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Maximum Rent?

phattonez said:
But no one is arguing that landlords ought not be compensated for maintenance. Maintenance is estimated at 1% of the property value per year. So I can find a $300,000 condo in the Los Angeles area. That says that maintenance should cost $3000 per year. That's $250 per month. Can you find ANY 1 bedroom apartments that cost $250 per month in Los Angeles, or anything even close to that?

The maintenance argument isn't a serious one. Profits are far beyond compensatory for maintenance.
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You are obviously not a property owner or you would know that mortgage, taxes and insurance must be paid as well. For rental properties you must add vacancy time between tenants, make ready and advertising (or tenant finder fee) costs. Of course, profit is expected as well since renting property is a business.
 
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Hypothetical said:
the reason people would eventually increase homelessness is that if you can't make money renting a place because you constantly have to follow such a socialist rule, you're not going to invest in rental property and will sell it off for whatever purpose, that may nto be renting.

then you get a shortage of rental properties.

NO law can supercede supply and demand... unless you can be the one nation who can implement a non corrupt government control of everything.

...but you can't,, then you just get corrupt central government who decides who gets the most potatoes based on who they like.
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This argument supposes that corporations cannot be just as corrupt.

Further, are you seriously arguing that rents capped at 25% of income cannot pay for home building? Construction is only 55% of the cost of a new home. The rest is the price of the land and financing. I agree that this scheme will not change the cost to build a home. That is, you can only go down so low before you do induce shortages. However, this scheme will lower the cost of the land. There is wiggle room here.
 
Lursa said:
Er, that's what we do now. And we just reject the ones who apply and dont.
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No, there are plenty of landlords that allow tenants to pay 50%+ of their income.
 
Nap said:
Of course they are, hence much of the reason it costs more to rent than it is to own.
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Exactly, which is why these arguments talking about the cost of maintenance are disingenuous. Landlords are making profit far beyond the cost of maintenance.
 
Nap said:
I don't think he has thought this through.
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Of course I have. Just go through the effects one by one with me.

1. The law is implemented.
2. Landlords must lower rents on average.
3. As rental yields fall, more landlords sell, depressing home prices.
4. As home prices fall, more current renters will instead opt to buy, depressing home prices even more.
5. More people are then able to buy. Those who are remaining renting are only paying 25% of their income toward rent.

If I got anything wrong, please let me know. Please also let me know how any negative consequences you identify are worse than the current situation.
 
ttwtt78640 said:
You are obviously not a property owner or you would know that mortgage, taxes and insurance must be paid as well. For rental properties you must add vacancy time between tenants, make ready and advertising (or tenant finder fee) costs. Of course, profit is expected as well since renting property is a business.
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I have to push back on the mortgage issue. Any rent that goes toward paying principal on the mortgage is profit. I don't know why most landlords on here seem to think that this is a cost, neglecting the fact that they end up with more capital than they had previously. Additionally, why aren't capital gains included in their accounting? In other words, you could break even on rent, but you still make the capital gains through property value appreciation.
 
phattonez said:
No, there are plenty of landlords that allow tenants to pay 50%+ of their income.
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Right but if the landlord posted the rent publicly, then he can refuse anyone that doesnt meet that % and just pick some one who does.
 
phattonez said:
Of course I have. Just go through the effects one by one with me.

1. The law is implemented.
2. Landlords must lower rents on average.
3. As rental yields fall, more landlords sell, depressing home prices.
4. As home prices fall, more current renters will instead opt to buy, depressing home prices even more.
5. More people are then able to buy. Those who are remaining renting are only paying 25% of their income toward rent.

If I got anything wrong, please let me know. Please also let me know how any negative consequences you identify are worse than the current situation.
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WHy must they lower rents? If there are enough people that can pay 25% *of whatever the landlord chooses* he still gets the $ he wants and people that cant meet that 25% wont even bother applying.

I still dont get your proposal at all.
 
phattonez said:
Of course I have. Just go through the effects one by one with me.

1. The law is implemented.
2. Landlords must lower rents on average.
3. As rental yields fall, more landlords sell, depressing home prices.
4. As home prices fall, more current renters will instead opt to buy, depressing home prices even more.
5. More people are then able to buy. Those who are remaining renting are only paying 25% of their income toward rent.

If I got anything wrong, please let me know. Please also let me know how any negative consequences you identify are worse than the current situation.
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Except for a couple things. Why would anyone buy a rental with declining income? And, what happens to renters who are unable to get a mortgage to buy? Your scenario is well crafted to support your point, but I doubt it is realistic.
 
Lursa said:
Right but if the landlord posted the rent publicly, then he can refuse anyone that doesnt meet that % and just pick some one who does.
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Yes, that's allowed under this proposal.
 
Lursa said:
WHy must they lower rents? If there are enough people that can pay 25% *of whatever the landlord chooses* he still gets the $ he wants and people that cant meet that 25% wont even bother applying.

I still dont get your proposal at all.
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Because there won't be enough people. That's the point. When the average is 30-50%, then clearly most landlords will not be able to find tenants who can afford that price at 25% of their income.
 
Bullseye said:
Except for a couple things. Why would anyone buy a rental with declining income?
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Exactly. Home prices would fall.

And, what happens to renters who are unable to get a mortgage to buy?
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Many more would be able to buy. Those who cannot would still be renting, but spending no more than 25% of their income.

Your scenario is well crafted to support your point, but I doubt it is realistic.
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Why?
 
phattonez said:
Because there won't be enough people. That's the point. When the average is 30-50%, then clearly most landlords will not be able to find tenants who can afford that price at 25% of their income.
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Please provide some proof that there arent enough people to pay? What's your *sourced* evidence.
 
Lursa said:
Please provide some proof that there arent enough people to pay? What's your *sourced* evidence.
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The source is simple math. The fact is that on average people are paying more than 25% of their income to rent. If you place a limit on rent to 25% of income, that necessarily means that there are not enough people to keep average rent the same.

Or do we have to go over, AGAIN, what average actually means?
 
phattonez said:
The source is simple math. The fact is that on average people are paying more than 25% of their income to rent. If you place a limit on rent to 25% of income, that necessarily means that there are not enough people to keep average rent the same.
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That does not necessarily mean that. Please show your work.

Or do we have to go over, AGAIN, what average actually means?
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If it will help you explain your proposal better, sure.
 
Lursa said:
That does not necessarily mean that. Please show your work.


If it will help you explain your proposal better, sure.
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Where are all of these magic people who have income enough to pay only 25% going to come from to replace the ones paying 50%? Why aren't they replacing the 50% ones now? All else being equal wouldn't you want the tenant who makes more money?
 
phattonez said:
Where are all of these magic people who have income enough to pay only 25% going to come from to replace the ones paying 50%? Why aren't they replacing the 50% ones now? All else being equal wouldn't you want the tenant who makes more money?
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Sorry, that's not economics. It's not even math.

It makes no sense. There's no real foundation here and no numbers to support it.
 
phattonez said:
Of course I have. Just go through the effects one by one with me.

1. The law is implemented.
2. Landlords must lower rents on average.
3. As rental yields fall, more landlords sell, depressing home prices.
4. As home prices fall, more current renters will instead opt to buy, depressing home prices even more.
5. More people are then able to buy. Those who are remaining renting are only paying 25% of their income toward rent.

If I got anything wrong, please let me know. Please also let me know how any negative consequences you identify are worse than the current situation.
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It would cause prices to drop in some areas, you are essentially making it so people can't spend irresponsibly and the only ones truly hurt by it are those that would not be able to rent the places they want and are barely out of that 25% range. One scenario could be someone that was in my situation when I first moved here just starting my new job, there was some really nice apartments close to the plant and the rent was in the 30-35% range of the income I was making. Under your proposal I would have been screwed because I would have had to live either much further away from work (which given the amount of gas used would have ended up costing more than living within a mile of the plant) or live in some particularly rough areas.
 
Lursa said:
Sorry, that's not economics. It's not even math.

It makes no sense. There's no real foundation here and no numbers to support it.
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Explain to me where all of these extra people are going to come from.
 
Nap said:
It would cause prices to drop in some areas, you are essentially making it so people can't spend irresponsibly and the only ones truly hurt by it are those that would not be able to rent the places they want and are barely out of that 25% range. One scenario could be someone that was in my situation when I first moved here just starting my new job, there was some really nice apartments close to the plant and the rent was in the 30-35% range of the income I was making. Under your proposal I would have been screwed because I would have had to live either much further away from work (which given the amount of gas used would have ended up costing more than living within a mile of the plant) or live in some particularly rough areas.
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You're assuming that the rental market would stay the same in the scenario. With reduced demand, rental prices would fall.
 
phattonez said:
Explain to me where all of these extra people are going to come from.
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I'd like to know where any of the people you are describing are going to come from. You've provided no numbers. Not for renters, income levels, or rentals.
 
Lursa said:
I'd like to know where any of the people you are describing are going to come from. You've provided no numbers. Not for renters, income levels, or rentals.
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I'm not describing people coming from anywhere. I'm describing what will happen to the market when people are forced to pay less.
 
phattonez said:
I want to hear everyone's thoughts about this. We have had minimum wage laws for decades now, and we've had plenty of debate about it and we know more or less where everyone stands. I want to talk about another price control, and that is rent. What if we passed a law stating that landlords could charge no more than 25% of a household's income as rent. That is, a family that makes $4000 per month could be charged no more than $1000 per month in rent.

The immediate reaction I hear is that this will just increase homelessness, but let's think this through. Is that really true?

For the rich the impact is negligible, at least on their primary residence. Now what about the poor? Well, they're already paying 50%+ of their income toward rent. Are we really expecting for all of them to be homeless? That's quite doubtful, just like minimum wage increase don't cause unemployment rates to skyrocket to 15%. On the margins there are effects, but they're never as large as detractors make them out to be. So landlords would take a hit, yes, but the poor would also have more money to spend, helping other industries to have a larger market.

So let's think this out and have a real debate on the issue. Or, are you totally oblivious and fine with the fact that massive numbers of Americans are being absolutely fleeced just to have a roof over their heads?
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Do you think someone earning minimum wage should pay 25% above to live in the penthouse of a beach front condo in miami?

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Beaudreaux said:
There are too many other factors involved in rent control on a universal basis - the cost of ownership being just one. No one, not even the government, can require me to lose money in my business for the benefit of others. Price controls do not work on market segments that have broad tentacles into other markets and can impact the overall economy so vastly. The only way true rent control can work, is for the government to own the housing - all of it.

There's a reason, that even in far left New York, that this guy still can't get elected:
rent_high_cover-845x400.jpg
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I love that guy lol

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