Dutch cities want to ban property investors in all neighborhoods

https://nltimes.nl/2021/09/02/dutch-cities-want-ban-property-investors-neighborhoods

by atombender • 5 years ago

606 577 5 years ago

finikytou• 5 years ago

why not banning foreign buyers first. then corporations. homes should be for the people. it should be cheaper to acquire a home u live in than an home u buy to speculate/rent. And the difference should be way higher than a few % tax more

capableweb2• 5 years ago

It seems there intent is to reduce the number of people who buy property just for investments, and then potentially sit on empty property waiting for opportunities. Banning foreign buyers would just do that, banning foreign buyers, which does not seem to be their intent. Even Dutch people buy property and just sit on it, like what happens in other countries as well.

Not sure how focusing on if someone is Dutch or not will help the situation, compared to banning speculative property investment as a whole instead.

mission_failed• 5 years ago

I'd like to see data on who can afford to sit on an empty property. I've heard of Chinese money trying to avoid Chinese government crackdowns or really rich families who refuse to sell empty houses, I don't see how the average investor could afford it.

raffraffraff• 5 years ago

Absentee landlords were notorious for allowing their Irish tenant's properties and amenities decay, while continuing to extracting rent. Yet back at home they were known as philanthropists who gave generously to "their own" poor houses and churches. People tend to care whether or not they are judged poorly, but only by peers and neighbours.

It may not make any difference who the investor is, but then again it may. Also, if the investor is resident, could there be other ways to ensure that they are not simply wringing every cent out of their investment with no reinvestment?

throwaway67342• 5 years ago

Won't this result in higher rent prices for those that don't have the funds or interest in purchasing property?

ginko• 5 years ago

it should be cheaper to acquire a home u live in than an home u buy to speculate/rent. And the difference should be way higher than a few % tax more

At least in Norway your primary home is exempt from property tax. I guess that's one reason why we have a home ownership rate of over 80%.

WouterZ• 5 years ago

I've been looking at buying a bigger home than the current one I own. It's near impossible as prices keep on going up. Very disapppinted that cities have to arrange this - it means that some cities won't yet introduce anything.

I can already see investors swooping into those markets without the ban... i.e. Haarlem where I live will be among them.

mytailorisrich5• 5 years ago

We'd need to look at demand versus supply, including new builds before we can point the finger at "investors", which may be convenient but not necessarily useful.

Ultimately, market forces are what they are. If demand exceeds supply then some people will always miss out.

There is also the problem of the amount of liquidity available. Since 2008 and even more since Covid mountains of cash have been created at zero interest rate and that partly explains assets' price inflation.

Let's also not forget that many people cannot afford to buy, and don't want to for whatever reason, so decimating the private letting sector is not great, either, and will only cause rents to skyrocket.

jlokier4• 5 years ago

Rents have already skyrocketed while the private residential letting sector is thriving.

It's not clear at all that changing the market forces to increase access to ownership by occupiers would lead to increasing rents, even with reduced supply of rentable properties.

At the moment, a lot of tenants would rather buy if they could, and are paying the same or more in rent than they would pay on an equivalent mortgage, plus rents are rising faster than a mortgage would if they had one. Rents are also rising faster than their salaries. So they would gain location stability and financial stability by owning, but they can't get a mortgage. Mortgages, like anything in a competitive market, are preferentially offered to the best-looking customers, and property speculators are better-looking than ordinary working folks struggling to make ends meet on their current and rising rent.

If those people could buy properties like the ones they are currently renting, rentable supply would go down. But demand would also go down by the same amount, and mostly from those competing to pay the higher end of rents currently. I think this would reduce average asking rents for the remaining tenants.

dt3ft• 5 years ago

This is the only right way to deal with greed. Enough is enough.

snemvalts• 5 years ago

Greed is innate to humans and you can't even take it away with communism, people will still find a way to collect and hoard. The problem is the low interest rates from central banks flooding the economy with money.

capableweb2• 5 years ago

Some greed might be innate, but what we're seeing today with billionaires is not normal greed, it's extreme greed, something me (and many others) don't think is innate.

And where does "communism" come from? No one mentioned it here on HN nor in the article. People are so quick to label things, even if they are not even related.

In this case, Dutch people seems to had enough of expensive prices so now they are on the lookout for a solution. Just because this solution involves the government stepping in to adjust the market, doesn't mean that the Dutch government is suddenly "communist".

arvinsim2• 5 years ago

That's not an excuse. Lots of undesirable traits are also innate like violence, tribalism, etc. Does that mean we give those a free pass?

imtringued32• 5 years ago

If you raise interest rates then people hoard money. How does that solve anything?

tellersid2• 5 years ago

Greedy? Not me. Always the other guy that is greedy.

The irony is there is such high probability with posting on this board you are part of the top 1% of the globe when it comes to wealth.

sumedh2• 5 years ago

you are part of the top 1% of the globe when it comes to wealth.

So what, what do you want the person to do, go live in a hut?

How is that person greedy compared to people with multiple houses?

logicchains6• 5 years ago

This is the only right way to deal with greed. Enough is enough.

How about dealing with envy? Seems you've sure got plenty of that.

57844743385• 5 years ago

The only way to make housing affordable is to end property investing.

lostlogin• 5 years ago

New Zealand had a stock market crash in the ’80s which is frequently blamed for the aversion New Zealanders have to shares and the love of property investment.

We have a truely terrible housing stock (cold, damp and poorly maintained) and in the largest city, Auckland, the average house price is 20x the average wage.

People claim it’s untenable but the rise in values has been utterly relentless.

tjpnz• 5 years ago

Nothing's going to put that cat back in the bag at this rate, short of a capital gains tax. But given 70% of our politicians are property investors themselves that won't ever be on the cards.

This whole sorry state of affairs makes me glad I left the country. That and how utterly abysmal IT salaries are.

arp2425• 5 years ago

When I lived in Dunedin a few years ago I was truly shocked at the state of the houses. I don't think I've ever seen a house in the Netherlands without central heating; but I've never seen a house with central heating in Dunedin, and Dunedin is quite a bit colder than the Netherlands. Isolation and even double glazing seems almost non-existent and wooden houses are the norm.

Don't get me wrong, I really loved living there, and I'd move back in an instant (but work visas are very hard at the moment), but Kiwi houses are the worst and many decades behind Europe.

throwaway67342• 5 years ago

What defines property investing?

Why not a land value tax instead?

kortilla• 5 years ago

How do you buy a house then? Does the government just own all housing?

jlokier4• 5 years ago

You just buy a house the usual ways and live in it. With cash or a mortgage.

If you live in it, it's not called "property investing".

"Property investing" refers to buying property to benefit from price speculation and use as a store of value, without actually using the property as a home. The property may sit there empty most or all of the time, or it may be rented out, with a combination of rent and price speculation being the owner's business plan. "Flipping" may be involved.

Isinlor3• 5 years ago

Do I understand correctly that they want to kick out all the students from the cities?

When I was studying in Groningen I had to look for places to rent out of the city.

Some students were camping in tents in front of the campus.

Here is a photo from another city, Tilburg:

https://www.dutchnews.nl/wpcms/wp-content/uploads/2019/09/st...

Some academic staff were even taking them in due to shortage of places to rent.

I managed to rent a very nice place in Bedum, a village 13 km from the university campus, and I was commuting every day on bike.

jhgb9• 5 years ago

Do I understand correctly that they want to kick out all the students from the cities?

Presumably not, unless those students are property investors.

Isinlor3• 5 years ago

investors won't be allowed to buy cheap and medium-priced homes and rent them out

So, who will be renting cheap and medium-priced homes?

There are already extremely severe shortages as exemplified by students camping in tents.

amelius3• 5 years ago

You misunderstood. The only way to rent a place is to rent it from an investor. If investors are banned from the city, then students need to buy the house/room they live in. This is of course not feasible for the majority of students.

sverhagen• 5 years ago

I suppose the implied question is: who's going to rent to students if the landlords' investments get penalized for them not living there themselves. There's presumably too many students in these cities for all of them to find some family who have a spare room to rent.

johndoe0815• 5 years ago

The trend here in Trondheim (third-largest city in Norway with 200k residents, of these ca. 40k are students) is that a lot of houses and apartments are explicitly offered for sale with plans for conversion to student apartments.

Rents in the city have increased by 8.2% over the last 12 months, property prices by 20-25% over the last two years. The price per square meter to buy anything reasonable is above 6k Eur now. Salaries are, of course, not adjusted to compensate for this...

So I can understand and support this Dutch initiative, but of course universities and municipalities then have to ensure they provide an appropriate amount student accommodation. Since students are an important economic factor, this doesn't sound to be a too unreasonable demany to me.

The Norwegian government also tries a different approach - it tries to enable young people to buy property already in their twenties by funding special discounts on interest rates. Together with banning investors from the cities, this might also be a model for the Netherlands, which, like Norway, has quite a high rate of home ownership (69% NL vs. 81% NO). Some of my recent master students owned an apartment here and made a nice profit when they sold it this year and moved back to Oslo...

[1] https://www.statista.com/statistics/543453/house-owners-amon...

[2] https://tradingeconomics.com/netherlands/home-ownership-rate

marvin2• 5 years ago

Everyone is suggesting ineffective solutions with idiotic side effects. The proper way of solving this problem is to build a lot more homes. Otherwise you'll be creating a plan economy where bureaucrats are constantly scrambling to alleviate the side effects of their shuffling of deck-chairs on the sinking ship.

But of course, few cities want to do this. The biggest cities in Norway are particularly bad at not even attempting to solve this problem at the root.

Let's just say it loudly and proudly: If you're against allowing the free market to build as much as the demand indicates, you're for high housing costs and screw everyone who is negatively affected. This hypocritical virtue signalling has gotten really old.

cutler9• 5 years ago

Even better - ban profit on property sales.

MonaroVXR• 5 years ago

Person living in Groningen right now, as Dutch citizen here.

There aren't enough houses for students right now.

reillyse• 5 years ago

So long as homes are considered an asset class governments are compelled to protect their value and help increase that value. This is a small step to decoupling property from investing but I think a great start.

iamnotwhoiam2• 5 years ago

So investors buy the homes then rent them out? What’s the problem?

In some asian markets investors buy homes then sit on them unused for years. That’s a problem.

azeirah• 5 years ago

It affects the housing market very negatively. These are houses that could've been bought by families and couples and so on. Instead of being available for purchase, the same people have now have to rent instead of buy.

House prices rise, rent increases, common folk are struggling, investors are getting rich without doing anything.

It's just meh all over.

winkelwagen3• 5 years ago

If that means middle income families or starters are not able to buy those houses, and the investors driving the prices up. Then yes, it’s a problem.

keewee72• 5 years ago

Why should middle income families be able to buy property in some of the wealthiest and most expensive cities in the world?

There is suburbs for that.

turbinerneiter3• 5 years ago

The problem is that it gets harder and harder for normal people to own anything (build up wealth), while building wealth is the best retirement startegy there is.

I myself, for example, live in a city where owning the place I live in is just barely getting in reach for me, although I am in the top 30% income bracket of my country. I therefore have to put my savings into the stock market, which is at an all time high. Maybe even a bubble.

It is frustrating to see any income gain that I make being absorbed by the housing market. I work hard while others get unspeakably rich just by owning stuff.

Simply put, the balance is off.

lotsofpulp9• 5 years ago

The problem is that it gets harder and harder for normal people to own anything (build up wealth),

In the US, it is easier than ever. Open a free account online at a number of brokerages, and buy some broad market low cost equity index ETF.

The problem is government subsidies for real estate. Get rid of federal taxpayer guaranteed mortgages (Fannie Mae, Freddie Mac, ginnie mae). Get rid of 1031 exchanges. Let the markets set the interest rate and do its own risk calculations.

See similar price distortions due to federal taxpayer guaranteed student loans.

All of this is unlikely, however, since the US and many other societies have baked in burgeoning economic growth for decades to come in their previous decades’ spending. Therefore, to avoid defaulting on these assumptions, the societies will keep inflating currency to keep the ruse going as long as possible.

keewee72• 5 years ago

The problem is that it gets harder and harder for normal people to own anything

One of the reasons is that people insist on living and working in some of the wealthiest and most expensive cities in the world.

I live a cheap town and my commute to work in the 2nd biggest city in my country is just 25 minutes.

bradleyjg• 5 years ago

The problem is that it gets harder and harder for normal people to own anything ( build up wealth), while building wealth is the best retirement startegy there is.

This is the problem in a nutshell! It’s impossible for houses to continue to be great “wealth building” vehicles and for them be affordable. Politicians have prioritized the former and that’s how we got where we are.

If we want affordable housing for people to live in they can’t also be the universal investment vehicle. Those two objectives are in direct contradiction.

csomar2• 5 years ago

The problem is that in a globalized world, dutch homes are more attractive than, say, homes in Cairo or Sao Paulo. Investors moving money in means that home prices are no longer correlated with the local economy. A salary is no longer what determine the rent or the mortgage but rather "global" appeal to that place.

Genego2• 5 years ago

The problem is that these investors have raised rents nationally to a point where there is no affordable housing outside of social housing (8-15+ year wait lists). And this happened in a very short time period. If I'd want a 60-80m2 apartment in the city I currently live, I'd have to pay 1000-1200+ Euro for that; three to four years ago, that would have been half. Just over the border in Germany the same apartment goes for 350-500 Euros (NRW to be specific). The housing market here feels beyond crazy. Real estate prices themselves are also exploding +10%~ month over month

iamnotwhoiam2• 5 years ago

Is that because Germany had banned property investment or because supply keeps up with demand in Germany?

leoedin2• 5 years ago

A lot of these investors are 50+ year olds who've benefited from tremendous unearned wealth from their primary residence.

When you own outright your main house and have paid effectively no rent or mortgage payments for decades, that surplus income makes buying a second investment property, even at today's prices, relatively easy. The extra money and demand entering the market pushes prices up.

Then the renting tenants have to pay an ever increasing share of their income in rent. They never build up capital, and so can never afford to buy anywhere.

This is a societal problem - home ownership means stability (to have children), commitment to an area, a willingness to invest time into improving it. When you can be cast on to the streets with a few months notice at your landlords whim, you have none of that.

throwaway-8c93• 5 years ago

The real problem is that governments around the developed world gave up on building affordable social housing since the 70s.

AirBnB investors just highlight the symptoms.

II2II3• 5 years ago

From my experience, the size and type of investor seem to be a factor. I have rented my entire adult life since it has some advantages (notably mobility), yet have always rented from homeowners or small-time investors. They tend to place more emphasis upon keeping their units rented and keeping good renters. Except for moving, I have only seen my rent increase once. It was a small increase and I lived in that place for many years.

Contrast that to people who have lived in places with large property managers. The rent increase is automatic, even with better renters than I. I have heard substantiated stories of rent doubling. Now those renters may have been bad apples and the property manager may have been using it as a tool for eviction, but that is still a problem. It is a problem since it is used a means to bypass tenant protections. Those protections are necessary to provide housing stability.

My apologies for the rant. In principle, I have nothing against investment. That said: the excessive greed of some investors, the ones that effectively push people down or out to achieve ... well, I don't know what some people are trying to achieve beyond a certain point ... is turning me away from that principle.

cutler9• 5 years ago

Market investment, ie. where little new value is added, is gambling dressed up to look respectable. It's all about getting something for nothing which is the root cause of all our economic ills.

jvvlimme• 5 years ago

There are more efficient ways to achieve the same and get a bunch of other positive side effects in one go: Land Value Taxation. Henry George proposed it already in 1879 in his book "Progress and Poverty".

lunarboy• 5 years ago

Interested how this plays out in other countries in terms of both reception and actual effect. The current Korean gov set out to reduce house prices by various methods: e.g. high property taxes on houses that are not the owners primary residence, banning loans/mortage for flipping homes, etc. But prices have gone up more during this regulation. People suspect its actually driving buyers to buy before more regulations in the future.

I feel like the only way would be to restrict to one house per co-residence family unit in contested cities. But I have no knowledge of real estate/economics, and I'm sure it'll be called communism. So really feels like a near impossible problem to solve.

wsc9812• 5 years ago

As others have mentioned the best solution is to just build a massive supply of houses, in order for supply to outstrip demand. This, however, is unlikely to happen in the next 10-15 years. Especially if The Netherlands keeps the current immigration levels up (~400 people per week).

winkelwagen3• 5 years ago

Better late than never. The housing market in the Netherlands is currently terrible. I’ve “fled” the country for the next few years. Hoping that would be enough time for the market to get healthy again. It’s just insane that we made it this easy for people who were well off to begin with to profit. Just sold a house, the profit I got from buying and selling that house alone makes me nauseous. Makes me wonder why I work at all. Can imagine corporate investors are milking it for all its worth.

___luigi2• 5 years ago

Is it better in neighboring countries?. There was a discussion [1] about controlled rent market few days ago, it seems that the problem is related to growth.

[1] https://www.bbc.com/news/business-58317555

amelius3• 5 years ago

IANAE, but I'm guessing part of the problem is also that housing is not part of inflation (i.e. not in the indexation).

cjfd• 5 years ago

This is cart before horse stuff. As noticed by other commenters some people need to rent. I am blaming 'quantitative easing'. If the central bank buys a whole lot of assets where do other investors go?

varjag5• 5 years ago

I believe the Netherlands used to allow full tax write-off of the mortgage interest (dunno if they still do). That certainly is bound to heat up the market.

dwightgunning• 5 years ago

This is still in place for PPOR. Does not apply for investment properties AFAIK.

dogma11389• 5 years ago

That’s not a full write off and it’s only for a mortgage on a property you reside in. BTW many countries in the EU allow you to write off interest from loans even from credit cards but it didn’t cause an inflation of personal credit line or increased utilization.

the-dude3• 5 years ago

I am not sure 'full write-off' is the correct term.

It is tax deductable, so you are taxed less, typically max 50% of the interest sum.

xvector• 5 years ago

Dutch cities are easily the best-planned cities in the world. The channel "Not Just Bikes" [1] goes fairly in-depth as to why. I think I'll trust that the Dutch city planners know what they're doing in this instance.

[1] https://youtube.com/c/NotJustBikes

kalium-xyz2• 5 years ago

I wonder if things will turn around on this channel now covid lockdowns are stopping. I have never found living in a city center in the Netherlands quiet before the lockdowns, and don't find it very quiet now anymore either.

dmje2• 5 years ago

Amen to this. Two case studies from the UK I've been thinking about recently:

1) Visiting London and spending time in South Kensington - walking back to hotel at night, only about 30% of houses had any lights on. Suggestion is the others are effectively uninhabited, and a search on RightMove shows properties sell for £20-£30m for a 4/5 bed. This isn't normal Londoners, it's outside investment.

2) Cornwall, where I live - an insane house price rise over lockdown as city dwellers aim for the beautiful bits of the country. Literally no way now you could afford your first home round here on minimum wage, and some towns have a high (>50) % holiday or second homes.

It's an untenable situation. I think my generation (I'm nearly 50) are probably the last to be able to afford their own home on anything other than a massive wage.

Round here in Cornwall the jobs are things like surf instructor, supermarket worker, barperson, etc. That's not gonna stretch to the local house prices.

anothernewdude• 5 years ago

Those empty homes should be torn down or squatted in. I imagine an organisation like a squatters union could be set up to manage protection for them.

csomar2• 5 years ago

Sure. Let's fix a housing crisis by completely breaking up laws, society and order.

mytailorisrich5• 5 years ago

Vacant properties in London are a red herring. Last time I checked official number they accounted for 1% of the housing stock, bearing in mind that a number of properties are always being refurbished at any given time. In general it does not make sense to keep a property empty unless perhaps it is an extreme luxury one.

South Kensington is one of the most expensive area of London and not representative at all. Whatever happens there does not affect the average person, and quite of few of the grand houses there are also actually offices.

In any case, it is not true that 30% of homes are empty there. Apparently the City of London (i.e. the square mile, not London as a whole) has the highest rate in the country and that is still only about 4% [1].

In Cornwall the issue is quite different: The area is very attractive for second homes and, at the same time, it is the second poorest region in all of Northern Europe. This means that local resident have a very low purchasing power and indeed cannot compete with people from London and the South East. I think that they are starting to implement restrictions in some areas in order to give priorities to buyers who will occupy the property as their main residence in order to keep second homes in check.

[1] https://www.cityam.com/15bn-worth-of-london-homes-sit-empty-...

dogma11389• 5 years ago

The median price for a property in London is £600K, the average is over £1M today.

That means that normal people cannot afford to buy anything in London even with HTB which is a terrible policy the people who can afford to use it are already in the top percentiles.

A £600K property as a first time buyer requires you to have about £100K to get on a property ladder.

10% deposit for a 90% LTV mortgage is £60K, stamp duty is £17,500 (£20K from end of Sep 21) that’s already ~£80,000 then you have mortgage fees, legal fees, furnishing costs (since new builds don’t even come with blinds)…

The average salary in London is £41K, that leaves you with take home pay of about £30K after tax (if you have no student loans).

So a house hold of two people living in London has about £60K per year if both earn the average pay, £25K or more of which would go to rent per year, another £4000 will go to various utility bills and council tax, another 5-5.5K would go for travel (assuming you live within zone 1-4), then you have food, clothing and other living expenses, so if you are somehow lucky and can save up £10K per year that’s 10 years to save up enough for a median property which is most likely a 54 sq/m flat.

Add kids to this mix and well you are royally fucked.

___luigi2• 5 years ago

walking back to hotel at night, only about 30% of houses had any lights on.

I wish a data scientist at utilities (water, electricity and gas) providers pick up this line and provide some statistics on this. I wish also that city-services companies (e.g. Electricity/water/parking service provider) can collaborate to provide better and justified policy making.

I did similar studies based on open data to provide insights on road/sidewalk optimization usage, and I still see value in collaboration with policy makers.

mordae• 5 years ago

Pirates tried to investigate the situation from this angle only to be publicly shamed for being commies, spying on people. They only wanted district aggregate statistics.

spangry• 5 years ago

There's an organisation called Prosper Australia that does analysis of 'speculative vacancies' in Melbourne using water consumption data: https://www.prosper.org.au/wp-content/uploads/2021/01/Prospe...

ed_blackburn• 5 years ago

Another Cornishman here (Par). The financial destitution and how much harder they have to work for the same things I do in the South East is unsustainable. Cornwall has Luther to the right politically and that’s because there’s been some useful scapegoats. Now those scapegoats have been slain and things are getting worse not better I hope we’ll see policies that are focused on root cause issues instead of ideology (left or right). Property is an obvious example. Dormant second home now means the Cornish rent or live in low quality new build accommodation (hello Wainhomes) but when communities are hollowed out and empty through winter local businesses fail and the destitution affects even the pretty locations. Those people wonder what happened to the quaint fishing village their second home is in. Why is cafe closed, the nearest shop a supermarket that is a 30 min drive away. Why is their a drug problem? Why are the pins all boarded up etc etc. I hope Cornwall and it’s political representatives can act before the bust comes and find a balance between tourism and building sustainable local businesses in different sectors. The obvious place to start is accommodation. If people cannot put a roof over their head how can a community function least of all an economy.

makomk3• 5 years ago

Unfortunately, the British press and all the wealthy people with second homes still have Brexit as a scapegoat for why cafes and shops in tourist destinations can't find staff. Never mind the fact that AirBNB and second homes have pushed up house prices and rents to the point that it's impossible to live there on the kind of pay those jobs have, according to the media it's all the fault of Brexit driving away the foreign workers who had to do the jobs because all the Brexit-voting morons who were brainwashed into blaming the EU are too lazy to do them.

toomanybeersies• 5 years ago

Has it ever been possible to buy a house on minimum wage?

lsiebert2• 5 years ago

Yes, depending on where you buy. Many homes are much cheaper outside of major cities.

inter_netuser2• 5 years ago

Yes. I even knew welfare recepients who bought a property while on welfare.

Pepperidge farms remembers.

varjag5• 5 years ago

I moved here years ago and was having doubts if it's the right time to buy at these insane property prices. A coworker said "I know some people who've been holding out for fair housing prices since 1949, they are still waiting".

te_chris• 5 years ago

UK’s also only had a min wage since Blair

Ekaros3• 5 years ago

Not sure about minimum wage. But certainly for regular blue collar labour it was. And I don't see why it should not have been.

traceroute662• 5 years ago

spending time in South Kensington - walking back to hotel at night, only about 30% of houses had any lights on.

South Kensington is a bit of a curiosity.

It is predominantly bordered by Chelsea and Knightsbridge.

Chelsea is Russian country, if you are a wealthy Russian, Chelsea is the place to be. Unless you are a Russian oligarch, in which case there are one or two spots a bit further away where you can splash super serious cash on rarer properties.

Knightsbridge is wealthy Arab country, when it gets too hot in the Middle East summer, they flock to Knightsbridge with their imported Ferraris to stay in their London houses.

But South Kensington is a bit different. Its not attractive to the Russians or Arabs. Not many of the properties there remain single occupant, they've been mostly subdivided in to individual flats or re-purposed for office (or educational use ... there are lots of cram-schools, colleges and nurseries round there).

OJFord• 5 years ago

Yeah a lot are not residential, a lot of those that are are subdivided into flats, and a chunk of those that remain may just not be occupied outside term time or during a pandemic.

But mostly it's that they're not residential to begin with. Many more are linked to an embassy, restaurants, clubs, nurseries, storage, etc. than you'd realise from 'walking back to hotel at night'.

yawaworht1978• 5 years ago

What about Notting hill, a bedsit can go for 2000 quid per week there, it's in Kensington. Average London rent prices are 1600 quid, that is before council tax, internet and the dreaded tv licence. A more granular overview is Location Studio One bedroom Kensington and Chelsea £1,427 £2,062 Islington £1,383 £1,565 Tower Hamlets £1,398 £1,547 Westminster £1,371 £2,113 Lambeth £1,240 £1,595

One bedroom is not sufficient to raise a family, I think that's safe to say.

So let's move on to the 2 and 3 bedroom properties

Location Ttwo br 3Wbr swestmisnster£ 2,920 £4,152 Camden £ 2,254 £2,880 Kensingtonelsea £3,030 £4,938 Islington £1,934 £2,487

Hammersmith a 1,922 £2,653

Sorry for the formatting.

Cheapest

BBexley£. 1,105 £1,281 Havering £1,120 £1,384 Redbridge £1,293 £1,589 Sutton £ 1,163 £1,498 Waltham Forest £1,364 £1,649

These are before council tax and other costs, which are gonna be laughed at by oligarchs but they do count for normal people.

The new houses nnextto Westfield shopping centre cost around 2000 quid before council tax , zone 3 classic houses with a garden go for 1500 before council tax. its really bad in all London, unless you make 50k after taxes and most devs don't make that money there. t

saddlerustle• 5 years ago

Your first point is a misleading anecdote given there's actually data on this. The amount of empty homes in London is at a historical low [1]. Broadly, cities with the highest amount of empty homes tend to have the most affordable housing, because obviously that indicates there's more than enough housing to go round.

[1] https://i.imgur.com/jX1OpmS.png

brailsafe• 5 years ago

True, but citing data from 2017 is also a little misleading, considering theirs was a very recent anecdote. It's still probably relevant though.

yodsanklai2• 5 years ago

It also depends what we call "empty house". Your link doesn't provide a definition. Is a house occupied a few weeks a year considered empty?

throw0101a• 5 years ago

Contra:

The Square Mile has the highest percentage of empty homes in the entire country, fresh data states.
Some 42.4 properties per 1,000 sit unused in the City of London, leaving it top of the charts and the only London authority to feature in the nationwide top 10.
Data compiled by insurer Admiral also shows that as many as 29,242 London homes have been unoccupied for at least six months, to a collective value of roughly £15 billion.

* https://www.citymatters.london/vacant-homes-city-london/

rocqua5• 5 years ago

Note, this targets anyone buying houses to rent out. It does not (like london considered) tax un-lived-in houses.

This is just a weird bandaid. Mostly trying to blame landlords for this housing crisis when mortgage tax credits, and scarcity due to weird eco regulation shenanigans are to blame.

iso121012• 5 years ago

There aren't mortgage tax credits in the UK, and I have no idea what you mean by "eco regulation shenanigans"

iso121012• 5 years ago

Round here in Cornwall the jobs are things like surf instructor, supermarket worker, barperson, etc. That's not gonna stretch to the local house prices.

That was the case. A colleague of mine, originally from St Just, moved to London for work as so many have to do. Another from near Cockermouth did the same. Both now work remotely full time from their 'home towns' on decent wages.

Covid has done wonders for local communities - good jobs are now available for people without having to move across the country.

https://www.rightmove.co.uk/properties/112353359 for example is under £300k. Assuming you got it for 300k (asking price is 285k) with a 15k deposit you're looking at £1,278.19 a month with nationwide on a 30 year rate, well within the range of a couple earning £35k each, which is a reasonable

Now sure if you didn't get the education to get a decent job. Hell even on 25k each, Nationwide can lend upto £275k for a first time buyer - just need that deposit.

itsdsmurrell• 5 years ago

The real problem is how much the bank earns off the interest it charges you throughout your life while it had to do what?... create new money from nothing into the money supply with special permissions given to it by the government. This is why housing is so expensive to begin with. This bullshit needs to stop.

DrBazza3• 5 years ago

Now sure if you didn't get the education to get a decent job. Hell even on 25k each, Nationwide can lend upto £275k for a first time buyer - just need that deposit.

This horrifies me. Even the slightest increase in interest rates will ruin a huge number of home owners.

On the other hand, home ownership in the UK isn’t normal either. It’s only since the 50s or perhaps 60s that the average person has been able to afford a home. And then again in the 80s with council houses sold off to tenants.

arp2425• 5 years ago

For a small village of less than 5,000 people nowhere near any sort of city or population centre, this seems like a lot. £1,278/month is well outside the range for a lot of working class and even middle class families. The median gross salary in Cornwall was £27,223 in 2020.

I'm baffled by your comment to be honest; not very long ago I could buy a house in Bristol for the same or less.

Dayshine• 5 years ago

Median post-tax household income in the UK is £30k. So, £25k each is roughly £20k post-tax, so you're looking at the top 30% of households.

Admittedly this includes households including people who are "retired" but I think that's reasonable as plenty of people have to keep working even though they're receiving a pension.

https://www.ons.gov.uk/peoplepopulationandcommunity/personal...

headmelted• 5 years ago

I mean, it’s an easily fixable problem.

Punitively heavy land taxes on non-primary dwellings solves this overnight. It also raises a lot of capital that can be used to provide services in the area.

taffronaut2• 5 years ago

Unfortunately the wealthy tend not to want to be taxed and they're not averse to fighting back. They've learned that they need to lobby even small local tax-raising authorities to obstruct these kinds of actions. In Wales, local authorities are allowed to raise a local tax premium of up to 100% on holiday homes [1], but few, if any, charge a premium of more than 50%, even in affected areas considered to be in crisis. There's also a loophole that a second home can be declared as a holiday rental property business, without any real intention of letting it out. Welsh authorities work hard to police this by asking to review evidence of lettings (I know this as I own a legit holiday rental property in an affected area) but the enforcers need extra funding to police the tax dodgers.

I don't dispute your underlying point that punitive taxes are a big part of the solution, but I take issue that it's an easy or overnight fix unfortunately because of the interests aligned against imposing them.

[1] https://gov.wales/welsh-government-announces-three-pronged-a...

mrjin• 5 years ago

Yes and no. Yes, your proposal can solve the problem for sure. No, you just can hardly implement it anytime soon. I'm in Australia and Labor lost last election just because they were swearing to remove so called NG(Negative-Gearing, which allows the property investors to offset their income with losses from investment property) before the ballot day, despite NG itself is actually a bizarre idea: why would tax payers cover the asses of the property investors and what's more, in fair amount of NG claims, the so claimed losses were not actually rendered but rather losses in accounting term. If you opt to a different accounting method, they were actually making a profit.

So your proposal will for sure hurt those vested interests, and I would expect it be very hard to pass the parliament. It's great to see Dutch cities actually made that far, I'll keep my eyes wide open to see what's next for them.

heresie-dabord2• 5 years ago

Wages have been stagnant for decades while the cost of living has increased... and now housing has become a privilege.

Yes, there are "rich foreigners" and some corporations are strategically acquiring the places and spaces where high rent can be extracted. But what has driven housing cost in the market of individual homes is simply that some citizens can afford to borrow at low rates, and other citizens are seizing the opportunity to realise gains that they could not attain through a lifetime of work, wage increases, and other investing.

It is grim to work for years and have nothing else to show for it.

Young families, workers, the elderly, and the poor will be unable to afford even tenancy in the big cities. (To turn dark for just a moment, we only really seem to have a plan for the elderly.) The future control of crucial urban voting-blocks in Western democracies will be in the hands of landlords.

bushbaba• 5 years ago

The governments are to blame. If conventional mortgages were capped to 1 per person. And a minimum of 80% ltv was required. Then houses would be cheaper.

Instead the government is letting people put low money down, low interest rates, and buy up many houses at once. That of course inflated housing costs.

IkmoIkmo17• 5 years ago

Not sure why the amen is applicable to Dutch cities. I'll take the local perspective from Amsterdam as an example, but it applies more broadly to the other cities as well here.

Regarding point 1:

There's no real issues with long-term vacancies (the municipality already has laws in-place which fine owners of vacant homes), typically sits between 1 and 2%. That should obviously go down to 0 as much as possible, but it's clear that (1) the problem has an extremely minor effect on the market, (2) it's not exclusively caused by investors, a lot of them are pied-a-terres or homes owned by temporary migrants working abroad and (3) the problem of vacant homes that can be attributed to investors, can be addressed in many other ways than a total ban.

In other words, not an effective or suitable policy on this point.

Regarding point 2:

The price increases aren't caused by investors in Amsterdam, studies have shown this over and over again. If buy-to-let is banned, rental supply drops, rental prices go in overdrive, and there'll be more pressure to buy under any circumstance. The have-nots who're unable to buy will be even worse off. There's no magical panacea to a lack of sufficient supply.

You mention a couple points around 2nd homes, which are fair. I think in a world where there isn't enough housing for everyone, we should at minimum disincentivize owning second homes that go unused most of the time. But apart from the fact that Amsterdam is the capital, a working town, not a place where people have second homes that they enjoy on the weekend, this policy doesn't address 2nd homes at all. You're not banned from buying and owning a 2nd home in Amsterdam after this policy goes into effect.

In other words, an entirely ineffective policy regarding point 2.

belter4• 5 years ago

The problem is not only in Amsterdam, and for anybody wondering how crazy the situation is at the moment this is a realistic, up to date view:

"The WILD Dutch housing market and our home buying flop | American in the Netherlands"

https://youtu.be/dFXsfeEEVAM

einpoklum5• 5 years ago

If buy-to-let is banned, rental supply drops

This seems to contradict your earlier claim that:

the municipality already has laws in-place which fine owners of vacant homes

MomoXenosaga• 5 years ago

The Netherlands is just too rich that it is working against itself. We have created a society where every person wants their own house- 17 million people 10 million houses. And the Netherlands is a magnet for migrants- compared to most of the world the streets are paved with gold.

And no matter how much the prices go up people can and will pay. Unless there's a mayor economic recession things will not get better.

berkes3• 5 years ago

Studies have shown that in the Netherlands only a tiny part of the rapidly increasing price is due to shortage and the majority due to investers. The exact opposite of what you say.

I'm not saying you are wrong. I'm saying that what you pose as established facts are highly debated in the Netherlands at the least.

I'm on mobile, so finding English studies is hard. Maybe parent author could cite some of the studies (s)he mentions? https://www.eigenhuis.nl/huis-kopen/starters/artikelen/beleg... https://www.kadaster.nl/-/opkomst-particuliere-investeerders...

crote• 5 years ago

About point two:

Both supply and demand are incredibly constrained: building new houses is slow and not exactly being stimulated by the government, whereas demand is fixed because people need a place to live.

Property rental is an extremely attractive investment opportunity. Demand is guaranteed and due to the low cost of obtaining money it is basically risk-free. Even at near-zero rent you'll still make a profit - as long as the housing market doesn't crash.

On the other hand mortgages always carry some risk, and banks are aware of this. There are quite strict limitations on the amount you are allowed to borrow. This directly means that individuals will always be outbid by investors.

This directly results in price increases. Individuals are now no longer able to buy a home, forcing them to rent. Landlords, in turn, are happy to let you rent a property which you wouldn't be able to afford because it is way easier to evict you. And because demand is higher than supply, they'll happily increase the price. Rent prices are already in overdrive.

So now you're paying €1200 in rent instead of €800 in mortgage payment - for the same property.

Banning buy-to-let would result in a sale of the properties currently being rented out - which means a drop in the housing price. Rental supply will drop, but those houses don't magically disappear! People who previously were unable to get a mortgage can now suddenly afford to buy instead of rent. This lowers the demand for rentals, which decreases rent.

People don't need landlords - they need homes. With the exception of a very small number of short-term rentals, landlords provide zero value. Removing them from the equation decreases the prices for everyone.

brnt• 5 years ago

Show your sources. I've read the exact opposite of what you claim.

The CIA even lists the Dutch housing market as the largest risk factor in the stability of the Dutch housing market.

sparks1970• 5 years ago

South Kensington is also home to Imperial College London. See this map to get a feel for the extent of it in the area: https://www.imperial.ac.uk/media/imperial-college/visit/publ...

You did explicitly say houses but possibly the area is quieter and less inhabited out of term time.

m0llusk• 5 years ago

That is a complex problem, though. The main issue is land investment that effectively prevents or greatly limits potential new construction. With new construction thwarted even modest growth over time causes extreme prices per unit.

Preventing properties from being treated as bidding chips or bonds issued this could greatly improve the situation, but without addressing land use and land banking then the lack of new construction will continue to unbalance property markets.

icelandicmoss• 5 years ago

Similar situation for York -- tourist hotspot, a large chunk of the local jobs in tourism/customer service, retail, food service etc. Article in the local press in the last year (which I obviously can't find now) found that something like 95% of the properties on sale were unaffordable on the median wage of a local resident.

And then you get articles like this one: https://yorkmix.com/york-is-the-norths-property-hotspot-as-i... Funny thing is, this article happens to be a total submarine -- I recognise the development they're describing, it's been there for years and has not sold well (totally overpriced) -- this article and others like it are just an attempt to drum up further demand.

Really frustrating that when we have so many people needing housing, homes are built entirely with the objective of selling them to people who already have homes elsewhere!

First houses should have priority over second houses please.

dmarinus• 5 years ago

There is also a law in the works called "Prince Bernhards tax", our Prince owns a lot of expensive property in Amsterdam.

belter4• 5 years ago

600 of them ...He says its for his pension. https://www.stolker.nl/portfolio/items/prince-bernhard-jr/

mercy_dude3• 5 years ago

There is a better way - raise the real rate. Cheap loans along with endless printing has basically made fiat useless as a medium to store value, the only reason fiat exists now is as a medium to exchange goods/services. Here the Fed has been buying over 100B of mortgage based securities a month. This got to stop. For all the talks about Wealth inequality, I don’t understand how politicians fail to understand this basic thing.

I hope ECB and other central bankers realizes how they are fucking up an entire generation before it’s too late.Negative rates is only going to make things worse.

mcv5• 5 years ago

I don't think it's an issue of inflation. Inflation has been super low for the past decade or more. Everything else is cheap, it's just housing that's expensive. It's a combination of scarcity and speculation leading to more artificial scarcity. Make it less attractive for speculators and build more houses.

birbs• 5 years ago

Inflation is extremely high: https://www.aei.org/carpe-diem/chart-of-the-day-or-century/

pigeonhole1233• 5 years ago

How is the CPI a useful measure of inflation if it ignores the things people actually have to spend money on like housing and healthcare?

wsc9812• 5 years ago

In The Netherlands I don’t think this would make a big difference around the major cities as there is a huge housing shortage and this will stay the same at least for the next 10 years, probably more much longer.

mercy_dude3• 5 years ago

Scarcity was always a problem. Even in 90s and early 00s there was a lot of posters about housing shortage. But prices we’re rather stable. In a healthy housing market, you expect the property values to not grow over real interest rate. Which was the case back then.

zihotki2• 5 years ago

The main problem which this won't solve is the lack of space. There is a little land in NL so you can't grow endlessly and new districts would also put additional burden on infrastructure. People want to live close to major transport connections and/or big cities. You just can't build more and faster without considering the whole picture.

pydry6• 5 years ago

This would lead to a steep collapse of property prices and force new homeowners who have just scraped together enough for a deposit into negative equity. This would drive a lot of anger against it (all amplified by the media/ultrawealthy who would be furious too) even if it were the right thing to do long term.

The only time I could see this happening would be in the case the value of the dollar fell off a cliff due to externally triggered emergency.

mercy_dude3• 5 years ago

Yeah this is the narrative that is always played every time there is a talk about even slightest increase in interest rate. When politicians and news media alike play this narrative this gives people signal that house prices can never go down. I know a couple who is one layoff away from defaulting their mortgage, but they bought a house with mortgage 60% of their income since they think housing prices can never go down.

Assuming you are able to afford your mortgage in the first place and want to live in the house for distant future, why is repricing in due to rate change a problem anyway?

imtringued32• 5 years ago

There is a better way - raise the real rate.

Ok, you decreased monopoly rents but you also raised the cost of everything that isn't a monopoly. You will now pay more interest on your car. Companies pay more interest and pass the cost of interest onto you through more expensive products and services.

The truth is that you didn't even make housing cheaper. You still pay $1000 per month for 30 years. Higher interest rates just mean more of your money goes to the bank in the form of interest payments rather than into home equity.

Cheap loans along with endless printing has basically made fiat useless as a medium to store value,

I don't understand this logic. Fiat currency is created by the promise that someone will work for you. If you never redeem that promise it is worthless. You cannot store labor the same way you can store gold. All saving money does is create room for investments today. If those investments never happened then you saved for naught. You denied yourself of the value of your money and yet you have the audacity to blame others for it.

I hope ECB and other central bankers realizes how they are fucking up an entire generation before it’s too late.Negative rates is only going to make things worse.

What negative interest rates do is force you to face the fact that you are not utilizing the promise and that money, just like grain decays over time. You are letting people sit unemployed unable to live up to their potential.

What "fucked up" an entire generation is the utilization of money as a time machine. Let's imagine a simple money system. $1 = 1 pound of grain. The grain standard. Grain decays over time. Therefore $1 appreciates exactly at the rate at which grain decays. The farmer storing grain has to pay the maintenance cost of holding onto it while the person with the money has none of the costs. Everyone will start hoarding money while they get to watch the real world decay. If you put a holding fee onto money that matches the decay rate of grain then people will be forced to spend their money on something that is more durable than grain like giant pyramids that survived for 4000 years.

nmca• 5 years ago

In the long term, the ethically right answer seems pretty clearly to me to be a land value tax [0]. But due to encouragement of home ownership [1], that's not going to democratically tenable in a lot of countries for 20+ years. Unfortunate situation.

[0] In 1879, a man asked "How come all this new economic development and industrialized technology hasn't eliminated poverty and oppression?" That man was Henry George, his answer came in the form of a book called Progress & Poverty, and this is a review of that book - https://astralcodexten.substack.com/p/your-book-review-progr...

[1] https://www.economist.com/leaders/2020/01/16/home-ownership-...

saulpw• 5 years ago

How about a land value tax with an exemption for primary residence?

lifty2• 5 years ago

This sounds like a reasonable trade off which doesn’t hVe the risk of uprooting people from their primary residence.

acomjean• 5 years ago

We have straight property tax in Cambridge(ma United States). If you live if your unit they’ll reduce the value that is taxed (by about 400000$ Or about $2500)

I’m not sure it’s helped, but it might be worse without it.

https://www.cambridgema.gov/departments/finance/propertytaxi...

imtringued32• 5 years ago

It would certainly be better than nothing. You can then add some sort of capital gains on primary residences so taxes will be paid on sale not during use.

murgindrag3• 5 years ago

I'm not sold on the Economist article. I do believe in home ownership. The idea that a person spends a lifetime in the same home and community is a good one. We're tribal creatures, and you want a tribe -- you want people to know their neighbors, have community BBQs, and live in real communities. You want enough of a vested interest in municipal politics that democratic structures work. You want kids growing up with the same friends in school.

The flips side can be pretty dark too. For example, there are are plenty of stories of poorer communities, especially African American tenant ones, being broken up and priced out by gentrification of rental markets.

Ownership is less economically efficient, but much more resilient. Once a mortgage is paid off, you've always got a roof overhead. You just need to earn enough for food, clothing, and medicine.

I think the trick would be to implement significant differences in land tax based on:

* a home you live in; versus

* an individual investment property (e.g. if you own 2-3 homes); versus

* an institutional investment property (e.g. investment fund owns hundreds of homes)

paganel• 5 years ago

Unfortunately “community barbecues” oftentimes meant “barbecues with people who are exactly like me and who think exactly like I do”, an attitude which has had a pretty corrosive effect on democracy in the near past.

simonh2• 5 years ago

I don’t think the article is saying ownership is a bad thing in itself, but that the vast resources that have been poured into promoting and subsidising it have had some pretty undesirable consequences.

Here in the UK we have started imposing tax penalties on buy to rent that disincentivizes owning more than one or two rental properties. The problem with punishing institutional investors is it would take huge amounts on investment out of the housing market, just as we have a massive need for more housing. We need more houses for people to buy and more new housing available to rent. Rental properties by themselves aren’t a problem, it’s taking houses out of individual ownership and transferring them to the rental sector that’s the problem.

the_gipsy• 5 years ago

community BBQs, and live in real communities

The sad reality is that people want their own BBQ and not really mix with their neighbours. That’s what poor people have to put up with, so to speak.

rhacker2• 5 years ago

To be 100% completely honest, home building needs to be one of our basic skills taught in school. That along with chopping down the building codes for small homes to be extremely simple. I'm not saying we support shanty homes everywhere, but the problem we have is that investors are buying up all the perfect homes and most homes are perfect homes. Maybe we should have less than perfect homes that aren't valued so high and sought out by investors that live in China.

fennecfoxy5• 5 years ago

Ownership is important, it's a personal investment. For millenials all of our money is going to the boomers etc we rent from, those of which who do own property (because I know many of them don't) make it big on buying when house prices were actually reasonable, then downsize their house in London and get a nice big house build in Spain to retire to.

When millenials reach retirement age, a house, as for all previous generations, is the best option for financial security for retirement/end of life. Fewer and fewer of us will have that option I think.

thepangolino• 5 years ago

Wouldn't a land value tax encourage urban sprawling ?

Current ubran policies in the western world, coupled with the normalization of remote working already do this to some extent.

zeepthee• 5 years ago

How would it encourage urban sprawling?

pydry6• 5 years ago

It would probably encourage less urban sprawl by driving more efficient use of city center land and housing.

taffer5• 5 years ago

On the contrary, a land value tax is often proposed to discourage sprawl. Since a land value tax is the same whether you leave a lot vacant or build a single family home or a multi family home, it encourages density and leads to less sprawl.

Lammy• 5 years ago

Sprawling to where? It’s an island

inter_netuser2• 5 years ago

how is land value tax any different from a property tax that all homeowners already pay?

If anything, it might end up being lower tax on residential housing, and much higher on commercial/retail.

oftenwrong• 5 years ago

Property tax increases when you improve the property, and land value tax does not. Therefore, property tax creates a disincentive to improve property, and land value tax creates an incentive to improve property.

taffer5• 5 years ago

In contrast to the property tax, the land value tax only taxes the value of the land, not the value of the buildings. A land value tax is always the same regardless of whether the land is undeveloped, a single-family house or an apartment building. A property tax, on the other hand, encourages the former and discourages the latter. A property tax encourages urban sprawl, a land value tax does not.

dogma11389• 5 years ago

LTV won’t work in the UK land ownership is way too concentrated and leaseholds give land owners an easy tool to transfer the cost to the leaseholders.

London and other metropolitan areas still have a lot of low income housing in very high value areas, there are current/former council houses in Westminster and Kensington and Chelsea for example that sit on land worth billions.

LVT in the UK would likely just increase cost of ownership for leaseholders which would make flats in cities even more expensive (and since many newly developed terraced, detached and townhouses also come as leasehold these days even buying a house won’t help) and just push for further gentrification as housing like this https://en.m.wikipedia.org/wiki/Hallfield_Estate would become economically non-viable.

ClumsyPilot6• 5 years ago

"leaseholds give land owners an easy tool to transfer the cost to the leaseholders"

This relationship has always reminding me of medieval surfdom, i think it's deeply unfair and rigged and needs to be abolished.

imtringued32• 5 years ago

LVT in the UK would likely just increase cost of ownership for leaseholders which would make flats in cities even more expensive

Increasing the cost of ownership makes it more expensive to speculate on real estate which would drive prices down. The most speculative assets have no maintenance costs.

newswasboring• 5 years ago

Land ownership tax doesn't work because land is a basic need. You have to exist somewhere. The problem isn't ownership of land, it's excessive ownership of land. Ownership of land beyond need into greed. You can easily design land ownership tax like income tax where people who own more pay more. People who own enough for their family are not taxed at all and if you want more you pay a lot more.

Of course there is the usual issue of the definition of "enough" but those kind of questions are solved all the time in parliaments. This all or nothing behavior is what harms the prospect of land tax.

imtringued32• 5 years ago

Well, when people talk about wealth taxes those are always above a certain threshold. I am perfectly fine with taxing excessive ownership of land. We don't need the theoretically perfect utopia. We need something that is good enough to give us another 80 years of peace.

therealdrag02• 5 years ago

Sounds like you haven’t heard much if the theory behind LVT.

For example one way it aligns incentives is pressuring land to be put to more productive use. Aka if someone can’t afford the taxes they might have to sell it to someone who can and likely that second entity will build more units on the land which utilizes the land more efficiently. Not in every instance perhaps but enough to matter. Its a way of forcing communally central land to be put to good use and for the profitability to feed back into the community.

rocqua5• 5 years ago

Homeownership is a great ideal. Letting people work towards having a place to live without paying rent is great for independence.

What is stupid is promoting Homeownership as a personal investment for the individual home-owner. A home is already a great thing to own financially, because it 'produces' not having to pay rent. There is no need to also have it pay 5% a year for people who have 100% leverage (which is very common in the Netherlands for mortgages).

But politicians get lots of votes by making the current middle class richer for owning homes. Nevermind that it is bad long-term as people have been saying for the last 20 years.

refurb5• 5 years ago

In a perfect market where there was always enough housing and rental units to supply the demand, rent would just end up settling at the same price as owning. See price vs rent index.

wallacoloo• 5 years ago

Just a note that 100% leverage would mean that you’re borrowing against 100% of the portion of the asset you bought to purchase more of the asset. I.e. you put 50% money down and borrowed to buy the other 50%.

A typical 20% down-payment in the US gets you 400% leverage (you used your 20% ownership 4 times over in order to purchase the other 80%).

5% down gets you 1900% leverage.

If you put $50000 down (5%) on a $1M home, it rises by 1% ($10000) and you sell it, then you just made a 20% return on your initial investment. You were leveraged 1900%, and so you got a return 1900% above what you would have without borrowing any $. Nobody serious advises that kind of leverage on any asset except for real-estate, AFAIK.

refurb5• 5 years ago

It’s a nice theory but it would involve tossing people out of their homes because they can’t afford the tax. If you make an exception for them, then the entire system is defunct because it’ll just be a web of exceptions that just create a “housing elite” that is exempt from the rules.

The easier thing is just make is easier to build more housing, denser if needed, to fulfill demand.

merrywhether4• 5 years ago

Who’s getting tossed out of homes? If they own any part of it, they can sell their land at its new higher value and pocket their share of the gains. Then the can either move into a nearby newly redeveloped multi-unit building (increased efficiency as incentivized by LVT) or they can move further out to land with the same low value on which they used to live in a detached home.

This same type of thinking drives me crazy in CA where Prop 13 exists because someone might have to move because they’ve made a million dollars in house value (simply by existing) that they might have to realize.

imtringued32• 5 years ago

Well, you don't have to make "tossing people out of their homes" a horrifying experience. If the eviction process on your primary residence granted you 3 years to pay the tax then it would be exceedingly unlikely that anyone would get kicked out because of a sudden real estate boom or bust.

As a concession the debt can be reassessed at any time during those 3 years. If there is a boom that makes the tax excessive followed by a bust that reduces the value of the land by 50% then your tax bill would also go down by 50%.

The easier thing is just make is easier to build more housing, denser if needed, to fulfill demand.

That's the entire goal behind the land value tax.

zhengiszen• 5 years ago

Thanks for the review it comes like a revelation.

ryan_lane• 5 years ago

It seems to me that a LVT eventually leads to 100% of the land being owned by the super wealthy in dense areas. It's a state sponsored transfer of wealth. It still results in a middle-man that leeches money from renters, and the taxes would most likely be passed onto them.

In this case, why not just be direct and have the land owned by the state, and have density requirements for use of that land based on population of the area?

ChrisLomont2• 5 years ago

So they want to make renting impossible? That surely won't help low income people.

lifty2• 5 years ago

The Dutch system caters for that through the social housing system. There are special companies that get permits to own houses and rent them at cheap prices for disadvantaged groups.

ehou• 5 years ago

In theory you are right. In practice this part of the system is having problems too:

    - people who used to move on to a larger house stay because of the increased costs
    - older houses are broken down and are replaced by newer ones … but due to building regulations fewer are build at the same place
    - due to stagnation in outflow and decreased number of houses the waiting time for getting a “social house” is increased by a ridiculous amount. In Eindhoven it is more than 10 years - in theory. But due to rules about preferred placement it’s often way more.

ChrisLomont2• 5 years ago

Ah, so a government monopoly on a common part of markets. Usually such action has downsides, in the same way rent controls end up hurting renters.

supperburg• 5 years ago

I can’t read a clickbait article. It reminds me of when some Swiss people wanted to use their power of direct democracy to put a cap on CEO pay. The Swiss were smart enough to vote it down. If every country had such a system, the world would quickly burst into flames. And here we have some Dutch people who want to nationalize housing development. Because without private investors, there will be nobody else besides the government to develop housing. The dutch and their government are exceptional enough to make it work I would imagine. But a lesser government would quickly turn nationalized housing into a disaster.

These people are angry at housing prices. Just wait a while longer and the housing investors will all be experiencing something much more painful than a government buyout and your houses will be quite affordable. That the beauty of a free market.

reacharavindh2• 5 years ago

I may be biased because I moved recently to the Netherlands and looking to buy our first home and stop paying rent.

But, the house prices are crazy out here. I work in tech and my wife is an academic. We earn what is definitely above market average, and it looks like we cannot afford most houses we find in the area where we are renting now(well outside Amsterdam).

At this juncture, at least temporarily, investors who are looking to buy up properties and make money out of it need to be stopped by regulations. This is for the greater good. Investors can always find other avenues to invest. But, people need reasonable housing prices.

akudha• 5 years ago

This is becoming a problem in farmlands too. Young farmers are unable to buy farmlands, they are forced to lease from huge landowners. It is zero risk investment for these big landowners. Farmers do all the work, put in all the investment like tools (except the land) - landowners simply collect rent. Some of these people own hundreds of thousands of acres (Bill Gates, for example).

This is an ugly situation. This is not sustainable. At some point, we'd have a few hundred super wealthy people/corporations owning much of the desirable land and property. Everyone else would become just a peasant/tenant living in tiny apartments working all our lives just so we can have a tiny roof over our heads. This isn't hyperbole - one look at BlackRock should give us an idea in the direction this problem is going.

Aeolun3• 5 years ago

Oh, I know! We can give them the land for free, but instead we get to collect a tax on their produce. Of course they cannot leave this arrangement without immediately paying for all the land.

I think we can call these people serfs.

arp2425• 5 years ago

This kind of system was sustained for thousands of years in many different cultures, so I wouldn't exactly call it unsustainable. I would very much call it ugly and undesirable though.

My point here is that there is no guarantee that this will be solved just because it's "unsustainable". I don't understand why people aren't literally protesting on the street; we did so in the 70s and 80s ("geen woning geen kroning") and the situation was a lot less bad back then.

vishnugupta• 5 years ago

While buying the house in early 2019 I consulted Woz portal and saw that the price (of the house I was planning to buy) had increased 300% over ~8 year period. A constant lunch table discussion used to be how crazy housing prices were even back in 2018-19. So the market was already hot even before the pandemic, but now it's reached mania levels!

charlesdm• 5 years ago

The result of years of low interest rate policies.

agilob• 5 years ago

I'm in Wales and house prices in Amsterdam look incredibly low for better build quality and higher living standard.

timwaagh3• 5 years ago

I'm very unhappy about this. It won't be possible to buy a reasonable retirement income anymore and all the profits of the property sector will flow toward those deep pocketed property firms who have the right political connections to get permits. I think the governments just want to work us till we either reach a much extended retirement age or die from depression (which you can be euthanized for here). I'll be fighting to get a second property in the coming months to rent out.

belter4• 5 years ago

If you are buying to rent in the Dutch market, and you are not part of the royal family, or a Black Rock fund you are making a big mistake. You are in a legal environment where you will not be able to evict a non paying tenant for several years. If there are children in the picture or a divorce you will have even more serious problems. The Belastingen will come after your earnings plus, you are likely to be victim of a legal environment biased to puritanical inspired laws, that try to hit back at anybody trying to get ahead of their neighbors in the same street. In other words, there are strong forces to make you get back to conformity, on what is a very homogeneous society. You will be taking on a huge amount of risk that normally only professional well funded investors are able to weather.

TacticalMalice2• 5 years ago

Eviction is already possible after 3 months of not paying rents (and sometimes after 2 months if there's a history of non-payment). The landlord has to get a court order, which is commonly granted.

Minors will be placed in foster care if they cannot be placed elsewhere.

Taxes on earnings depend on how you structure your work. They are usually in "box 3" where taxes are based on fictitious returns on investment as a percentage of total wealth and (fictitious) asset class.

That said, law-makers are a significant source of uncertainty and risk.

timwaagh3• 5 years ago

My grandparents and my brother already rent out property. There's risks to it of course but that's the case with all investments

debarshri• 5 years ago

This move is well appreciated. Currently, I own a house in oudegracht, Utrecht. It is very terrible situation here. All the apartments in and around me are all the time rented out as airbnb. During peak of pandemic, it was pretty much a ghost town.

The housing prices have skyrocketed due to covid, but all these all-cash investor are jumping and swooping in the apartments, holding it for a while and passing it to the next person. Some of the people, even have to pay around 50k euros over the asking price to buy it.

Because of the rising prices, the annual property tax to be paid also increases dramatically. People blame the low interest rate, but based on what I am seeing and heard from other people, it is investors all over the globe investing in properties in Amsterdam, Utrecht, Rotterdam etc.

chii2• 5 years ago

People blame the low interest rate

it is the interest rate - because the price of property is related to the cost of money (aka, interest rate).

Investors are merely looking for returns, with as low risk as possible. When property is priced low compared to the rate, you must expect this to happen.

imtringued32• 5 years ago

it is the interest rate - because the price of property is related to the cost of money (aka, interest rate).

You can manufacture more cars and houses as you get more money. It clearly is related to the fact that land yields a risk free return regardless of what you use to price it.

In that sense money and land is an NRA. A non reproducible asset. Low interest rates break the NRA property of money which is perfectly ok if inflation is also low. Rather than holding onto money unproductively they simply switch to holding land unproductively. The solution is to introduce a holding fee onto land.

IkmoIkmo17• 5 years ago

All the apartments in and around me are all the time rented out as airbnb. During peak of pandemic, it was pretty much a ghost town.

What you mention around Airbnb shouldn't be addressed through a buy-to-let ban, but an airbnb or short-term rental ban, which already exists in various forms. If there's problems with enforcement, address that. The ghost-town you described happened regardless of airbnb but due to literal lockdown measures that affected everyone, in particular the local population, you don't see the effect anymore despite tourists still largely staying away.

Because of the rising prices, the annual property tax to be paid also increases dramatically.

No that's not correct. Typically Dutch municipalities tax based on what they need. If they need 1 million, they'd charge 1% of 100 in property values, or 2% of 50 million in property values. Price increases don't translate into higher property taxes.

You can see a video of how Utrecht does it, on their own website: https://bghu.nl/belasting/ozb

In fact, in Utrecht property tax rates decreased by about 22% in the past 6 years, due to increasing home prices.

Of course there is inflation, in absolute terms the number is increasing. But what you're describing isn't happening. I own a home in Utrecht, too.

Many studies in the Netherlands have shown investors aren't the cause of the price increases, I don't think this policy will solve things. It'll just relieve some pressure on the buying market and put extra pressure on the rental market.

People blame the low interest rate

Yes, these people are economists, including the Dutch Central Bank, the AFM, every bank, every professor, in countless studies. The effect is clear and obvious.

rhacker2• 5 years ago

Airbnb shouldn't be addressed through a buy-to-let ban, but an airbnb or short-term rental ban, which already exists in various forms

Airbnb is probably paying off various government officials around the world to make sure the laws are friendly to them.

imtringued32• 5 years ago

It's not just the investors. It's literally everyone.

clydethefrog• 5 years ago

I saw a bus ad yesterday in NL that looked straight out of They Live - it just said "INVEST REAL ESTATE" with a website link on a blue blackground.

reacharavindh2• 5 years ago

Perhaps relevant to this discussion. Another article on the same website from 7 days ago.

https://nltimes.nl/2021/08/29/us-investor-blackstone-accused...

Cant help but think, may be this is some form of insider trading by the wealthy - buy up apartments before such a regulation comes into place?

Ekaros3• 5 years ago

I think real solution is to increase governmental supply. That is push market rates so much down that only marginal gains from property could be gained. Let's say 2% year... Property shouldn't really appreciate very much over time.

tellersid2• 5 years ago

In the US at least though I believe zoning is the issue.

Our zoning laws are so bad and it is so hard to add to supply that no one really bothers much.

There are all kinds of dislocations in the market because what you should see right now is massive amounts of home building but you do not. 15 minutes away from me there is a ton of open land that could practically be built into a entire new town. I would imagine the larger the project the more bullshit you have to deal with when it comes to permits, zoning, political pushback, palms that need grease.

If you compare the work, risk/reward to alternative investments like just holding the stock market index it becomes a bad investment so it doesn't get made.

We have all these self reinforcing distortions happening in the market that probably can't be fixed.

zihotki2• 5 years ago

To add to the topic, in NL you, as an owner of a property, are obliged to report to municipality if your property is vacant for one year. This is to prevent squatting. Very recently U.S. investor Blackstone reported ~300 apartments at once in Amsterdam for being vacant. They did it only after it was found out that some of the properties were squatted. And according to different sources, the apartments were vacant for very long time, more than a year.

On top of that, the investors often buy social housing. After some refurbrishment they start renting it as a non-social one. Many people are upset by this behavior as well.

Aeolun3• 5 years ago

I think it’s interesting that we tend to believe that someone would actually report these things.

Then we get hit by these US (and other) foreign companies to whom morality is just a suggestion, and whom will happily do whatever makes them most money.

Now they’ve made literal millions out of these empty properties, and they’ll be given the benefit of the doubt, because that’s how we do things.

seanieb• 5 years ago

Real estate investors buying existing properties, without substantial capital investment into upgrades/renovations, are exactly the same as concert ticket scalpers. Their business is of little benefit to society.

Ekaros3• 5 years ago

Investors buying existing private properties and not replacing them with higher density housing is something I could support ban of. Ofc, there should be some limitations on pricing of new units offered.

DonHopkins• 5 years ago

There's a history of violent protests and riots about housing in Amsterdam, and a slogan "Geen woning, geen kroning" (No house, no coronation):

https://en.wikipedia.org/wiki/Amsterdam_coronation_riots

Amsterdam coronation riots
The Amsterdam coronation riots (Dutch: Kroningsoproer) refers to major violence and rioting in Amsterdam, the Netherlands on the day of the accession of Queen Beatrix, 30 April 1980. It was one of the biggest episodes of such disturbances in the country since the end of World War II and the most significant event of the Dutch squatters' movement (Krakersrellen).
Since the 1960s and the 1970s, squatting had become common in Amsterdam to protest the city's shortage of housing. Many of the protesters were youngsters of the baby boomer generation. The 1980 riots were precended by the Nieuwmarkt Riots in 1975 and the Vondelstraat Riots in March 1980, when authorities heavily responded to evict squatters from properties in the city.

rocqua5• 5 years ago

This is stupid.

It bans buying or renting. Our rental market is already very distorted because most rentals fall under regulations except for people just above modal incomes. That already leaves a gap for people not poor enough to be allowed regulated rent, and too poor to get an 700 a month mortgage, who are forced to rent at 900 a month.

If you want to hurt pure investors, tax un-lived in housing.

But really, we need to kill the mortgage tax credit for any new homes. That will reduce the value of land because it offers less tax benefits. At the same time, currently interest is low so it will barely effect new entrants. The key is to make houses worth a bit less. Homeowners are just going to have to suffer a slight dip after amazing gains for the last decades.

morpheos137• 5 years ago

The spirit of the idea makes sense but maybe not the implementation. Homes should be occupied. I don't think a ban is necessarily the right approach. Have a high vacancy tax.

The way houses have been turned into a speculatively appreciating asset in much the world is absurd.

sega_sai• 5 years ago

I think I mostly agree with this idea, but while removing pure investors from the market may offer some (or significant) help, however it still does not solve the mismatch between supply and demand. I think the removal of investors will lower the demand, but I think the mismatch will still exist in many places. And proposing solutions for that is essential, i.e. either building more or making it easier to work remotely etc.

rusteh12• 5 years ago

I don't understand how this would work. How do people rent? Obviously many people can't or do not wish to own their house for any number of reasons. Who will own houses that are rented? I used to live in Amsterdam as an expat, and rented from a landlord who owned several homes in Amsterdam. Would she not be able to own and rent these homes under this scheme?

The social housing system seemed to be abused when I was there. I had a number of Dutch friends still living in social housing places they'd rented as students on very low incomes, and were still renting 10 years later. For the same 300 euro per month, when they were now earning 6-7000 euro/month. I could never understand why this wasn't means tested continually.

7341298372613• 5 years ago

Designations. That's how. Some houses are built and intended to be rented out to people. These houses are constructed entirely by companies (or people) for that purpose alone.

Other houses are meant to be for purchase, and purchase only. If you purchase a house like this and then rent it out, that should be considered breaking the intended designation.

So if you as an individual want to own multiple houses to rent out, you need to find houses with that designation and that are for sale. Alternatively, you need to find ground with the "rental housing"-designation and build a house or multiple houses on there.

You can do this in a collective of individuals, too.

And people who currently own multiple houses that were not meant to be rented out (but are rented out to other people) would need, by law, to either sell those properties (the current renter should get the first option on the house's current market value price).

And honestly, I feel that the people renting houses that were never meant for rental should get a discount. And that discount should come out of the pockets of the government.

And yes, I'm a Dutch citizen. I know that means my tax money is going to help these people buy their houses a little cheaper at my expense. I'm fine with that as it would create a healthier housing market for everyone. That's exactly what my tax money is for.

rusteh12• 5 years ago

Thanks. What if I purchase a home, to live in. Then I take a job overseas and move for 2-3 years. Must I sell the house rather than rent it out on a short term basis?

TacticalCoder• 5 years ago

These houses are constructed entirely by companies (or people) for that purpose alone.

So private companies are allowed to engage in rent-seeking behavior but individuals aren't?

IkmoIkmo17• 5 years ago

And people who currently own multiple houses that were not meant to be rented out (but are rented out to other people) would need, by law, to either sell those properties (the current renter should get the first option on the house's current market value price).

What is the 'would need' referring to, your ideal situation, current law, or proposed law? If it's any of the last two, I don't think you're correct but I'd be happy to read any references you may have to substantiate this.

vwoolf• 5 years ago

So the solution to government interference in the market (by preventing adequate building from occurring) is yet more interference, and that interference will by fiat somehow lower prices, but without dramatically increasing supply.

What could possibly go wrong??

em5003• 5 years ago

I could never understand why this wasn't means tested continually.

They've started some degree of means testing a few years ago: the maximum allowed rent increase on social/rent-controlled houses can now depend on income. This was controversial legislation for privacy reasons (it involves giving landlords information about tenant incomes every year).

kingludite4• 5 years ago

Oh, I missed that one. It seems to me that income tax based on rent would be more privacy preserving.

jenscow2• 5 years ago

I live in social housing (in the UK), and could easily afford to buy or rent non-social... and I was already in that situation when my current tenancy started.

You could say I abuse it, and I agree in principal. However, I'm only abusing it because social housing is scarce. The solution is to build more, and I do my bit by voting for a government that would probably do that.

If they ever decided to make it means tested, and my tenancy was at risk, I would just buy the house.

IkmoIkmo17• 5 years ago

Making use of any scarce resource intended for the poor, while you're rich, because it's so scarce, is beyond backwards... I have trouble being generous and playing devil's advocate because I simply can't see the argument you're making.

Yaa1013• 5 years ago

We had housing cooperation's for a century until they were forced by consecutive right wing governments to sell their houses, and thus ruining a system that was well working, except for rich friends of the right wing government to speculate with the housing system, which is taking place now.

kingludite4• 5 years ago

And before that we had woningbouw verenigingen. Non profits ran by their tenants. Something like: God fearing church goers wouldn't stand for hard working newly wed couples not getting a home.

imtringued32• 5 years ago

One of the dumbest things to do with government owned land is to sell it. You get a quick injection of cash and then the money runs out just as quickly. Meanwhile the land keeps going up in value forcing the government to subsidize housing for low income earners. If the government kept the land it could lease it out at reasonable rates and have an ongoing income stream.

user568439• 5 years ago

I guess this is only for new sales. The point is that there is plenty of people wanting to buy a home in Netherlands, they just can’t pay the same price as investors. With this law the seller will have to lower the price till some person who wants to live there can afford it

arp2425• 5 years ago

This is called scheefwonen – which roughly translates to "crooked living" – and has been a point of attention for several decades at least, more or less as long as I can remember.

It's a bit of a difficult problem, because you don't really want to kick people out of their house just because they have a better-paying job, and especially in the current climate these people don't really have anywhere to go; €7k people will probably manage, but €4k/month will have a harder time finding something affordable.

IkmoIkmo17• 5 years ago

I agree that evictions is an extreme measure and to be used as a last resort. I think it should be part of the policy instruments to be used, under the right circumstances. e.g. if you make 1.5x the wage that would give you a right to a social home, averaged over 3 years, then you get a 2 year period to move out.

That means you won't move out until 5 years after you've started earning more, and if your earnings were temporarily high, you get to stay. But if you're consistently earning a ton, you have to leave.

That's not so crazy considering that there's people who're low-income on a 10y waiting list for the home you'd be occupying, there has to be a mechanism that makes you have to leave. Yes it's hard to find something great at 3-4k, but it's even harder for someone at 2k who's 'spot' you're occupying. That could be limited to 5 years.

Everyone has a hard time finding a place, but why are some rich getting subsidised indefinitely at the expense of some poor?

But apart from evictions, I've never understood why we can't simply have dynamic rental rates adjusted to the market rate. I know people who live in Zuid for 500 a month in a home that's 1500 market rate, and their household income is 3x the average. Why can they not be made to pay 1500 to the social housing association? When they move out, the home reverts back to the subsidised rate for a low-income family.

I understand this can't be done on old contracts with no contractual clauses that make this possible, contracts are contracts after all. But we've had this situation for many years, and new contracts still allow the possibility of consequence-free scheefwonen. That's pretty absurd to me.

IkmoIkmo17• 5 years ago

This is one of those terribly myopic and symbolic policies that the Netherlands (despite generally one of the best governed countries in the world) keeps falling for.

Studies have shown over and over again that investors aren't causing the price increases in the Netherlands. Prices won't improve much.

Renting is going to take a beating, which is already an extremely small sector in the Netherlands, among the smallest in Europe. Remaining rental stock will be priced like crazy, pushing everyone desperately into a decision to buy. Due to systemic shortages that's not possible, exacerbating the gap between haves (who bought) and have-nots (who must keep renting).

Various studies have also shown a rental market is extremely important for labour mobility. Transient workers can't just move cities/regions in pursuit of jobs, when the rental market is completely destroyed and the only alternative is to buy a home and be stuck to that location for years (due to the friction and transaction costs of buying over renting).

Would she not be able to own and rent these homes under this scheme?

She would, but she'd be unable to buy more off the market to rent out, unless they were already buy-to-let stock previously.

I could never understand why this wasn't means tested continually.

Me neither. It seems like the least controversial thing that the left and the right should have agreement over: rich people not getting subsidised social housing. Things are getting better though, there's now means testing and accelerated rental price increases (up to a maximum) if your income is assessed as too high. But the new policy still way, way too generous to a class of rich people, while there's poor people waiting in line for 10 years in Amsterdam.

berkes3• 5 years ago

As above, you are presenting as a fact that investors aren't causing increasing prices. And as above, that is both uncited and, at the very least, a highly debatable 'fact'.

Even if not the only cause (is there ever just one isolated cause in economics), investing certainly is a big part.

DoubleDerper• 5 years ago

"Studies have shown over and over again that investors aren't causing the price increases in the Netherlands"

Source(s), please.

luckylion• 5 years ago

It seems like the least controversial thing that the left and the right should have agreement over: rich people not getting subsidised social housing.

The argument I've heard in Germany is that it's a good idea to have more socially mixed housing projects, so people who moved in as students are allowed to stay when they work full time. Initially they had to pay an extra fee ("Fehlbelegungsabgabe" = erroneous occupancy fee, but even with that it was much cheaper than regular housing), which was removed at some point.

colechristensen2• 5 years ago

So the housing market is so inefficient that removing a significant source of demand won’t change prices?

That is an exceptional claim that requires exceptional evidence.

gpvos2• 5 years ago

Means testing would force medium-rich people to live on the streets (or with their parents), since there are no rental houses available between 700 and 1200 euro/month (that is, between social housing and the liberalized sector), and not all of them will be able to buy a home with the current prices.

TomSwirly• 5 years ago

Obviously many people can't or do not wish to own their house for any number of reasons

"Those reasons" being that the price of real estate in Amsterdam has grown exponentially in recent years.

Some large but unknown number of apartments here have vanished into private investments where no one lives or AirBNB etc where no one lives for more than a few days.

If houses in Amsterdam were reserved for people _living_ in Amsterdam, there would be a significant increase in supply, and therefore a significant decrease in prices, which right now, are such that your average Amsterdam worker can't live here.

The social housing system seemed to be abused when I was there.

Still is, but I see this as rational calculation on the part of the Gemeente (municipality, these are much more powerful here).

Those apartments aren't palatial. Most of the time, people just naturally move out, maybe a few years late, but why force people onto the street when they're just getting started?

Some number of people do go on for years, but they calculate that it's better to have a more relaxed system, not to cause grief by going after a few freeloaders, and to spend their efforts on building brand-new public housing.

---

I had to get over 30 years of NYC living when I moved here. But the Gemeente is pretty smart. There's a reason for most everything, often a good reason, and they are constantly tuning.

Sure, I have complaints, but generally if I wonder why something is there or what's going to happen in terms of public works, I say, "What would a competent person do?" That almost never worked in NYC.

----

Did you know they're talking about banning cruise ships from part of the river IJ, raising the river bed there by 4 meters so they can put a bike path underneath it? And by gum, they might just do that.

Griffinsauce• 5 years ago

This is really necessary.

I'm a senior engineer, my wife is a neurologist, we are currently not able to afford a pretty normal house in the city.

Even if we did, buying now is a enormous waste of money. The market has been bad for years and it's absolutely out of control now.

chrisseaton6• 5 years ago

I'm a senior engineer, my wife is a neurologist, we are currently not able to afford a pretty normal house in the city.

I don’t understand why people think having a certain job means it’s more of a travesty that they can’t get a house.

Everyone should be able to get a house. Whatever your jobs are is irrelevant.

arp2425• 5 years ago

Of course, but I think the point the previous poster was making that even with well-paid jobs well above the average it's very hard to find something reasonable that fits in your budget, which underscores the point that for people at the average it's damn near impossible.

Freak_NL3• 5 years ago

This is desperately needed. And not just in the major cities; this is happening in every Dutch town. Amsterdam may have prices beyond absurd, but the whole nation is burdened by this problem.

In the street I live in the capital of the northern province of Fryslân (Frisia) most homes are owned by their inhabitants, but in the past few years we've seen several houses being bought by small-time investors (who already own their own home of course, are financially well on their way, and are looking for ways to save their saving from low interest rates and inflation), who charge renters four times what my fellow homeowners and I pay for mortgage.

You never get to know the renters, because they are really only here for as long as nothing better comes along (like buying a house or social housing), and who can blame them?

Meanwhile maintenance of these houses is minimal, because the market won't really reward proper upkeep at this point; they can always sell the house for an insane price tomorrow.

It's really upsetting to see my younger colleagues stuck renting a flat, while I own my house having even paid of the vast majority of the mortgage simply because I had the luck of buying it in 2013 (a major dip in the market where paying less than the listed price was common).

For the good of society we need to put a stop to this type of speculation on the housing market.

beckman466• 5 years ago

In the street I live in the capital of the northern province of Fryslân (Frisia) most homes are owned by their inhabitants, but in the past few years we've seen several houses being bought by small-time investors (who already own their own home of course, are financially well on their way, and are looking for ways to save their saving from low interest rates and inflation), who charge renters four times what my fellow homeowners and I pay for mortgage.

specifically the last part:

small-time investors who charge renters four times what my fellow homeowners and I pay for mortgage

But what about maintenance costs though? Those costs are very high, definitely 4x the cost of the mortgage! /s

joelbluminator5• 5 years ago

When I was living in NL I knew a guy who had a mortgage for a house in Australia, a mortgage on a house in Groningen and then he was looking to get another mortgage for a house in Den Haag. Banks don't seem to cooperate internationally or even nationally; he never told the banks he has mortgages already.

samsonradu• 5 years ago

You’re right, banks don’t cooperate internationally in this area, but it cuts both ways no?

How can one get a mortgage in Holland without being a resident/having income declared there? The bank will not loan a foreign resident in those circumstances. Did he pay taxes in all those countries?

berkes3• 5 years ago

While banks may not check this on signing, they'll certainly check it when you start defaulting.

This really is the worst advice ever. It's a sure way to get you in Real Trouble when shit hits fans. This is not legal advice either, btw. Just someone who read the tiny letters in the mortgage contracts.

gbajson• 5 years ago

Governments are printing money, inflation is eating savings. Properties are safe and easy way to protect money.

When buying properties will be banned, what would you recommend as an alternative?

dudul• 5 years ago

Gold and guns

Siira• 5 years ago

Also illegal in many countries, and not really practical for most people anyway.

blurbleblurble• 5 years ago

Refreshing to see this conversation play out while the silicon valley neoliberals are fast asleep. I want this in my city. People in my life are struggling to keep up with housing prices. It's obscene.

bamboozled• 5 years ago

Wish they'd do this in the town I'm residing, so many houses are vacant, it's really hard to find something to buy, its very annoying.

avsteele2• 5 years ago

What's the deal with landlord hate?

If I buy a lawnmower, pool, or whatever else and rent it out you all are ok with that.

If I buy a house and rent it out suddenly I'm an "enemy of the people".

logicchains6• 5 years ago

Most leftists are driven by envy; they see someone else has something they can't afford, and they feel rage. They can't afford multiple houses, so seeing people with multiple houses triggers this feeling. Fundamentally it's because they're so ego-driven they can't accept the market rewards people fairly, because doing so would require accepting that someone else deserves those houses more than they do.

imtringued32• 5 years ago

I want to become a landlords and I do not want to think about the moral implications of rent seeking. If the government simply taxed the unfair gains I received through rent seeking then I would have no moral qualms about other landlords. I would be very happy to pay land value taxes if that is what it takes to make free market capitalism fair again.

I do not envy Jeff Bezoz for owning $200 billion in stocks. I do not envy Bill Gates for owning Microsoft. I consider Bill Gates accumulating farmland without paying a tax to compensate for his monopoly rights to be a form of extortion that should not be allowed.

Most leftists are driven by envy; they see someone else has something they can't afford, and they feel rage.

I don't.

They can't afford multiple houses, so seeing people with multiple houses triggers this feeling.

I am always in favor of a land value tax that taxes home owners and large scale investors at the same rate. The reason why I have to make a concession to primary residences is that home owners would vote against the tax and the land value tax wouldn't be introduced at all.

Fundamentally it's because they're so ego-driven they can't accept the market rewards people fairly,

How can abusing the monopoly of location be considered a fair reward? You are distorting the market.

because doing so would require accepting that someone else deserves those houses more than they do.

No, it's the opposite. You can buy the land 30 years ago and let the property on top sit vacant and still net a return because the value of the land has risen. Such an investor made a lot of money without deserving the land at all. If land had a holding fee then only those who can extract the most value out of the land would seek it out.

nabla9• 5 years ago

Instead of banning, it's better to steer with taxation. Tax on empty houses (no permanent address) changes incentives.

chimen• 5 years ago

Good. I went to Prague recently (after 10 years) to discover that the entire city centre with all of it's businesses is now owned by chinese people. A 500ml water costs 10 euros and everything seems different, designed to just milk the cash from tourists. Had a much better experience 10+ years ago and made quite a few local friends.

alexbiet• 5 years ago

The intervention is late, yet much needed. It's time to create some rules for the greedy bankers too, they have been inflating the housing bubble with massive amounts cheap debt for far too long. Can't find a decent property for under €500K on the Dutch market. And bear in mind not everyone has Tech salaries; you have teachers, nurses, drivers, etc. on ~ €20K - €25K per annum before taxes. They would be homeless without social housing or homes passed on through generations.

Dutch properties listed for €350K-€400k are sold for +€50K to +€100K OVER the asking price. To complete the property sale prepare to put another €15K-€20K on the table for various fees, taxes and middlemen. Unless you are a millionaire or be willing to go deep into debt for 30 years and obliterate most of your savings, sadly you have no chance at purchasing a home in the Netherlands.

A home is a basic human utility (shelter), not a pump and dump investment scheme. Making standard homes so expensive that most people cannot afford is completely wrong and goes against society. Property investors have many other options such as investing in new property development, hotels for students, the stock market, new businesses, Bitcoin, etc. Heck, it's time to diversify.

FridayoLeary• 5 years ago

If the price of properties fall dramatically won't that have an adverse affect on property owners? Imagine shelling out £1M on a house, and spending 20 years paying it off. Now, at the end of that time period the house is worth half of that. I'm not an expert but is closing off an entire section of Capitalism going to work flawlessly?

ChuckNorris89• 5 years ago

And what's wrong with that? You still own the house in full and can live in it till you die whether it's worth $1MM or $1. There should be no guarantee for your house to appreciate over time; that's what got us in this mess in the first place.

If you want to turn your housing into an invested vehicle to sell an make you rich then you're basically gambling and should fully accept the risks of losing money in the process like with any other investment.

Capitalism also means letting bad business or poor investments go bust, not prop them up artificially for decades via low interest rates, zoning laws and nimbyism to make them worth more.

ianai• 5 years ago

I’m reminded of behavioral studies showing that other primates have an instinctive concept of “fair” and will choose against cooperation if a deal seems unfair to them. I think this was covered in Freakonomics.

How about making a civil law where anybody can sue the owner of a home if it’s not occupied in a way that benefits the community around the home - say with a $10,000 plus court fees and 10% of any residual income minimum for anyone in the community who sues and wins?

logicchains6• 5 years ago

Then do other citizens have the right to sue the passer of this law for the resulting shortage of rental properties that this incentivises?

ralfn• 5 years ago

I'm slightly annoyed with all the UK examples. This is about the Netherlands.

The Dutch housing bubble consists of 4 factors:

- interest rate on mortgages has been tax deductible

- new developments are limited due to environmental considerations

- it's the safest "on the books" wealth storage in all of Europe (it has been a good investment since the 16th century)

- the Netherlands outclasses it's direct neighbours in quality of life and urbanisation. It's #1 best location in the world to raise children. This leads to many many people wanting to move to the Netherlands. They are not coming for the jobs or our great personalities (sarcasm) they come for the nice living conditions, the great bicycle and public transit infrastructure. The great roads. The good education. The livability of our towns and cities. And we can't really scale it up further. It's all of the country already. You can be in the middle of nowhere in Frisia and jump on a lightrail or see a proper safe bike detour due to some new construction. From small suburbia to big inner cities. We really need Germany, Belgium and Denmark to step their game up. Release some of the pressure. (PS. Denmark is actually stepping up and will get there soon)

einpoklum5• 5 years ago

Title is inaccurate. It should read:

Dutch cities want to ban property investors from buying some kinds of apartments in some or all neighborhoods

I'm all for this. However, it is insufficient, because small-scale property investors may not be considered as such, but as buying an apartment for a family member or a friend etc. Or they will just "lend" money to someone to buy the apartment.

Generally, the situation in which individuals have full ownership of apartments or houses other than those they live in is problematic.

nathanvanfleet• 5 years ago

I have thought about San Francisco. It really does feel like this whole city is empty. No stores stay in business, no one seems to be walking around these neighborhoods. I have considered if you can fly around with a plane at night and use something like heat vision to determine who is home?Because I think the stats are just not correct for SF

ModernMech• 5 years ago

San Francisco has enough empty homes to house every homeless person in SF many times over. And there are a lot of homeless in SF, so that's saying something.

logicchains6• 5 years ago

And at the rate a certain subset of homeless destroy property, in a couple years none of those empty homes would be liveable.

sidlls• 5 years ago

That's a rather extreme response. I don't know what the markets are like in the Netherlands, but I can't imagine the dynamics are much different from other regions where this sort of issue exists. That is, it's a combination of NIMBYism or other supply restricting phenomena and a surplus of investors from outside these communities with the means to take advantage.

In my area on the Peninsula in the bay area, many years easily 25% of the available real estate stock is purchased by foreign investors. Forbidding all investors (local or foreign) from buying real estate to lease isn't going to solve the bigger problem: a lack of supply. It may help lower home prices into a range of affordability for locals (investors and primary residence seekers) substantially--which could be a good thing.

Flatcircle• 5 years ago

They need to do this in most big cities TBH

BurningFrog• 5 years ago

This is a common policy across the world. It is based on flawed reasoning, and won't work.

Simply put, housing isn't getting more expensive because investors are buying houses. The causation is the opposite: Investors are buying housing because its value is consistently going up, making it a good investment.

So why are prices going up?

Prices are formed by the forces of supply and demand. In the regions I know about, housing supply is severely limited by regulations/laws that makes building new housing hard.

imtringued32• 5 years ago

Prices are formed by the forces of supply and demand.

Technically the problem is that the supply is permanently fixed. There is no force on the supply side.

FpUser• 5 years ago

Please, please make the same thing happen across Canada

option• 5 years ago

why ban? why not tax more and/or restrict it to, say 10% of all properties?

acd• 5 years ago

I think beside limiting property investors, curbing central bank zero interest rates will make housing more affordable. Why? Zero interest rates drives up all asset prizes including housing. Buyers buy housing that they can afford to pay the monthly mortgage on. Zero interest rates by central banks undermines the UN article 17 human right to own property, instead you rent from banks. I argue that there wouldn't be so many property speculators if the interest rate weren't set artificially close to zero by central banks purchasing bonds.

UN human right of right to own property "Article 17

    Everyone has the right to own property alone as well as in association with others."

smashah• 5 years ago

One day an intergalactic 5th dimension demon investor will buy earth and rent it back to us for 1 Billion souls per year. What madness.

tmnvix• 5 years ago

The issue of housing affordability comes up a lot on HN and the discussion often turns to a shortage of supply.

Often overlooked is the demand side of the supply and demand equation. From my perspective (mostly familiar with the NZ/AU markets), this is where the real problem lies.

Statistics New Zealand have collected data on the total number of private residences and the total number of households since the mid-90s. The difference between the two has almost doubled to around 7.5% nationally. There are substantially more empty or under-utilised residences in a time where every politician is telling us that building more houses will fix the problem. It won't. At best it will alleviate the problem.

Prosper Australia's Speculative Vacancies Report [0] (looking at water usage to determine under-utilised properties) suggests areas with high vacancy rates in Melbourne correlate with areas where capital gains (i.e. percentage price increases) are greatest. This is the opposite of what you would intuitively expect in a naive supply and demand equation - desirable areas have higher vacancy rates, even approaching 20% by their reckoning.

A study in the UK [1] using council data found that high property prices correlate strongly with what the study refers to as 'low use properties' (LUPs).

I wouldn't be at all surprised if the situation is the same in the Netherlands.

All of this suggests that demand for investment, not demand for housing is driving prices up. Zoning restrictions and other regulations do play a part, but I think in many cases their influence on the larger picture is overstated. Cheap loans, leverage, and favourable taxes make property a good investment.

The only solution is to make property investment less attractive. A land value tax - though politically difficult - seems to me to be a good option.

[0] https://www.prosper.org.au/wp-content/uploads/2019/04/Specul... [1] https://theodi.org/event/friday-lunchtime-lecture-empty-home...

closeparen• 5 years ago

What exactly does it mean that investors are driving up prices? As far as I know an investor gets two things by owning a house: a stream of future rent payments, and an appreciating asset. We can easily calculate the present value of the future rent payments. It would be a weird and obviously temporary condition if homes were selling for less than this. A market in disequilibrium. Is that the theory here? The healthier housing market we had in the past was homes priced at less than the NPV of their rents?

Maybe the investors are simply irrational and are overpaying for these properties? Hoping for greater fools? This seems like great news. Everyone who owns a property should sell it to one of these exuberant investors, enjoy the hefty profit, and rent (perhaps from the same person, without even moving house) while waiting for the crash. If this is our contention then rents are reasonable and people who simply want to be housed should just pay them.

Or maybe the market has always been in equilibrium and the investors have always been rational, but now the NPV is rising. It could do this for two reasons: the rents going up, or the discount rates going down. It seems plausible that both of those things are happening. The unstoppable force of urbanization meets the immovable object of NIMBYism; urban rents rise. Low interest rates reduce the discount rate. Although stock market returns have been incredible, so I'm less sure about this part. In any case, maybe what we're looking at is new, higher NPVs and we're hoping to keep the housing market in disequilibrium to prevent prices from catching up to that NPV?

I guess the final paragraph seems the most likely. And, well, good luck. When there's a systematically under-priced asset, people are going to find a way, rules or not. It would seem a lot more effective and sustainable to address the drivers of the rising fundamental value.

xtat2• 5 years ago

Dutch cities want to ban property investors in all neighborhoods

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