the Organisation for Economic Co-operation and Development countries, the UK has roughly the average number of homes per capita: 468 per 1,000 people in 2019. We have a comparable amount of housing to the Netherlands, Hungary or Canada, and our housing stock far exceeds many more affordable places such as Poland, Slovenia and the Czech Republic."
That argument presumes that housing is consumed the same way it was 70 years ago, and that the location of the housing is irrelevant.
I know lots of places where there are empty, cheap houses. They're not close to any good jobs, the only Internet they have is 3G, and the schools suck because the county is poor (because no one wants to live there).
I also suspect housing consumption per-capita is up as people move out younger and marry later. Especially in population centers.
I'm not sure what they're pointing to as the reason for housing prices if it's not supply and demand.
And you either have to make the "cheap places" more desirable (which raises their prices, but lowers pressure elsewhere) or you have to build more housing in the desirable areas.
You also have the issue that if someone does have a house, no matter what kind of house, it's a hassle and a half to move, so you have to provide some pretty darn strong incentives to get people to move.
My house ain't great, but I'd need something like $10-20k to consider moving to a nearly identical or even somewhat better house, just because of the costs and hassle associated with moving.
I think the main argument they are making is that affordability is less a demand/supply issue and more a tax policy issue. Implication being: if you cap rental income, you'll see a fall in private landlords but not necessarily less housing stock than if there were no rent controls.
>I'm not sure what they're pointing to as the reason for housing prices if it's not supply and demand.
They are saying the uncapped rental market makes housing as an asset class extremely profitable i.e. simple supply & demand argument is not strong enough alone to be the only driver.
Housing per capita may not be the best measurement, if households are changing. What may have been two parents and some kids in one house after the war may now be two separate households because of divorce, etc.
everything is paid by the renters, and if the price is not high enough (to turn a risk-weighted profit) it will be removed from the market.
(if there's a high enough vacancy tax and/or security costs against squatting, then eventually it will be sold. which is a one time boon for the market, but it ends up crowding out new developments for a while, and altogether this just leads to crazy waitlists and the usual discrimination.)
I don't know anything about the French rental homes market but in the USA there's ample headroom in lessor profits to take a haircut without triggering the second-order effect that you hypothesized. Landlord income as a share of GDP (again, in the USA) stands at a post-War high, having increased 15x from its low around 1990.
Landlords have a huge and largely unearned cashflow and the thing about taxes is it's best to try to raise them where the money is.
Rental supply is fixed in the short term. Therefore landlords have no pricing power unless they are colluding assuming theyre trying to maximize profit and not giving tenants a deal. Landlord goal is to rent every unit for maximum amount, that means renters set the price by competing with each other.
Kind of the same deal as rent control in a lot of ways, right? What you get is a short-term suppression of market rates that slowly get internalized by the supply-side until prices more/less return to the original equilibrium
> People who don't understand market pricing are against rent taxes because they think landlords can pass them through.
If all rents are taxed, what is the market mechanism to avoid pass though?
It seems as if a more fair approach would be to increase tax rates on income from rents. That way a rentier would not defer maintenance, the costs of which would be deducted from income and not taxed, as opposed to front-loading the tax to the rent transaction and thus encouraging deferred maintenance to preserve income.
The problem — again, in America — is that residential rents are by far the largest component of unreported income. Exemptions mean nothing to petty criminals who are already not effectively taxed.
The market mechanism that precludes tax pass-through is the price is already set as high as the market will bear. If landlords could raise the rent to pass through a new tax then they would have done so already without the tax.
Where do you find that residential rent is highest unreported income? Last figure from IRS I see is 2014-2016 and rent was a quarter the size of non-farm proprietor: https://www.irs.gov/pub/irs-pdf/p1415.pdf#page23
What percentage of total rents are unreported? One would expect that the majority of rents are collected by professional management companies subject to reporting requirements that make underreporting unfeasible. Maybe that is an incorrect baseline?
What makes you think that rents are already as high as the market will bear? After all, rents keep rising, right?
