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.
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.
> 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).
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.
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...
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)
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.
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.
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?
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.
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.
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.
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.
> 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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".
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.
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.
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.
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.
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.
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?
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.
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)
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.
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...
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.
[+] [-] dmje|4 years ago|reply
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.
[+] [-] ed_blackburn|4 years ago|reply
[+] [-] traceroute66|4 years ago|reply
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).
[+] [-] Freak_NL|4 years ago|reply
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.
[+] [-] nmca|4 years ago|reply
[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-...
[+] [-] murgindrag|4 years ago|reply
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)
[+] [-] rocqua|4 years ago|reply
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.
[+] [-] newswasboring|4 years ago|reply
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.
[+] [-] saulpw|4 years ago|reply
[+] [-] ryan_lane|4 years ago|reply
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?
[+] [-] dogma1138|4 years ago|reply
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.
[+] [-] thepangolino|4 years ago|reply
Current ubran policies in the western world, coupled with the normalization of remote working already do this to some extent.
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] refurb|4 years ago|reply
The easier thing is just make is easier to build more housing, denser if needed, to fulfill demand.
[+] [-] inter_netuser|4 years ago|reply
If anything, it might end up being lower tax on residential housing, and much higher on commercial/retail.
[+] [-] zhengiszen|4 years ago|reply
[+] [-] rusteh1|4 years ago|reply
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.
[+] [-] debarshri|4 years ago|reply
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.
[+] [-] IkmoIkmo|4 years ago|reply
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.
[+] [-] chii|4 years ago|reply
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.
[+] [-] imtringued|4 years ago|reply
[+] [-] reacharavindh|4 years ago|reply
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.
[+] [-] winkelwagen|4 years ago|reply
[+] [-] mercy_dude|4 years ago|reply
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.
[+] [-] mcv|4 years ago|reply
[+] [-] imtringued|4 years ago|reply
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.
[+] [-] wsc981|4 years ago|reply
[+] [-] pydry|4 years ago|reply
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.
[+] [-] zihotki|4 years ago|reply
[+] [-] alexbiet|4 years ago|reply
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.
[+] [-] jvvlimme|4 years ago|reply
[+] [-] seanieb|4 years ago|reply
[+] [-] Ekaros|4 years ago|reply
[+] [-] reillyse|4 years ago|reply
[+] [-] zihotki|4 years ago|reply
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.
[+] [-] Aeolun|4 years ago|reply
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.
[+] [-] dt3ft|4 years ago|reply
[+] [-] cjfd|4 years ago|reply
[+] [-] varjag|4 years ago|reply
[+] [-] ralfn|4 years ago|reply
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)
[+] [-] iamnotwhoiam|4 years ago|reply
In some asian markets investors buy homes then sit on them unused for years. That’s a problem.
[+] [-] rocqua|4 years ago|reply
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.
[+] [-] Isinlor|4 years ago|reply
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.
[+] [-] johndoe0815|4 years ago|reply
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
[+] [-] MonaroVXR|4 years ago|reply
There aren't enough houses for students right now.
[+] [-] jhgb|4 years ago|reply
Presumably not, unless those students are property investors.
[+] [-] 57844743385|4 years ago|reply
[+] [-] lostlogin|4 years ago|reply
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.
[+] [-] kortilla|4 years ago|reply
[+] [-] throwaway6734|4 years ago|reply
Why not a land value tax instead?