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Maximum Rent?

phattonez

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I want to hear everyone's thoughts about this. We have had minimum wage laws for decades now, and we've had plenty of debate about it and we know more or less where everyone stands. I want to talk about another price control, and that is rent. What if we passed a law stating that landlords could charge no more than 25% of a household's income as rent. That is, a family that makes $4000 per month could be charged no more than $1000 per month in rent.

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

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

So let's think this out and have a real debate on the issue. Or, are you totally oblivious and fine with the fact that massive numbers of Americans are being absolutely fleeced just to have a roof over their heads?
 
Impractical

How would this be implemented?

If I have a rental property that I want to rent for $1500 a month what happens is a person with an income that states they can only pay a rent of $1000 A month. Would I be forced to lower the rent or could I refuse to rent to them? If I could refuse then this policy would be useless. If I could not I would get out of rental units very quickly.
Only if the government hot involved in providing rental properties would this work. It could have a variety of rental units at a variety of rental that it could provide
 
Impractical

How would this be implemented?

If I have a rental property that I want to rent for $1500 a month what happens is a person with an income that states they can only pay a rent of $1000 A month. Would I be forced to lower the rent or could I refuse to rent to them? If I could refuse then this policy would be useless.

Not entirely. There are only so many people with an income of $6000 per month.

If I could not I would get out of rental units very quickly.

And what would happen with those rental units?
 
I want to hear everyone's thoughts about this. We have had minimum wage laws for decades now, and we've had plenty of debate about it and we know more or less where everyone stands. I want to talk about another price control, and that is rent. What if we passed a law stating that landlords could charge no more than 25% of a household's income as rent. That is, a family that makes $4000 per month could be charged no more than $1000 per month in rent.

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

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

So let's think this out and have a real debate on the issue. Or, are you totally oblivious and fine with the fact that massive numbers of Americans are being absolutely fleeced just to have a roof over their heads?

When we bought a house to rent out the rent we charged was the cost of the mortgage payment, taxes and insurance, and a small amount put aside for maintenance. We made our profit on the increase in the value of the property. If we hadn't been able to make back those costs the house wouldn't have gone on the rental market.
 
There are too many other factors involved in rent control on a universal basis - the cost of ownership being just one. No one, not even the government, can require me to lose money in my business for the benefit of others. Price controls do not work on market segments that have broad tentacles into other markets and can impact the overall economy so vastly. The only way true rent control can work, is for the government to own the housing - all of it.

There's a reason, that even in far left New York, that this guy still can't get elected:
rent_high_cover-845x400.jpg
 
When we bought a house to rent out the rent we charged was the cost of the mortgage payment, taxes and insurance, and a small amount put aside for maintenance. We made our profit on the increase in the value of the property. If we hadn't been able to make back those costs the house wouldn't have gone on the rental market.

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

What, specifically, would go wrong?
 
I want to hear everyone's thoughts about this. We have had minimum wage laws for decades now, and we've had plenty of debate about it and we know more or less where everyone stands. I want to talk about another price control, and that is rent. What if we passed a law stating that landlords could charge no more than 25% of a household's income as rent. That is, a family that makes $4000 per month could be charged no more than $1000 per month in rent.

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

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

So let's think this out and have a real debate on the issue. Or, are you totally oblivious and fine with the fact that massive numbers of Americans are being absolutely fleeced just to have a roof over their heads?

Should Chevy be forced to charge the same for a Corvette as a Malibu? Should Steak and Lobster cost the same as a Big Mac and fries?
 
And where would it have gone instead?

Well, we wouldn't have bought it and my guess is someone would have bought it to live in it.
Point is, there has to be enough money in the deal for it to be worthwhile for someone to rent it out.
Besides the costs, being a landlord is a giant pain in the butt. We'll never do it again.
 
I want to hear everyone's thoughts about this. We have had minimum wage laws for decades now, and we've had plenty of debate about it and we know more or less where everyone stands. I want to talk about another price control, and that is rent. What if we passed a law stating that landlords could charge no more than 25% of a household's income as rent. That is, a family that makes $4000 per month could be charged no more than $1000 per month in rent.

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

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

So let's think this out and have a real debate on the issue. Or, are you totally oblivious and fine with the fact that massive numbers of Americans are being absolutely fleeced just to have a roof over their heads?

Government price controls are NEVER a good idea...whether applied to the price of labor (minimum wage) or the price of housing (your idea). Price controls always artificially disrupt the natural dynamic of supply and demand. This always results in reduced supply.

If you want the government to make housing available to low income people, then use taxpayer funds and have the government get into the rental business.
 
I want to hear everyone's thoughts about this. We have had minimum wage laws for decades now, and we've had plenty of debate about it and we know more or less where everyone stands. I want to talk about another price control, and that is rent. What if we passed a law stating that landlords could charge no more than 25% of a household's income as rent. That is, a family that makes $4000 per month could be charged no more than $1000 per month in rent.

A family shouldnt look at apartments that are more than 25% of their income then.

I know we've been around and around on this and you just believe landlords are parasites.

But to demonstrate further your lack of accepting reality...how would your proposal work? Someone has a nice garden apt with 3 bedrooms/2 baths for rent. A family that cant afford anything close to what it's worth applies to rent it...does the landlord have to take $250/month when it's worth $1200/month?

What about the family that applies and $1200 IS 25% of their income? Do they get turned away?
 
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And what would happen with those rental units?

They would be sold for full market value.

Still placing them out of reach of the low-income.
 
Well, we wouldn't have bought it and my guess is someone would have bought it to live in it.
Point is, there has to be enough money in the deal for it to be worthwhile for someone to rent it out.
Besides the costs, being a landlord is a giant pain in the butt. We'll never do it again.

The poster is on the record claiming that landlords do almost nothing but sit back and collect $$.

Many many times. He claims we're leaches on society and provide/perform no useful labor or services to society.
 
I want to hear everyone's thoughts about this. We have had minimum wage laws for decades now, and we've had plenty of debate about it and we know more or less where everyone stands. I want to talk about another price control, and that is rent. What if we passed a law stating that landlords could charge no more than 25% of a household's income as rent. That is, a family that makes $4000 per month could be charged no more than $1000 per month in rent.

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

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

So let's think this out and have a real debate on the issue. Or, are you totally oblivious and fine with the fact that massive numbers of Americans are being absolutely fleeced just to have a roof over their heads?

Why don't we simply make a list of anything anyone could possibly do to piss off, upset or enrage anyone else and then make up laws for how the federal government can control those things? I mean, it sure would be a lot easier to come up with a list of two or three things people CAN do without government permission than it is to come up with a list of everything they can't do.
 
Should Chevy be forced to charge the same for a Corvette as a Malibu? Should Steak and Lobster cost the same as a Big Mac and fries?

I think the point is that these things have a price on them to begin with. If I understand the argument correctly, food, shelter and medical care are all necessities of life and should be provided freely to all who need them.
 
I think the point is that these things have a price on them to begin with. If I understand the argument correctly, food, shelter and medical care are all necessities of life and should be provided freely to all who need them.

Which is why our current system is in place......people choose what they can afford and prices are set by property type, location and quality.
 
I think the OP would be wise to read up on some relatively recent history. During the Nixon administration, they came up with a terrific idea to counter inflation: Pass a law against it. This became known a Nixon's Wage and Price Controls. The basic idea was simply make it illegal for anyone to raise their retail prices and make it illegal to increase wages. A simply concept that was an unmitigated disaster for the economy.

If I have a mortgage on a house that I want to rent, I have to know how much I need to charge in rent in order to make it financially feasible to do so. If I have to rent to someone who can't meet my minimum requirements, I can't rent it. And, if I do rent it to someone, and their income goes down, do I also have to lower their rent accordingly? My mortgage obligation isn't going to change, is it? The bank is still expecting the agreed upon payment, right? If a landlord cannot predict how much rent he will collect in any given month based on your OP scenario, rental properties would be a terrible investment.

The fed tweaking interest rates (making it more or less expensive to borrow money) is pretty much the extent that the government ought to be involved in manipulating the economy.
 
Remember the 2008 Housing Crisis? That was nothing compared to the market crash that would occur.

You mean when home prices fell back to historical lows? Great. That process shouldn't have been interrupted.
 
Government price controls are NEVER a good idea...whether applied to the price of labor (minimum wage) or the price of housing (your idea). Price controls always artificially disrupt the natural dynamic of supply and demand. This always results in reduced supply.

If you want the government to make housing available to low income people, then use taxpayer funds and have the government get into the rental business.

This is just a platitude. What, specifically, would go wrong?
 
A family shouldnt look at apartments that are more than 25% of their income then.

I know we've been around and around on this and you just believe landlords are parasites.

But to demonstrate further your lack of accepting reality...how would your proposal work? Someone has a nice garden apt with 3 bedrooms/2 baths for rent. A family that cant afford anything close to what it's worth applies to rent it...does the landlord have to take $250/month when it's worth $1200/month?

What about the family that applies and $1200 IS 25% of their income? Do they get turned away?

In the scenario I provided the landlord can turn away whomever they want.
 
They would be sold for full market value.

Still placing them out of reach of the low-income.

And full market value would fall significantly in the scenario.
 
If the government passes rent cost control legislation, wouldn't you end up with a housing market like NYC?
Last I head they passed a lot rent cost control legislation.

From my view government passing legislation to distort the free market is generally a bad idea.

Seattle did, and from what I understand basically crippled their housing development market, by requiring excessive cost for fees, permits, environment impact studies, etc. etc. so no housing was developed. Now, they have a run-away housing market, the costs skyrocketing so much so that large parts of the labor force moved out, and now they have to promise them $15/hr to have them be able to commute in everyday from out of town.

Of course businesses pass those price increases right back to their customer base, which isn't the part of the labor force that moved out.

I'm struck by the unintended consequences, which, more often than not, appear to make things worse, rather than better (typical of government interference and distortion in markets).
 
In the scenario I provided the landlord can turn away whomever they want.

Hell, that's not even legal today. Although Trump's dad was notorious for it.

But what happens if say a couple 'qualifies' for the asking rent, but then one of them loses their job? Do they automatically get their rent reduced?
 
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