The horizon is not so far as we can see, but as far as we can imagine

Tag: Ghost Apartments

Learned Hopelessness About Using Government for Good

Seems that some of my commenters think that using government for good would be hard to do. Going with the theory that every comment indicates some number of readers who believe the same, let’s explore this notion in further depth. This kind of doubt is more important than it seems, because it speaks to the weird, modern idea that governments are powerless to control how money is spent by individuals or corporations, when, in fact, it’s dead easy.

The tax system is also set up to catch stuff like this. No income declared from your property? Hmmm… do you have family members living there for free? Go inspect.

You can also supplement this with things like checking meters, checking mail delivery, and checking IR maps to see if the heat or air conditioning is on. (All this before we even get to the government’s real surveillance abilities). I guarantee the salaries of the people doing the inspections will be far exceeded by the fines and the money earned from auctions of seized properties.

This sort of thing is not only dirt easy, actually enforcing it is profitable for government, just as auditing corporations and rich people is VERY profitable. So every time your government reduces auditors your tax service you should ask why.

No, as usual, this is an easily solved problem that people refuse to solve either because of learned helplessness or because it is profitable for them (and politicians) for the problem to remain unsolved.


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The Solution to Ghost Apartments Is Obvious and Predictably Overlooked

So, one of the reasons we have resurgent housing bubbles in world cities like New York, London, Hong Kong, and Toronto is because of foreigners who buy apartments and then leave them empty. Newsweek has a good article on ghost apartments, but I want to focus on this because it’s symptomatic of why we can’t fix almost anything:

In Singapore and Hong Kong, officials tried to slow the spread of absentee-owned luxury housing by limiting mortgages.

….

To encourage owners to occupy their units or sell, New York state legislation has been drafted to impose a progressive tax on vacant luxury apartments worth $5 million or more. The proposed levy would start at one-half of 1 percent and rise to 4 percent on values above $20 million.

People who can afford luxury apartments can afford that fee. Make it simple: Put in a residency requirement. Someone must live in the apartment six months a year. If they don’t, the tax rate is 50% of the ostensible value of the apartment. If that doesn’t work (and it might not, given how rich they are), well, then just make it illegal to own apartments that aren’t used and have the government seize the apartment and use it for social housing, or sell it. And if the next owner doesn’t use it, seize it again.

Lest you think this isn’t a serious problem, understand this: Every unused apartment raises the rent of every other apartment in the city and increases the cost of every other condo in the city. This is supply that is artificially off the market. Because people don’t live in these apartments, local businesses don’t have as many customers. Meanwhile, the high prices of luxury apartments for which there is no actual local demand drives up real-estate prices, which drives up taxation. Everyone pays more in taxes, rent, or mortgages to subsidize foreigners who aren’t even using the condos.

The same is true for houses.

Rich people who want to visit world cities can suck it up and pay for a hotel. There are plenty of hotels that cost thousands of dollars a day (tens of thousands aren’t uncommon, but ordinary people will never even see these listed), which are suitable for their “needs.”

The are many problems like this which are easy enough to fix by either extremely punitive taxation and fines or by just forbidding these destructive actions.


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