housing problems and solutions

This video prompted me to write down these proposals.

In my experience, there are three reasons housing in cities is becoming unaffordable.

Houses are bought up by a few large investment banks, and left empty. This creates a housing shortage, which inflates prices.

Yes this is not one statement, there are three things here:

  • vacancy

  • multiple ownership

  • ownership by non-people

The first one is the most important.


This can be solved by adding a large property tax on all housing, a flat rate on each housing unit. Then (option 1) every adult recieves a UBI of the same amount as the property tax, (option 2) Every adult can apply for an exemption from the tax, (option 3) some variation.

Landlords are allowed to pass the charge on to their tenants. If you want to encourage home-ownership, you only allow them to pass a portion on, and many landlords will sell to home-owners.

What about businesses who have a legitimate need to own property and leave it vacant? They have to pay the charge or sell, or gift the property to the state.

Option 1 has the side effect that the homeless, people flat-sharing, adults living with parents; they suddenly have a lot of extra income.

Option 2 has several side effects too.

So option 3 is a tweaked version that suits whatever the government’s policies are today. The point of this policy is that it’s simple and robust. The data comes from registries which already have good quality data. It would be very hard to avoid the payment, or financially ruin anybody. Please don’t overcomplicate it too much with excemptions and caveats.

It’s possible to design a menu. Should couples be entitled to two houses? Should large families benefit more? Should people who don’t live in the same country be discouraged from owning property there? You decide your policy, and you can make a version of this that increases housing occupancy, but also fits the rest of your politics.

Multiple ownership

People who own many properties, whose main income is from rent-collection. They are parasitic and shouldn’t really exist. So you add to the above, a limitation that you can only pass on the tax on a certain number of properties. For the others you must pay the charge. In option 1 your tenants keep their UBI, so they could pay you illegally. In option 2, not.

Another thing that would help is a tax as a percentage of rental income. The tax won’t just be passed on as rental increase because rental prices as set be the demand side. At some point the rental income less tax is less than maintenance costs, so there is an incentive to sell to a home owner.

Ownership by non-people

These entities could be vulture funds, or universities or hospitals or housing co-ops. So it’s important that the measure is proportionate.

It is another tax. A small one, and not a flat rate but linked to the market. Something like 1% of the property value. So for a property worth 500,000, that’s 400 per month. So if the rent is 2000 per month, the business makes 20% less than a human landlord would. If the aim is to make money from rent, this should be enough to make it uncompetitive. There will be an incentive to sell.

For a business which has a legitimate need to own housing, this should not be a huge strain or their budgets. 1% tax on an investment is not a lot. You could also lower business tax slightly to compensate.

Part 2 - House prices and rental prices

The way to control house and rental prices is already slightly well known. But I’ll summarise it here because it’s related and important. The above is about disincentivising predatory practices, which is important, but it’s not enough to control house prices. Regulation needed to do that.

In a market with (nearly) fixed supply, prices are set by the demand side, not the supply side. Building more houses is a good thing, but it only slightly lowers house prices. The main thing determining housing prices is how much people can afford to pay, so this is what you manipulate.

You evenly reduce the amount everybody can afford to pay for houses. Then sellers must reduce prices by the same amount, or else they just won’t get sold. The trick is to preserve the relative wealth of buyers - if man A can afford to pay more than man B, man A will be able to buy the bigger house in the available stock. Trick is to reduce the amount everybody is willing ot pay evenly, without changing that.

  1. Make mortgages a limited length, eg 15 years. This limits how much people can borrow.

  2. Forbid mortgage monthly payments (and rents) above a maximum ratio of the buyer’s (or renter’s) salary. (This is commonly done, but without also implementing point 1, it just creates longer mortgages and doesn’t reduce prices.)

part 3 - location

In city centres, housing is too expensive. This is because there is a concentration of workplaces and a shortage of housing. The solution is to redress the balance.

  • Prohibit building more workplaces in areas with housing shortage … unless the developer builds 2x the number of housing units as workplaces.

  • Prohibit building housing in areas without enough local workplaces. They also need local parks, shops, pubs, schools etc, or else the developer will be forced to provide these amenities.

  • Rules to prevent declaring one use to the planners, then changing the use after the building is finished.

Developers will thus be forces to build new towns with mixed use, instead of housing estates far from workplaces.

This gradually solves the high-rents-in-cities problem, the dead city centres, overcrowded public transport, long commutes, removes many drivers that make life miserable for everybody.


My research found these solutions:

-build highrises
-demolish nearby school and build high rise
-consider not creating new parks
-reduce musuems landspace / parking
-tax vacant land
-are accessory dwelling units allowed?
-whats the smallest room size allowed? Are microapartments allowed? 27.87 sq m looks okay on invidious
-Tax universities and other high income rental creation to offset construction of affordable housing
- waiving all minimum parking requirements for new construction in like downtown
- does chicago have rent control?
- Work with other cities, instead of building amazon warehouse in chicago, build it in a city with enough houses
- tax foreign owned property?

That’s something I hadn’t thought of - taxing high rents. It would dis-incentivise very large/opulent housing in high rent areas.

And preventing the building of workplaces where there is no housing nearby, preventing the building of housing where there is no work nearby, and forcing people to build both workplaces and housing on the same site - this is key. It’s not the solution to the OP, but it’s the solution to many other major socieetal problems.

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