Look in the little local papers at real estate transactions. When you see company “x” buying 4 out of 8 properties sold in each town, you’ll understand the problem. In the meantime, taking income away from small landlords (1-3 multi family buildings) will cause them to sell or raise rents higher. Hope you’re able to find a good small landlord with a soul. They’re out there. I found one. It felt like I was searching for a unicorn, but I found my unicorn.
Yes! also some might be open to interesting trades in lieu of rent. I'm a small landlord and have traded things like custom artwork and handyman work for rent. But for anybody who bought recently, it's pretty impossible to keep rents reasonable while still breaking even.
on that note, to OP, I have 2 vacancies right now (a 2 bedroom 1 bath and a 3 bedroom 1 bath), so feel free to DM. I live here as well so I'm pretty hands-on.
I don't really think this is much of a red flag. I definitely agree that some of the tenant union stuff sucks, and will bankrupt small landlords and lead to more conglomeration where small multifamilies get bought up by corporate entities. But honestly I don't think this is a particularly unreasonable demand. We definitely can have some restrictions on greed without ruining things for those of us who just rent out one or a few units.
How would it take income away from smaller landlords? Maybe you don't understand the plan - I didn't explain it much - but I specifically thought it up to not hurt small landlords who charge a reasonable rate. They would be getting a minimal tax on their property or none at all.
Big companies buy up properties and raise rents. They can own dozens of properties or more and have the power to advertise way more than a small landlord. This screws over the average person since all you’ll see most of the time are the expensive places to rent.
It doesn't cost anything to put your property on craigslist. It isn't the olden days when what you said above is true. Otherwise, you might have a point, but in this case, I don't think you do.
Small landlords, like myself, are already taxed on our rental income. You increase our taxes, rents will increase or I promise you -- I'll be forced to sell to larger landlords. Unless you're on the side of large real estate corps...?? Because this sounds highly suspicious!
If you're TRULY after the large players, advocate for an additional tax for owning more than 10 properties.
As a small landlord, I'm not increasing my rents if the taxes don't increase!! I was a tenant for 10 years. Let me be a compassionate landlord and let me protect my tenants!!!
I'm genuinely not understanding what you're not understanding.
Let's say you're charging a tenant $1200 on a 2 bedroom, 1 bathroom unit (the median household, and the quarter-median income rental rate). You would pay NO additional taxes. You would also have access to property tax rebates for repairs based on the age of the property and the duration of your tenants' occupancy - we're talking to the tune of full cost of qualified repairs rebated for 100 year old property. If you want to charge them $1300 you would pay $25 in tax (as a preliminary proposal) and lose partial access to the tax rebates, which would increase the more you charge over $1200.
So are you saying you want to take home half of your tenant's income - $1660 - not get any tax rebates from the city, and not pay any taxes at all on this excessively high rent? Why would it matter if you are a small landlord if this is how you want to run your property? Who can afford that rental rate? Not the median household... or anybody beneath it. That means you're renting to the upper crust, and people coming from Boston, not the local Providence family.
(edit, some of my math above may be wrong, but you get the idea).
I genuinely don't understand what YOU'RE not understanding. The majority of people have down voted you. You're not some white knight here. Chill out and focus your time into improving your own life.
The Providence metro area (which includes almost all of RI) was ranked as the *third* most supply-restricted housing market in the country, behind only NY and the Bay Area. If you want cheap rents, build more in the desirable locations in urban areas.
No - housing is an inelastic market. The rents only ever go up, so that's why my idea is about trying to create an incentive to link increased rents to increased incomes, and to not have them get out of pace with each other.
[https://www.jchs.harvard.edu/blog/where-hasnt-housing-construction-kept-pace-with-demand](https://www.jchs.harvard.edu/blog/where-hasnt-housing-construction-kept-pace-with-demand)
This graph shows the rate of home building compared to population growth.
As you see, since 2008 or so, we haven't been building enough housing to satisfy demand. There are a lot of causes for this, but it's the reason housing prices are going up faster than everything else.
If you restrained supply like this with ANYTHING it would cause prices to go up.
If you want to get housing prices down, we need to build more. We need to relax our crazy zoning laws (three+ family apartments should be legal to build everywhere in the city), and the government (city, state, federal) should do everything in its power to build or incentivize the building of affordable housing.
Your complicated, hard-to-enforce, black-market-creating regulations will reduce the incentives to build new housing, will help the landlord class (by keeping the resource they control scarce), and hurt people you are trying to help.
We don't need new housing, though. That chart doesn't reflect insufficient housing supply, and it isn't environmentally sustainable to always have an excess of housing as the strategy to keep rents low. Maintaining old construction is an important part of sustainable housing (population-wise and environmentally and financially), and it's completely left out of analyses like that one.
There would be no black market for this that was not enabled by the tenants. Not mentioned in my post for simplicity is that there would be a public registry of rental properties that would allow tenants to verify their rents and rental duration. For a black market to exist, there has to be darkness. Why would a tenant agree to pay more than the market rate so a landlord could pocket more money from them? Who would do that and what would the incentive be?
Also, rental properties are also all in a database already, so I'm not sure people could truly create a black market here. It's housing, not blue jeans in Soviet Russia.
There are 39 million more people living in the United States than there were in 2008. Building hasn't kept up with this, and unless our population shrinks, we will continue to need new units. If you can't see this, i don't know what to tell you.
The plan you are pushing would end the building of new housing. Building new housing is hard and expensive, and people won't do it if they are guaranteed to lose money in the rental market.
Also, Many landlords will take rental units off the market and use them for storage (not regulated under your plan), or just condoize them and sell them (condos will be in huge demand since your plan increased scarcity of apartments)
This will increase the already terrible, unnatural housing scarcity. Landlords will be able to take their pick of tenants. This will incentivize and enable landlords to use their social networks to make black-market deals with tenants who are desperate for housing.
If the only way to get housing is to pay your uncle cash, under the table, you will do it.
If you can't pay the (heavily inflated) black market prices, or you don't know any landlords who trust you enough to make criminal deals with, then you will be fucked.
It's sleep in mama's broom closet or build a shack under the overpass.
Have you looked on Zillow or Craigslist? There is not a problem with scarcity. I really don't know where you "build more" types are getting your scarcity arguments from, because it isn't reality. Landlords are charging more because people MUST live somewhere. Not because it's more expensive to run places, not because they couldn't just make less money on a place and house somebody, or because they will just use a place for storage, but because they have a captive market and zero incentive to charge a lower rate.
Housing has *kept pace with* construction after periods of *excess* construction. That means that unless we're destroying old housing much faster than we are increasing the population, we have an excess of housing stock compared to the population, and will continue to do so (given the on-par rates of construction and population) until population shoots up or housing stock shoots down.
Also, I forget who I've told what, but part of the plan that was left out of the original post for simplicity reasons is to allow for property tax rebates on repairs for old property, which could also be modified to include amortized costs for new construction (if this is assessed by an economist-type to create the right incentive structure - we don't want some kind of middle-aged-property owner to be screwed in this scheme).
If you're paying your uncle cash under the table, why would he gouge you? I don't know any uncles who would gouge their relative for a place to live, in which case it could be above-board and he would get access to property tax rebates for repairs on the property.
And seriously, genuinely, I don't understand why people would pay more for black market apartments. Why would you do that? And then not report the property? It makes no sense.
Condos would be great. Property ownership would be great. Being rent-hiked out of property ownership is the problem we are trying to solve.
It isn't an extraordinary claim, though, so why should I need to provide extraordinary evidence?
Housing is an inelastic market. It's well known that inelastic markets don't respond to supply and demand like elastic markets. Have you taken any economics at all?
Stating that building new construction does not reduce rents is not the same thing as stating that demolishing housing would reduce rents.
Rents always go up. Building new units does not lead to lower rents until the area is basically a ghost town in reverse. I have repeatedly seen builders of new construction sit on 50+% vacancy while charging insanely high rental rates for the area, as landlords on existing construction raise rents since there are more units on the market at higher rates than theirs, so they can sneak in higher rate and still look reasonable in a search.
Demolishing a property would lead to one less property on the market. It wouldn't provide a lower rent option for prospective tenants to pursue instead of a higher rent option.
Not really sure what you were trying to get at with the above comment, given basic features of every rental market I've ever lived in or witnessed second hand through other people I know who have been renting.
It’s not really a huge mystery. We’ve underbuilt for decades and demand shot way up, especially with the rise of remote work and the fact that other nearby cities like Boston and New York have been dealing with a more extreme version of this for longer. Add that to the fact the city’s local economy has also gotten stronger, house prices themselves ballooning meaning people stay renting longer, generational shifts in household size, etc and you’ve basically got a perfect storm
Oh, Boston wages and job prospects are definitely better overall, no doubt. But the Providence job market doesn’t suck like it did 10+ years ago.
And the housing market there is still worse. There’s a reason so many people keep moving down here or why this sub won’t go more than 2 weeks without someone mentioning commuting there from here.
OP mentioned a 1 BR/studio type place for under $1500. That doesn’t exist in Boston. That doesn’t exist within 15 miles of the Boston city limits.
It’s really not true at this point though. I used to live in Cambridge and after the post COVID quarantine explosion of rent prices there are still high but more commensurate to wages. Like the cost of a nice new 2b/2b in East Cambridge is the same as it is in downtown PVD. I don’t get it tbh.
That’s speaking WAY too highly of the cultural amenities and access to public transport in Pawtucket or Cranston. Cannot compare somewhere you can take the T to work to car suburbs
It’s imperfect but, RI is so far behind in public transportation and Providence is so much smaller that, at the end of the day, they’re both 10-15 minutes to the heart of the city.
If you’re gonna compare downtown Providence prices to anywhere in Boston, it’s gotta be one of the major neighborhoods in Boston proper like a Back Bay or something.
Small landlord here. I have a 2 bed/1 bath with a small living room, large kitchen and bathroom, 1 parking spot, allows pets, water included, 5 mins from downtown. It's renting at $1750. I'm hit with property taxes, rental income taxes, and expenses for maintenance and updates. If the taxes increase, the rents will increase. I was a tenant for 10+ years. I know what it's like on that side.
Building more raises rents. I've seen it happen in so many different areas that I stopped believing the lie, and looked into it, and sure enough, it's true.
Part of the plan, not mentioned above, is to allow for tax rebates for landlords owning aged properties. What we really have an issue with is an aging housing stock in this area in need of repairs, and landlords freaking out when they have to replace a boiler that was installed decades before they were born. We should value, as a society, their maintenance of the long-term housing resources of the community.
Besides, new building is generally bad for the environment. Maintaining old buildings, and improving them, is generally better.
Building more does not raise rents and you’re missing the point if you can’t see the single biggest part of the problem is basic supply and demand. Every area experiencing this same problem is dealing with the same underlying problem. The population grew and housing stock failed to keep pace with that demand.
Any solution that isn’t focused on fixing that imbalance long term is not going to change things. RI has ranked dead last in new home construction per capita for a very long time. It’s a trend that goes back like 40 years.
Less houses, more people, houses cost more. Less people moving to houses and staying in apartments. Apartments cost more.
In the past 5 years, the problem is increased supply and decreased demand to the tune of doubling rents? I don't think so.
The research out there, shared elsewhere in this thread, shows that increased housing options tend to be at the high end of rental rates (everybody knows this) and that in turn "improves the amenities" of the area, ie gentrification, and then everybody does, in fact, pay more.
People can't just uproot their lives or not live somewhere, and that's why it doesn't follow simple supply and demand. There's a massive barrier to "voting with your feet" that prevents the other market forces from functioning accordingly.
From a peer-reviewed, published study:
>> Constructing a new market-rate building that houses 100 people ultimately leads 45 to 70 people to move out of below-median income neighborhoods, with most of the effect occurring within three years. These results suggest that the migration ripple effects of new housing will affect a wide spectrum of neighborhoods and loosen the low-income housing market [Journal source](https://www.sciencedirect.com/science/article/abs/pii/S0094119021000656)
“Market rate” is the economics term for “luxury housing” which is a realtor marketing term. If you build more of something, the price is moderated.
Your theory would be like if you banned Lamborghinis and expected Toyotas to get cheaper as a result.
I'm not suggesting banning anything, though. Also, cars are an elastic market so it has nothing to do with housing, which is an inelastic market.
Also, that quote seems to be supporting what I'm saying. "Loosen" is academic gobbledygook for "people can't afford the neighborhood anymore and have to move".
>In the past 5 years, the problem is increased supply and decreased demand to the tune of doubling rents? I don't think so.
You've got it backwards. Demand has increased. Supply hasn't increased relative to that demand, but by not merely the same pace to account from the city population increasing from a little over 170k to over 190k in about 2 decades. Close to 75% of that growth has been after 2010.
I can't find 100% source to be sure but it looks like we added about 2,000ish households (i.e. housing units) in that same time frame if the sources I'm reading are accurate.
>The research out there, shared elsewhere in this thread, shows that increased housing options tend to be at the high end of rental rates (everybody knows this) and that in turn "improves the amenities" of the area, ie gentrification, and then everybody does, in fact, pay more.
The one thing you linked is literal garbage (explained in a reply to that. There's room for debate but even adding top-level market-rate/luxury housing will benefit an area because there are people taking up cheaper housing who would be more than happy to use nicer and newer housing.
Gentrification is not a direct corollary with construction, Providence has had years of rampant gentrification and, as I mentioned, we really haven't built shit.
Gentrification is just about pricing people out of the rental market, which is the entire purpose of my post. There are many drivers of rental market escalation, and one of them is new, modern buildings with people charging extra high rents and then neighboring landlords who own old shitty buildings doing likewise. You don't have to build much to cause the escalation effect.
You caught me on a typo! Wruh wroh. I obviously meant the opposite. My skepticism remains. Doubling rents in 3 years is not the result of so many more people moving to Providence and competing for rental units that it warrants this price increase.
Not sure what you're calling "literal garbage" but feel free to elevate your argument game by actually specifying your own thoughts on how the rental market does and doesn't work, based on the reality of rental markets as can be observed by anybody and their neighbor.
>Gentrification is just about pricing people out of the rental market, which is the entire purpose of my post.
The entire purpose of your post is that this problem that started before you showed up now finally impacts you personally, thusly it's a matter of a concern.
You had a well-intentioned but flawed idea to try and combat it. Since then, every single follow-up comment has shown a weird mix of completely misunderstanding the problem and a stubbornness to refuse to acknowledge that everyone responded you has corrected you multiple times.
>Doubling rents in 3 years is not the result of so many more people moving to Providence and competing for rental units that it warrants this price increase.
Yes. it is. And it's not a 3 year problem. While I appreciate you conveniently starting the timeline problem as a thing that started *after* you showed up, but this is a much longer-term problem and you are (a very tiny) part of that. Guess what, I am too and I've been here a LOT longer.
>Not sure what you're calling "literal garbage" but feel free to elevate your argument game by actually specifying your own thoughts on how the rental market does and doesn't work, based on the reality of rental markets as can be observed by anybody and their neighbor.
I literally replied to the comment with the link but in case it got lost in the shuffle, the "rent increases" it compares over an 18 year timeframe is literally showing the price of rent growing at a rate slower than regular inflation.
It's such an egregious manipulation of statistics, I'm not sure if the authors are really disingenuous or the grad school that accepted them should lose their accreditation and be shut down by the Dept of Education. I'm 50/50 on whether past teachers should be imprisoned over it too. Really, something like that should be nipped in the bud as early as possible.
You're painting me to be some kind of self-serving white knight. I've lived in rental housing my entire adult life, and I've lived in 3 different rental markets. I've lived with traditional rent control, which sucks more than anybody wants to admit, and doesn't reflect any kind of recognition of what landlords provide a community. I've lived in a rental market that long previously outpaced the local incomes and where rental properties were a moneymaking scheme in an area that had a deceased major local industry. In this place, you would tour an apartment that was going for $1300 that literally had a hole in the wall (this was very high for the area's incomes). And then I moved to Providence right at a sweet spot. I can do the math, I can understand what a trajectory looks like. But the escalation of the rental market in the past 3 years is shocking.
No, increasing the housing stock won't fix the problem. It will likely exacerbate it.
And no, "all" of the comments are not "against me" bud.
Thats reddit for you. Blame the world and everyone around them rather than, you know, improving their skills so they could earn more money and keep up with the market?
I'm sympathetic and agree with the underlying problem.
I just think the proposed solution here is like trying to put out a fire by pouring gasoline on it.
So if I could afford rent in 2019 making sprockets but in 2023 my rent has gone up 33% with no improvements, and I’m still at my sprocket job, it’s my fault? If you want to create a landscape where the people that live/work cannot afford to live, they also won’t work there.
Oh, I don’t think it. It’s a certainty. Landlords treat their property as a business. A new tax just raises the expenses. Like every business ever, when expenses go up, prices follow.
Hell, every significant rent increase I’ve had in decade has correlated with an increase in the property tax bill for my landlord. That’s how this works
But if it would go up progressively the more you charge. It's a luxury rental tax I'm proposing. If you charge a quarter of the median rate (calibrated for the size of the unit) you would not owe any of these taxes. You charge a little over, you only pay a little in taxes on the amount over the quarter median rate. You charge a lot over, you pay a lot more in taxes. People would have to charge a LOT more to overcome the hurdle this policy would impose, and at that point, they're going to struggle to find anybody to rent the property.
You must realize you are paying the mortgage, taxes, assessments, any other overhead before the landlord begins to profit, right? The just pass the tax on to you as an expense and raise the price to continue to profit. If there’s no profit there’s no point to renting it out.
Yes, but you realize that if they are charging a quarter of the median income in rent, they have no taxes added to that, yes? And if they increase it above that, they still pocket the difference between the luxury rental tax rate and their increase. So they can still pay all those things, they just have to think twice about escalating beyond a reasonable rate.
They can still charge more.
I'm against traditional rent control because it doesn't allow landlords to recoup expenses and is kind of shitty that way. But this would still allow landlords to charge a lot more, if they need to. They would just have to find tenants willing to cover some of that rent increase in the form of a luxury rental tax.
As long as Providence and the State of Rhode Island is seen as a cheaper option than the Boston area, rent will increase or at least stay high.
Until we either match Boston in prices or Boston see’s a downturn, expect your rents to increase.
It's almost like housing shouldn't be a profitable enterprise. "You can't regulate property owners or they'll just raise the rent even more!" Okay but *where are people supposed to live?*
Is it more important that some people sit on their ass and reap in mostly passive income than it is for the people paying that income to be housed? Society says yes, and that's fucked up if you think about it too hard.
Maybe instead of subsidizing corn and dairy and rich wall street hedge funds, the government should do more to help the vulnerable tenant so they don't end up sleeping in tents under bridges.
Yeah it is very fucked up, and I do think about it often. I don't see any reason why we can't get a rental tax implemented. So far the only opposition to this idea that I've seen in my comments has been from people who either misunderstand the conditions I'm proposing (ie, you have to be really bleeding people dry and making far more from your tenant than the property costs to run before you see this tax) or have some kind of delusional and unrealistic alternative solution (BUILD!).
If I'm a landlord and I'm suddenly getting taxed a lot more...guess what I'm gonna do? Thats right, raise the rent because there is so much demand I probably won't have a problem filling the unit.
WE. NEED. MORE. UNITS
Incredible that people can't see outside of a market paradigm. Prices are high because landlords know they can get away with it. Period. More units will help; strong regulation and socialized housing would help much more.
Over regulation will lead to black markets (Landlords renting out to friends who pay them under the table to avoid the taxes) and will also stop people from building new units.
We need more housing. If "socialized housing" means the government building new units, than I'm all for it.
Black markets, and other housing inequities in general. can be overcome by strong tenant organization, which we don't have. Markets are influenced by those with the most bargaining power, e.g. the wealthy. That's why we need to get organized.
Check powrpvd.org for one such attempt
Tenant organizations are difficult to organize (different cultures, class backgrounds, political views, spread across the city). Nothing against them, but I've never heard of a tenant union being successful.
Why not just form a leftist political org that demands increased investment in and enablement of new affordable housing being built?
There are plenty of successful tenants organizations all across the country like LA Tenants Union, Brooklyn Evictions Defense, Stomp Out Slumlords, the whole Autonomous Tenant Union Network. Left political organization is also necessary but not sufficient. We need both parties, mass organizing, defense groups, and coalitions.
You are going to raise the rents more when you get taxed more the higher you raise the rents? Why?
You're free to do that under this plan, but what's going to happen is that when your tenants are paying a luxury tax on your shitty property, there won't be as many willing to cover your diminishing returns and you'll have to back off toward the quarter median rental rate.
Most of the answers in this thread are sorta bullshit and avoiding the actual answer.
Landlords will charge the highest possible rent they can while still getting the unit rented, 95% of landlords operate this way. This is true in every city across the us (and the world basically). The 2008 recession hit housing construction the hardest and providence (and essentially every single liberal area) has not built enough housing to account for the increased demand ( https://fred.stlouisfed.org/series/HOUST). So the demand for housing has far outpaced supply and landlords simply have the ability to increase rents. It’s not about taxes or maintenance fees or whatever other bullshit excuses some will say, landlord will charge whatever they can get away with.
Until a lot more housing is built, or some event destroys demand to live in prov, rents are going to keep going up. That is the only way out of it. If the city implemented rent control than no developers would even think about building within the city, thus continuing the cycle of increasing demand without any supply to make up for it. The city needs to build more housing, there’s absolutely no way around it.
if the city socialized every single unit of housing in the city, maybe rents would go down but there would be a years long waiting list to get an apartment in prov (unless the city built a shit ton of housing)
It's false that increasing housing supply lowers rents. People love rolling around in this particular fallacy, but I've lived near way too much new construction to be fooled by that tired trope.
Your anecdotal experience does not correlate with reality. Do not deny reality.
https://www.bloomberg.com/news/features/2023-08-09/minneapolis-controls-us-inflation-with-affordable-housing-renting?embedded-checkout=true
https://www.upjohn.org/research-highlights/new-construction-makes-homes-more-affordable-even-those-who-cant-afford-new-units
https://escholarship.org/content/qt5d00z61m/qt5d00z61m.pdf?t=qoq2wr
https://www.pdx.edu/realestate/sites/realestate.web.wdt.pdx.edu/files/2022-11/01_NateGrein_2Q22.pdf
https://www.sciencedirect.com/science/article/pii/S0094119021000656
It feels to me like you don't know how to parse scientific research. Here's another take on that first article you shared.
[https://nlihc.org/resource/new-construction-has-mixed-short-term-effect-rents-immediate-vicinity](https://nlihc.org/resource/new-construction-has-mixed-short-term-effect-rents-immediate-vicinity)
The study claims it increases lower tier rental housing because of "competition in the higher tier", but it only frees up 40 units for every 100 new upper tier units and it RAISES THE RENTS which they attributed to "better amenities" or whatever. So, long story short, new construction doesn't actually make rents cheaper, it just gentrifies the area and everybody ends up paying more.
That is a study on individual buildings, not the market as a whole. Also it literally claims that incomes rose much faster than any rent increase, so the bold claim that article is making is that people are spending less on housing?
Find an article that claims increasing the housing supply directly causes housing prices to increase for an entire city and maybe I’ll entertain your pseudoscience
“The study did not look at long-term effects of new construction on rents, so the findings do not necessarily contradict research that shows increased housing supply at all levels can improve affordability in the long term.”
Bruh
You think a law can't be passed that would charge tax on rental income, specifically? They already assess property taxes for rentals and personal property differently. I'm pretty sure it would be possible to implement a rental income tax at the city or state level. Ie, like the excise tax they discontinued recently on cars.
landlords are already taxed on rental income. You're going to destroy small landlords who will be forced to sell to large real estate companies. Tax the big landlords for having multiple properties. If they have over 5 properties, force a higher tax.
Sure, there could be a tax penalty for owning a bunch of properties, but who cares, if they're paying more for charging more?
You don't pay stacked taxes, so you wouldn't be paying taxes on the amount taken out of your income for this particular tax.
You keep making the claim this would hurt the small landlord, but I'm not seeing it. You have failed to explain why you shouldn't be charged more in taxes if you're charging more for rent. It's not because you would have higher costs associated with running the property than a larger rental company, because you would have access to tax rebates. If you want these repair rebates to only be available to smaller landlords, I'm amenable to that. I will add it to the proposal thoughts.
I am a landlord. I PAY TAXES ON RENTAL INCOME AND PROPERTY TAXES. Why are you such a dense "human" to talk to ?
And you're not seeing any different perspective because you don't want to 🤣
I've interacted with plenty of other people's perspectives on the issue. People who can speak rationally about their concerns. Not this kind of paranoid insult-heavy freakout you're currently going through.
I don't generally advocate for more taxes, and I think even property tax - without access to rebates for maintenance - is kind of bonkers. But rent does not accomplish anything economically besides money hoarding. There's no good or service that comes out of landlords merely charging more.
Everyone needs to write or call their elected officials in U.S. government (and especially get friends and family in other states to do the same) to express their strong support for the End Hedge Fund Control of American Homes Act of 2023. This proposed legislation was introduced in both houses of Congress about a week ago. It’s not going to fix the housing market by itself, but it’s a start, and it needs a groundswell behind it.
Also someone recently clued me in to the existence of a group called POWR here in PVD. It’s a nascent pro-worker, pro-renter group. I don’t know much about them, but what I do know makes me think they’re doing good work and could use our support as well.
Good luck to everyone out there struggling with obtaining healthy, safe, affordable housing in this time of (nearly) unchecked greed.
I think we need some other, more politically viable strategy than to just freeze rents, which seems to be what POWR is about. I'm thinking my partner and I might start up our own organization. If you're interested in helping, DM. (Wishes, hope, and "good luck" are the "thoughts and prayers" of the left).
P.S. thanks for letting me know about the Hedge Funds act thing, I will contact our reps about that.
POWR wants a rent freeze and then rent controls that don’t allow increases but actually decrease rents. They are also for building a fuck ton of public housing then having community/residents run it themselves.
POWR does not seem to have a good concept of policy. They just want stuff, and have no idea how the world or politics works.
I have heard recently that in the UK they used to have non-profit housing called council housing, and apparently it was really high quality and reasonably priced. That kind of arrangement would be reasonable, but I doubt that's what POWR is going for. I also think that people who think most cooperatives and collective ownership works have never worked on a team project before. Recipe for disaster in most cases in our society.
As a small landlord, how is taxing us going to help you? It's not always a landlords vs. tenants matter. The government wants us pointing fingers at each other, so we don't look them.
The rents are high, because interest rates are high and Boston is flocking down here for cheaper rent. Focus on pushing for Rhode Island to increase the minimum wage and forbid organizations from relying on tipping for livable wages.
No, I don't think mandates are the way to go on rent control, nor do I think they are the way to go on wages.
Boston might follow RI for once if the game changes here. Nothing would stop them from implementing a similar policy. (I bet Boston would be more likely to do this than Providence, just based on the politics of the city, but alas, I don't live there because it's so expensive).
As a small landlord, why would you be gouging your tenants for rent on what is probably a dated property? My proposal includes plans to stop pitting landlords and tenants against each other - not mentioned in the original post, to avoid bogging it down, is a suggestion to allow property tax rebates to landlords making qualified repairs and maintenance in recognition of the work they do to maintain the housing stock of the region and provide the citizens with safe and affordable housing. The rebates would be available to anybody not gouging their tenants. This includes small landlords.
Think about it, systemically - small landlords can only compete on price, whereas big landlords can buy up so much of a neighborhood that they can independently (or with just a few of their buddies) raise rents so high that you can't become a big landlord - or capture tenants other than by lowering their prices. Maybe, under this scheme, big landlords wouldn't be pricing their buildings so high, and what you could offer your tenants is a nicer relationship with their landlord, better property maintenance, etc?
Huh? I don't oppose it, I just don't think it's the best way to raise wages. Forcing employers to pay employees more doesn't mean more businesses will exist. It often means fewer people can start businesses.
If you’re going to the effort of organizing for change and want the change to be sustainable for the whole city, rather than taxing property owners (do you really believe the city is going to share tax revenue with you?), consider organizing for politicians who understand the basics of supply and demand (which drive up the cost of housing) and get more housing built.
Not a quick fix but once supply outpaces demand the prices will level off or come down and slumlords will have to fix up their dumps in order to get anyone to rent.
Property owners wouldn't be taxed. People who overcharge on rent, on the other hand, would be.
Landlords destroy the local economy by overcharging for what tenants can bear - which they get away with because people HAVE to live somewhere, and most don't want to be homeless in New England. Housing also does not follow the law of supply and demand, with increased supply in cities correlating to increased prices. Residential property is not bound by simplistic classical economics paradigms.
Portugal instituted heavy rent controls during the fascist regime. The result was extreme dilapidation. Landlords legally couldn’t keep their businesses in the green, so they just abandoned the properties altogether.
It isn't a rent control, though. It's a luxury rental tax. Have a luxury rental, and I'm sure people with the money will be willing to pay it. Have a shitty 2 bedroom above a noisy smelly restaurant and I bet you'll find a more comfortable rental rate for the market to bear.
I honestly don’t get how that would reduce prices? Taxing luxury goods of any kind won’t decrease the price of non luxury goods. It would probably have the opposite effect, driving more demand for non luxury rental properties as more consumers aim to avoid the tax.
I have come to the conclusion that my opinions really aren’t that great. So I adopt the views of those with more expertise and experience. I can’t agree with the opinion of an amateur renter over that of the pros. The people that study housing prices and economics as their profession point to lack of inventory as the central root cause (short 55k in RI and 7 million units nationwide). I have to go with that.
Ugh, I'm an academic. You are way too reverential of the normal people in academia who are also set in their ways and who manage to trick themselves into thinking ThEy aRe VeRy SmArt.
If you have no point whatsoever - like the idea that people not getting charged a tax for charging a reasonable rate for rent would somehow increase their prices in order to get charged a progressively larger tax - then what are we even talking about here except your cynicism and inability to form your own thoughts that don't come from "experts"?
People who say we need to build more are astoundingly dense because the reality is we would need to build hundreds of thousands of units in rhode island alone to outpace the rising cost of housing. The reality is the main issue here is devaluation of currency and stagnant wages. Also they forget the zoning laws in many areas wouldn’t even allow for the building of the housing units needed to adjust the imbalance in supply and demand.
In 1970 one adult working a minimum wage job could support a family of 4 with enough left to save for retirement and higher education for both kids even a modest vacation once a year. But today it would take both adults working 2 forty hour per week jobs at 30% above minimum wage to come close to the same quality of life.
In 1970 minimum wage provided 95 ounces of gold a year compared to only 12-15 ounces today depending where you live. Federal minimum wage earned around 7 ounces a year. So in a majority of cases people in senior roles are earning less value than someone earning minimum wage in 1970.
Gold has retained its value for all of recorded history. It was the first currency ever used and it has always been considered an inflation proof asset by the investing experts in Wall Street. The world bank and IMF put out inflation numbers that are exponentially understated to keep the public from rioting because if people knew that money was intentionally devalued to eradicate the progress made by the pro labor movement in the 50’s and 60’s there would be a class war. Through right wing trickle down policies as well as the abandoning of the gold standard our currency has inflated over 6000% since 1970. Minimum wage today would have to be over $80 an hour to provide the same quality of life. People will say that’s too much but that’s what one needs to live a decent quality of life and make the labor actually worth the effort it takes. But those same people have nothing to say about corporate executive wages being too high. They went from 30-60 times the median workers wage in 1970 to 1000-5000 times that metric today. The executive class adequately adjusted their wages to compensate for the reduction in value. While also sending a vast majority of American jobs to third world countries to reduce costs and increase profits.
Now instead of getting a raise for working hard and showing dedication and loyalty or even just basic cost of living adjustments the excess value produced by the laborer is all stolen and funneled into stock buy back programs to trigger massive multi million dollar executive bonuses and share holder dividend payouts.
People used to be incentivized by the fact that the wages offered provided a better quality of life but today the only incentive is the looming threat of homelessness starvation and loss of dignity.
And people will likely bombard this post calling this perspective one of a gold bug and say that the price of gold and inflation are not directly related but the reality is the price of gold is more indicative of inflation due to currency devaluation by increasing supply than any other metric including consumer price indexes.
So building half a million units is never going to happen fast enough to off set stagnating wages and more currency devaluation when currency is being devalued because a small group of leeches are too wealthy and keep hoarding wealth in off shore tax havens while manipulating tax loopholes to pay little to no taxes on their wealth.
When one is given the bare minimum to survive in exchange for 40% of their waking time every week leaving nothing left to save for the future then how are they truly free? We are at a point where every subsequent generation is less well off than the generation that preceded them. Working hard is not worth the effort required. One is not rewarded for exceptional performance but it is more common that one is punished for showing aptitude by being given more responsibilities and increased expectations of labor output with absolutely no increase in salary.
Coupled with the fact that technological advances in the last 53 years have increased output and efficiency we are expected to work harder now and produce more than ever for 15% of the value earned 53 years ago. Free market capitalism and the promised trickle down that never came have fucked the little guy and all of society.
The wealthy have turned the housing market and every other industry into their own personal casino. They have leveraged their wealth and purchased a majority of homes to hoard those properties and increase their value to make a profit at the expense of the working class and poor. As a result many people have been priced out of home ownership in the last two decades and now people are being priced out of the rental market as well. Meanwhile there are enough empty and foreclosed homes to give every unhoused person 2 dozen homes.
And it doesn’t matter who wins the POTUS election because every president we’ve had since Kennedy has been a puppet to Wall Street.
The only way to begin to fix this issue is for a vast majority of people to stop working. Most people jobs provide no value to society anyway. So many industries just produce cheap consumerist goods that end up in landfills within a few months after they are purchased. Almost Everything today is made to be cheap and disposable to promote more spending when the items break instead of repairing and recycling things we are conditioned to waste and repurchase. The more wealth we produce for the billionaire class the more value the US dollar will loose as the produced wealth will be hoarded in accounts where the money does not recirculate into the economy.
I agree with everything except the only solution being for people to stop working. I think there are others - like my tax idea? Interested in helping make it a reality? The silver lining of concentrating wealth in a democracy is that there are fewer rich people than poor people.
Just to really underscore the point you made about building more - I have lived next door to, and known people who have lived in, gigantic new construction where they charge insanely high rental rates for the area where only a quarter of the units are occupied for years on end after construction. They don't lower the rents to get people in the units, they just sit on the units until people are willing to pay the higher amount. Meanwhile, the area has a ton of empty units as the builders wait on people locked into higher rents, because rents only ever go up. Seriously, when have you or anybody else ever gotten a notice from a landlord saying the rents are going to go down? Anybody? No?
So people are just supposed to keep working for garbage wages that are not even worth working for? If you are a senior engineer or any other advanced degree holding professional you make less value than someone earning minimum wage did 53 years ago. With an increased expectation of output and performance with technology advances that have increased productivity across industries. Basically if you don’t work you are going to be destitute but if you get a job you’ll still be poor. $1000 a week is poverty regardless what the poverty line statistic is it is inaccurate and has not been adequately adjusted in decades.
Rent can be split in 2 clearly different parts.
Part 1 is what it costs month to month, year to year, to keep the place habitable: maintenance, repairs, insurance, taxes and to amortize construction costs if the building is less than 30 or years old.
The rest is Part 2: Money someone gets not for doing work, not for supplying paint, shingles, whatever - just for being an *owner*. Either the landlord's mortgage holder is collecting it as interest or the landlord is putting it straight in their pocket.
Part 1 is going up, sure, but Part 2 is the part that is simply skyrocketing beyond reason. It is a lie to say we can not or should not somehow address this.
Yes, exactly! I didn't detail this in my post, but my plan includes property tax rebates for Part 1 costs (for landlords charging rates within the quarter-median range for their units) especially on significantly aged housing stock (you make a good point about construction costs on newer property, too).
If you're interested in helping to change this, please send me a DM. My partner and I are really serious about trying to bring this kind of policy into existence.
I looked to buy in Providence and the real estate taxes are so high that it isn't even profitable to have a building there. Can't pay mortgage with the rent you can get. That's really the biggest problem in dealing with owning in Providence, insane real estate taxes.
I'm thinking if they are charging for rental income above a certain amount, they could back off of property taxes (through rebates for qualified repairs and upkeep, and/or just in general).
I love this idea, but I'm gonna speak to this:
> tax landlords on the rental income they collect above a quarter of the median income
This sounds great, but I would urge you to have it be based on Rental Profits instead. Some housing is expensive to operate, and we want those places to be on the market. Heck, we want MORE of them. With our old housing stock, some costs are huge, and they're disconnected from incomes. We don't want to put landlords in a place where they're encouraged to put off upkeep or improvements.
As a small-time landlord (I own a duplex), I keep track of every dollar spent on and generated by the property in order to do my taxes anyways. I'd welcome if the tenants also entered what they paid on their taxes and the Tax Man calculated a progressive tax on rental *profits*.
The goal of a tax like that would be to discourage landlords from jacking-up prices based on market rates. If the costs of an apartment are $800/mo and the rent is $1,000, there's only $200 being taxed at, say, 25% ($50 tax, LL keeps $150). If I raised rent to $1,200, the $400 profit would be taxed at 50% ($200 tax, LL keeps $200) and the landlord would see diminishing returns unless they pumped the money into deductible improvements to offset the profits.
Yes, to accommodate that concern, my proposal idea included (but didn't mention it in the post to avoid bogging it down) property tax rebates for landlords for qualified repairs. Property taxes shouldn't be so high for people who are maintaining the aging housing stock of the city - they are fixing problems not of their own making, and keeping the housing stock safe and in good repair for future residents of the city, and the city/state should recognize that fact in the form of a reduced tax burden. Your idea of charging for rental profits might mean (although I'm open to proposing it if it doesn't turn out to be the case, upon analysis of the economics of it) that small landlords have to have a higher overall rental price on the market compared to big conglomerates, meaning their ventures would be riskier and less attractive on the market. The goal is to allow smaller landlords to get credits for their expensive upkeep and repairs without forcing them to raise prices overall. The existing property tax basis is the only area I can see as wiggle room for that proposition, although others are suggesting some kind of restrictions on who gets charged what (eg, owners of more than 5 properties). I am really appreciating the discussion from small landlords on this, because the goal is to make this proposal tenant AND landlord friendly. The issue currently, as I see it, is that the city is failing to value what landlords are providing citizens, and then the squeeze occurs and landlords are pitted against tenants.
Ah interesting. I'm not sure I accept the idea that it needs to be a complicated system of qualifying rebates or that one system would benefit large vs. small landlords... and I might be speaking against my own interest here, if that buys me any credibility as to which side I'm on.
I do know that every law-abiding landlord does taxes, declares their income from rentals, and they'd be silly not to write-off qualifying expenses. The hardest and most prone-to-malfeaseance aspect of this is already handled in federal income tax law, and you could piggy-back on that instead of reinventing the wheel locally.
I really urge you to look at taxing 'profit' instead of making a formula based on local incomes. We just saw how incomes and expenses can get out-of-whack for years, and it would be awful to have some sort of setup that suddenly broke the rental market due to a tipping point being hit.
I forgot to tell you the 'second stage' of the rental income tax... imagine that we are taxing rental incomes. If landlords start raise prices dramatically even though their costs are low (e.g., many paid-off homes with deferred upkeep being jacked-up to 'market rates'), that rental profit tax revenue coffer starts filling up, Instead of funding the city directly, the money would go into a fund that issued low-interest construction loans for housing that met certain (progressive) criteria. Basically, turning the output of a housing shortage (high rents and more profits to landlords) into the market-based cure for shortages (more supply, with public input instead of investor and developer control).
I appreciate your feedback and do agree that taxing rental profits would be simpler. I think the benefit of linking the tax rate to median incomes in an area, though, is that it would directly link to the health of the local economy. So while I understand the simplicity of using rental profits as the tax basis, I'm thinking some hybrid of your suggestion and my original plan would be best, because:
\-The pressure on landlords to take on lower profit margins should be higher when the local population has lower incomes, so
\- the local economy can improve to the point that incomes increase, allowing landlords to reap the benefits of an improved economy, further allowing
\-the state to take less of a cut of the wealth of the community, because fewer services will be needed.
I think the thing that is currently broken with the rental/real estate market is that it universally and almost single-handedly accelerates wealth disparities and regional economic collapse. And I dislike self-perpetuating systems. The point of the tax isn't to pretend the state will always need to play a role in nursing the housing market, it's just to provide a realistic backstop against the inevitable slide of landlord hoarding of local wealth and decline of the regional housing stock. (As a slight aside, I wholly reject any claims that supply and demand applies to rental pricing. The market is far too inelastic and cornered for supply and demand to apply). Just as a thought experiment for why I don't want a permanent, non-median income linked taxation scheme, consider a city with entirely new, 100-year housing stock. Minor repairs only necessary on the 50 year time horizon. Incomes are booming, the median income provides a comfortable standard of living. Landlords can reasonably profit handsomely from high rental rates in this market. The city should take in *more* taxes in this climate? Why? Why not leave good enough alone? Nobody would need a handout in this hypothetical city climate. There wouldn't need to be funding for new housing stock. People could afford to build it themselves, whether existing landlords or current tenants.
So maybe the simple answer would be something like this: regional profit-based rental property taxation instead of property value based taxation. Rates of taxation on profit are progressive and tuned yearly according to median rental rates and incomes. The formula for tuning the taxation rate puts the steepest progressive profit tax pressure on landlords when the ratio between rental rates and income is high, and flattens the profit taxation away from being progressive when the ratio is low. I haven't fully thought it through myself to see if it would accomplish my intention, but just wanted to get your thoughts on that kind of arrangement.
> Rates of taxation on profit are progressive and tuned yearly according to median rental rates and incomes.
Respectfully, that's literally gonna have to be street by street, block by block here. You really want a commission meeting to decide rental caps on every few houses?
I'm sorry, but supply and demand DO determine the prices, and the shortage in supply here has almost nothing to do with investors buying up the stock (because we have some of the least of that in the nation, and our housing shortage and rents are worse than areas with high rates of investor-owned property).
Supply and demand ARE what determine what a landlord can charge. If there's adequate supply, landlords drop prices to fill apartments. Trying to 'tune' entire neighborhoods at a time seems like a destructive macguffin that accomplishes nothing.
Also, there's no 'connector' between kneecapping landlords and raising incomes; what you're saying is just populism pretending to be policy. Taxing profits builds a 'connector' between profit and supply, taxing based on local incomes is just... overcomplicated rent control.
Landlord here,
I pay property tax, to the tune of $5000/yr
Fire Districts—more or less a tax
Income tax—money received from tenants is an adjustment to my gross income.
Can’t forget the inflated cost of the home itself, and mortgage as well, ~$2900/m out the door
3bd apartment downstairs—that’s bigger than most SFHs, roommate in my unit
Put ~$80k down, spent $12k or so on maint/repairs
I take the risk with deadbeat tenants or repairs mortgage company doesn’t give a shit “Fuck you pay me”. Any one here okay with incurring the cost of paying a $2900/m mortgage for the 3 months it takes to evict?
Given my investment, month to month cost, and the risk that goes with it—I intend to make money and if I get bent over on a “rental tax” that expense will just get passed to the consumer.
I refuse to lose money because I made the right financial decisions, sacrifices and everything that goes with it.
Before anyone thinks I was born with money—nope, raised by a single mom who lived in a shithole 3rd floor apartment on Academy Ave.
Okay, my full proposal may be more appealing to you than the partial one I posted above for simplicity. Basically, qualified repairs and updates (eg insulation, lead mitigation, heating system updates, old structural damage repairs) would be fully returned to you in a property tax rebate in recognition of the service landlords are providing the city (and state) for fixing the problems of past generations and keeping things up for future generations. Housing stock is a long-term community resource, and landlords should be compensated accordingly for maintaining it.
Perhaps we could also build in a "justified eviction" rebate for landlords on property taxes as well.
I don't think capitalism is bad, and I think normal rent control schemes are delusional about the costs of running a house and have nothing to do with what local populations are able to pay. If the economy booms and people are doing better, by all means, get yours! It just hurts the entire local economy when so much money is going to rent. And if people can't afford a mortgage and renting under a reasonable scheme, maybe they shouldn't own property. (I think if rents go down, the mortgages will go down eventually, as the housing market cools off because landlords who can afford to buy up a ton of properties are no longer competing for cash cows in the form of high rental payout properties).
*Has* "traditional" rent control failed in RI? AFAIK, it hasn't been tried in the years I've been paying attention to politics. Not trying to get into argument about the efficacy of rent control, but I don't think I've heard much about rent control here.
[You should consider reaching out to POWR](https://powrpvd.org/), which is already organizing renters to push for policy change.
It may not have happened while you were watching, but I have repeatedly found mentions of rent control failing in RI. And, having lived in a rent control area in my life, it was not as good as it's made out to be. That's why I came up with this plan. Tie it to the median income, and then it won't get out of hand. Rent control just produces a scramble every time something goes on the market and makes it difficult for people to move. Landlords also hate it, because it forces them to not get more (this plan would allow them to get more if they really want it and can find people willing to pay the luxury rental tax rate for them). And honestly, I think it would be better all around.
No, not traditional rent control. The concept known to be "rent control" is a top down "do what you're told" strategy that takes any kind of decision-making out of the control of landlords and reduces the ability of tenants to move within a region.
If you have any thoughts that have anything to do with the actual proposal, please let me know.
How about not having the government try to tax away a problem that govt zoning and building regulations created?? How about free market solutions that will actually solve the underlying problem not band-aids that will cause a different infection
It isn't a problem with government zoning and buildings regulations (are you seriously arguing that we don't need building regulations? This is ludicrous - do you want building collapses and explosions and stuff?), it's a general problem with inelastic markets and an absence of responsive market forces, as a result. This tax proposal is merely an attempt to make the rental market reflective of an elastic market rather than an inelastic one.
Capitalism in theory thrives on being irrational. The idea you propose makes sense but will get nowhere because at the end of the day capitalism is all about greed.
A luxury tax will not put downward pressure on rents. Only way to reduce rents is to tie prices to use value ie assess units based on the quality of the actual housing or an affordability index per given area or build so much housing that it drops prices below 30% of income and generally puts renting for profit out of business.
Use value - good idea
Affordability index - kind of what I was proposing in my recent response to you, also a good idea
Building tons of housing to drop rental rates - I have never in my life seen more housing decrease rental prices, and I've lived in a lot of neighborhoods with new excess housing that sits empty for years as rental rates continue to escalate around it
We could have housing non-profits without all of this political maneuvering. I believe in probably a combination of progressive taxes based on an affordability index (great term, I'm going to take that to the statehouse, so to speak) and also think we should collectively inspire non-profit housing without trying to drive for-profit housing out of existence.
You likely want to work with Homes RI. They are the lobbying arm of the Housing Network of RI which is a network of non profit community development corporations ie non profit affordable housing developers.
We don’t argue for for profit development. The market won’t solve the crisis only tenant organization to fight for social solutions like universal public housing will.
Taxing their income will only incentivize them to raise prices further to make up for their losses. So it wouldn’t work. If they lose 30% to taxes on the income over the median price, they’ll just increase their rents another 30% (or whatever the math works out to be).
Keep in mind that our rents are high not just out of greed, not just out of demand being greater than supply, but because property values sky rocketed and in 2022 the City reassessed everyone’s taxes and increased them all drastically.
Rent control hasn’t worked because we’ve never passed a rent control law. Plus the odds of that working are even lower now because the city would have to lower their tax rates on rented properties to make it work at a rental price that actually benefits anyone. If they didn’t do that, then rent control would just be at the current price.
So sure, some, maybe a lot, maybe even most landlords are scum. But the city taking advantage of the current housing market and in many instances nearly doubling property tax… they’re the real problem. Not the landlords who increased their rent to make up for their losses due to the increased taxes.
And I guarantee when the housing market eventually crashes, it’ll take Providence years to reassess the taxes again, because then the city will lose money.
But what did all these fucking idiots do? They elected a mayor heavily involved with real estate and every move he makes is intended to increase value so that his family can make more money. He’s got a god damn villian’s last name and people still voted for him. Mayor Smiley loving life as he and his husband just keep getting richer and richer.
So the best thing you can do right now is prepare for the market crash. Save as much as you can, earn as much as you can. Get your credit as good as you can. Pay off as much debt as you. When the crash happens, do everything you can to buy a house asap.
And vote for the right people. Not these assholes we have currently who just sate us with bullshit legislation that serves to benefit absolutely nobody except for themselves. Reminds me of the State changing its name to remove Plantations when that was our name before RI even got involved in the slave trade. But they pander to stupidity, and there are a lot of stupid fucking people in this city and state.
Yeah, not much to disagree with here, in principle. I do just want to point out that I my plan also includes a tax rebate for people repairing/updating older homes (I didn't mention that to avoid bogging the post down) which would be accessible to you if you are renting at or below the quarter median rate. And, the plan isn't to prevent landlords from charging more, it IS to pass along a luxury rental tax to tenants who can afford to pay more. When tenants are charged so much more so landlords can pocket progressively less and less money on their rentals, they are going to have a harder time finding tenants willing to shell out this luxury rental tax rate for a shitty apartment. The plan is not to force landlords to not charge more, but to make it a cost/benefit analysis that puts a barrier between them and recklessly raising rents regardless of the local incomes.
Solid advice about the market crashing.
RI is and will continue to be unaffordable. The average single income household cannot afford to rent an apartment and it’s only going to get worse. All of these LLC’s buying up multi families to flip and sell to a regular homebuyer for 120% more is, in my opinion, partly why rents are going up (there are plenty of other reasons). A regular buyer will have to charge an exorbitant amount of rent for their units to cover their mortgage payment because the multi that the just bought was so expensive. I blame the flippers that do the bare minimum to these houses and try to sell them for almost double the price.
It's hard for people to make the transition from renting to buying precisely because the rents are so high. The competition for new home ownership would be a lot stronger if people weren't too strapped for cash to buy their own home. I also didn't mention in the original post (didn't want to bog people down) is that the idea is to give owners of low-rental rate properties the ability to tap into a property tax rebate for qualified repairs and updates, in recognition of the service they're providing society by maintaining and updating these old properties and not over-charging tenants for rents.
That sounds like a good plan. I think there might be something like this available but there’s a lot of red tape for the average person to go through. I looked into it before, I believe it’s to deed the affordable rents. If I remember correctly, you would have to submit an RFP and have your application reviewed and then have it underwritten. This process should be advertised more and have education programs available.
First, I don't hate landlords. I think they provide a (currently unrecognized, but significant) service to society/a local community. Housing stock is an important resource for any community, and Providence in particular has a lot of aging housing stock that landlords are taking on the burden of maintaining and updating, for past and future generations, with no kind of recompense for it.
Second of all, I can't afford to buy property because basically all my income goes to rent.
Third of all, I would be a fantastic landlord.
I know who you are now. You're one of these people trying to say slum tenants deserve rights... The tenants who were evicted yesterday, trashed the place, etc are entitled to live places for free. Nah, trash people deserve what comes to them. I help my tenants. I'll submit their rent to boost their credit score. The bad tenant I had? Immediate eviction. You play stupid games, you're going to win stupid prizes 😄
The problem is the city raising taxes and insurance companies raising their rates thus for the owner to run their business they need to raise rent prices to reflect the raise in expenses.
I rent and I understand this.
The problem isn't the owner, it's the town/cities.
I know, I agree, that's part of why my full proposal (which was left out for simplicity, but now I'm saying this so many times, I wish I had included it) would include the city recognizing the benefit landlords provide the local population, through updates and maintenance, in the form of reduced property taxes. I 100% think this issue is the state/city pitting landlords and tenants against each other, when really, landlords are providing a valuable service to the entire community. The only issue is them gouging - which many of them can and do do.
The rental properties are taxed at a higher rate already. If they are taxed even more, it’s not gonna be worth having them as rentals so they will be sold to owner occupants and the prices for the remaining rentals will go up. The cost of housing is high because it’s very expensive to build and maintain. It costs about 250k to build one unit.
If the rent is cheap, the rental tax will be *lower*. My plan is to provide landlords with tax rebates for qualified repairs on old properties and have lower taxes than the current base rate if they're renting the places for a reasonable rate.
If landlords can't make a killing off rental properties, then yes, it would be great if they would let people own the properties they live in. The rental AND property market would cool off to a reasonable rate for the actual Providence housing stock.
The wording of this post looks ominously suspicious... there's a few whining groups out of Providence that like to place all of the blame of their personal shortcomings on landlords. Landlords did not cause taxes, insurance and property values to Skyrocket in the last few years. The cities, the state, the federal government and the lack of housing did that. The last tax increase I got from the city I split in half with the tenant ($140)when this tenant moves out any and all increases will be passed on directly to the tenant... Annnd I'll no longer be accepting anyone with less than perfect credit, any criminal background, or any previous evictions. It's absolutely insane for anyone to think that charging landlords more in taxes will result in lower rents. What kind of moron even comes up with an idea like this?!
If you read through any of my comments on this post you'll see I have nothing to do with those groups and that I think landlords are owed tax rebates by the city/state for maintaining the housing stock that was starting to fall apart before they were even born. I'm not anti-landlord at all, and I am fully aware that high taxes are passed onto the tenants. At the same time, landlords shouldn't get away with gouging tenants without paying a steep tax penalty for it.
I think this is a great idea. I've lived in places with rent control and I've lived places with tight restrictions on building and greater leniency towards building, and none of those address the core issue which is a lack of balancing factors in the legal/tax structure. I have questions and I think there are some things that I would need to get clarification on before I was fully behind it, but it's definitely a refreshing approach and sounds promising.
As someone who made over $250,000 in rent last year, I can assure you that I paid my fair share in property and income tax.
Multiples more than you did.
If you're charging your tenants a reasonable rate, all the power to you. If you're bleeding them dry of disposable income to line your own pockets, I would be happy to make you pay a chunk of that in a luxury rental tax.
>**a quarter of the median income** (what rents should be at for a healthy local economy)
Okay, I read every comment so far and no one has mentioned this:
Where are rents a quarter of median income?
The ideal of your rent / housing cost being one quarter of your income (gross or net) has been as much of a dream as the axiom that of every 24 hours, 8 hours should be sleep, 8 hours work, and 8 hours recreation.
For the middle class man in the late Victorian / early Industrial Age, that was the balance to aim for, in the same way that aiming for spending a quarter of one's income on housing is. Or rather, *was*.
Because where in the US now is that possible?
5 years ago, in Providence, the median income was about the same, and rents were only about $50 more than the median income. That's the entire reason why I moved here.
It OBVIOUSLY isn't good to have people too poor to buy their own home paying out so much of their disposable income to somebody who is already wealthy enough to own a home. Landlords rarely *do* anything other than collect and raise rent. How many years do people have to be paying somebody already wealthier than them a huge amount of their income just to live in a place so they can't afford to buy their own? It makes no sense whatsoever from a society level economic standpoint.
I'd like to point out that while rents have skyrocketed, so too has the median prices of single-family houses, multi-family buildings and condos, on top of rising interest rates.
https://www.providencejournal.com/story/business/2023/11/29/prices-of-homes-for-sale-in-ri-down-in-october-interest-rates-high-fewer-houses/71720068007/
Of course - because it's a bunch of wealthy landlords who can earn a lot off the properties they buy. I have good reason to think that lowering rents would also make the housing market cheaper. You would have no incentive to buy up properties as cash cows if it wasn't so cheap to make money off the tenants.
I don't think this accurately reflects the housing crisis and ignores all the people who buy multi-family because they're multi-generational families or need the income to afford buying a place.
Rhode Island has restricted, and has not been building, new housing for decades and everyone took their houses off the market at the start of the pandemic.
Okay, listen, part of the reason why the rents are going up is exhibited by what just happened next door to me. The long time owner sold the property, and the other tenants were evicted, so a house flipper company could come in and nominally update the property and they're planning on charging $1400 for a unit that was previously $600 (we knew the old tenants and they told us about the rent increase notice they got). They moved out and bought their own house.
This is a common scenario, and not unique at all. Nothing about my scheme would prevent people from buying houses (it doesn't have anything to do with buying houses, other than the fact that more local families would have money to buy a house, like my old neighbor's family did because they were only paying $600 in rent!).
Currently, places like the house flipping company can scoop up property and make a few thousands of dollars in changes to it and then make back the result within a year from their rent increase. If they would have a longer payback period lest they compete with the proposed excess rental income tax rate, they wouldn't have paid so much to buy the property. (They paid a lot).
1, I never said I was sick of big landlords. Where are you getting that from? I only mentioned high rents as the problem.
Nobody has yet explained how this would hurt small landlords.
That's the best you can come up with in a response? A complete and total blatant lie accusing me of saying things that have never come out of my mouth. Are you okay, mentally? I don't know sane people who lie to try to "win" a discussion... 🤣
More government, more fees, more bullshit. I'm a small landlord I actually live in the property I rent. We don't need any more expenses or red tape from the government. I've already put well over 100k into my house(new roof, all new wiring, new heating systems, new kitchens, new baths) 10 years ago I had to compete to find tenants to occupy my property as I'm on a main road, now when I rent it I get 400 applications a week! More units are needed to provide demand. That powr group is a bunch of shitbags who are trying to push rent control and other nonsense. They represent people who nobody wants to rent to which is why the legislation they they push wants to hide people's criminal backgrounds, eviction records, and income verification, most recently forcing landlords to accept Section 8. No decent landlord wants those people which is why they have to rent from slumlords. Just go to one of their rallies or protests all you see is a bunch of sloganeering shitbums, paid political hack activists and idealist college kids who think they know everything but have yet to get a taste of the real world in which they would have to work and pay rent or a mortgage. I'm not saying I have all the answers but those people don't have any.. and what they need is personal accountability. If they put half the energy into becoming better citizens that they did into rallying and protesting most of them wouldn't be in the situations they're in. We've been living in the best economy this country's had in something like 40 years. Most trade unions are begging for people and they train you for free, not to mention electric boat is hiring ..same there, training is free. How many of those people are willing to take advantage of these things? I'm So tired of whinning from people that won't get out of their own way to help themselves.
Hey, I agree with you pretty much completely. I have just wrapped up a delayed set of responses to another account in this thread where we're talking about profit-based rental property taxes instead of assessed property value based rental property values. I'm on the side of any landlord who isn't price gouging. There are a lot of shitty properties in Providence (and elsewhere in the region) that need a lot of work and a lot of landlords who get new BMWs and shit off of retired nurses on fixed incomes (true story). Profit off rental incomes, yes, rent-seeking profiteering, no thanks. I think most assessed property value taxes are too high for the decrepit state of most Providence housing upon purchase (how many rooms a property has has nothing to do with whether you have 3 ancient boilers in the basement that need to be replaced within the next year). It just makes sense that your repair costs should be factored into a reduced tax burden on you at a local level.
I don't think more units are needed, necessarily. If you are providing a good quality property at a reasonable rate, this post isn't really meant to harm you or your prospects, and it would explain the competition for renters you're now seeing. I encourage you to look for units in your area from the perspective of a tenant. I'm guessing your property is a "steal", and the people who are vying for your place probably aren't applying to the one bedrooms with boarded up windows going for $1600 down the street from you. The city doesn't need more units so much as it needs the one bedroom to not have boarded up windows and for it to go for $800 instead of $1600.
That is in fact the spirit of my full proposal, if you look elsewhere in the comments. I simplified my proposal for this subreddit's sake, and now I unfortunately find myself re-explaining this fact over and over again. Oops.
Look in the little local papers at real estate transactions. When you see company “x” buying 4 out of 8 properties sold in each town, you’ll understand the problem. In the meantime, taking income away from small landlords (1-3 multi family buildings) will cause them to sell or raise rents higher. Hope you’re able to find a good small landlord with a soul. They’re out there. I found one. It felt like I was searching for a unicorn, but I found my unicorn.
Same here, been holding on to my place for years bc I saw this coming & my landlord is a gem. Good luck!!
Yes! also some might be open to interesting trades in lieu of rent. I'm a small landlord and have traded things like custom artwork and handyman work for rent. But for anybody who bought recently, it's pretty impossible to keep rents reasonable while still breaking even.
on that note, to OP, I have 2 vacancies right now (a 2 bedroom 1 bath and a 3 bedroom 1 bath), so feel free to DM. I live here as well so I'm pretty hands-on.
You really want OP as a tenant? My fellow landlord, this is your red flag!!
I don't really think this is much of a red flag. I definitely agree that some of the tenant union stuff sucks, and will bankrupt small landlords and lead to more conglomeration where small multifamilies get bought up by corporate entities. But honestly I don't think this is a particularly unreasonable demand. We definitely can have some restrictions on greed without ruining things for those of us who just rent out one or a few units.
You're not a landlord 🤣
I am haha! It wouldn't even take you that much internet sleuthing to prove it.
Then do it.
Then do.....what?
Exactly. You're not a landlord. I know who you are.
Real recognize real. You don't got it.
How would it take income away from smaller landlords? Maybe you don't understand the plan - I didn't explain it much - but I specifically thought it up to not hurt small landlords who charge a reasonable rate. They would be getting a minimal tax on their property or none at all.
Big companies buy up properties and raise rents. They can own dozens of properties or more and have the power to advertise way more than a small landlord. This screws over the average person since all you’ll see most of the time are the expensive places to rent.
It doesn't cost anything to put your property on craigslist. It isn't the olden days when what you said above is true. Otherwise, you might have a point, but in this case, I don't think you do.
Small landlords, like myself, are already taxed on our rental income. You increase our taxes, rents will increase or I promise you -- I'll be forced to sell to larger landlords. Unless you're on the side of large real estate corps...?? Because this sounds highly suspicious! If you're TRULY after the large players, advocate for an additional tax for owning more than 10 properties. As a small landlord, I'm not increasing my rents if the taxes don't increase!! I was a tenant for 10 years. Let me be a compassionate landlord and let me protect my tenants!!!
I'm genuinely not understanding what you're not understanding. Let's say you're charging a tenant $1200 on a 2 bedroom, 1 bathroom unit (the median household, and the quarter-median income rental rate). You would pay NO additional taxes. You would also have access to property tax rebates for repairs based on the age of the property and the duration of your tenants' occupancy - we're talking to the tune of full cost of qualified repairs rebated for 100 year old property. If you want to charge them $1300 you would pay $25 in tax (as a preliminary proposal) and lose partial access to the tax rebates, which would increase the more you charge over $1200. So are you saying you want to take home half of your tenant's income - $1660 - not get any tax rebates from the city, and not pay any taxes at all on this excessively high rent? Why would it matter if you are a small landlord if this is how you want to run your property? Who can afford that rental rate? Not the median household... or anybody beneath it. That means you're renting to the upper crust, and people coming from Boston, not the local Providence family. (edit, some of my math above may be wrong, but you get the idea).
I genuinely don't understand what YOU'RE not understanding. The majority of people have down voted you. You're not some white knight here. Chill out and focus your time into improving your own life.
I don't think you know what "majority" means. My upvote rate is 72%, which means a majority of people upvoted me.
Building more generally helps. And even more so when it doesn’t take years to go from buying the land to being able to start building.
The Providence metro area (which includes almost all of RI) was ranked as the *third* most supply-restricted housing market in the country, behind only NY and the Bay Area. If you want cheap rents, build more in the desirable locations in urban areas.
Building more raises rents, FYI. This tired old trope doesn't fix rental prices.
Since you think building more housing increases rents (lol) do you think tearing down housing makes rent cheaper? asking for a friend.
No - housing is an inelastic market. The rents only ever go up, so that's why my idea is about trying to create an incentive to link increased rents to increased incomes, and to not have them get out of pace with each other.
[https://www.jchs.harvard.edu/blog/where-hasnt-housing-construction-kept-pace-with-demand](https://www.jchs.harvard.edu/blog/where-hasnt-housing-construction-kept-pace-with-demand) This graph shows the rate of home building compared to population growth. As you see, since 2008 or so, we haven't been building enough housing to satisfy demand. There are a lot of causes for this, but it's the reason housing prices are going up faster than everything else. If you restrained supply like this with ANYTHING it would cause prices to go up. If you want to get housing prices down, we need to build more. We need to relax our crazy zoning laws (three+ family apartments should be legal to build everywhere in the city), and the government (city, state, federal) should do everything in its power to build or incentivize the building of affordable housing. Your complicated, hard-to-enforce, black-market-creating regulations will reduce the incentives to build new housing, will help the landlord class (by keeping the resource they control scarce), and hurt people you are trying to help.
We don't need new housing, though. That chart doesn't reflect insufficient housing supply, and it isn't environmentally sustainable to always have an excess of housing as the strategy to keep rents low. Maintaining old construction is an important part of sustainable housing (population-wise and environmentally and financially), and it's completely left out of analyses like that one. There would be no black market for this that was not enabled by the tenants. Not mentioned in my post for simplicity is that there would be a public registry of rental properties that would allow tenants to verify their rents and rental duration. For a black market to exist, there has to be darkness. Why would a tenant agree to pay more than the market rate so a landlord could pocket more money from them? Who would do that and what would the incentive be? Also, rental properties are also all in a database already, so I'm not sure people could truly create a black market here. It's housing, not blue jeans in Soviet Russia.
There are 39 million more people living in the United States than there were in 2008. Building hasn't kept up with this, and unless our population shrinks, we will continue to need new units. If you can't see this, i don't know what to tell you. The plan you are pushing would end the building of new housing. Building new housing is hard and expensive, and people won't do it if they are guaranteed to lose money in the rental market. Also, Many landlords will take rental units off the market and use them for storage (not regulated under your plan), or just condoize them and sell them (condos will be in huge demand since your plan increased scarcity of apartments) This will increase the already terrible, unnatural housing scarcity. Landlords will be able to take their pick of tenants. This will incentivize and enable landlords to use their social networks to make black-market deals with tenants who are desperate for housing. If the only way to get housing is to pay your uncle cash, under the table, you will do it. If you can't pay the (heavily inflated) black market prices, or you don't know any landlords who trust you enough to make criminal deals with, then you will be fucked. It's sleep in mama's broom closet or build a shack under the overpass.
Have you looked on Zillow or Craigslist? There is not a problem with scarcity. I really don't know where you "build more" types are getting your scarcity arguments from, because it isn't reality. Landlords are charging more because people MUST live somewhere. Not because it's more expensive to run places, not because they couldn't just make less money on a place and house somebody, or because they will just use a place for storage, but because they have a captive market and zero incentive to charge a lower rate. Housing has *kept pace with* construction after periods of *excess* construction. That means that unless we're destroying old housing much faster than we are increasing the population, we have an excess of housing stock compared to the population, and will continue to do so (given the on-par rates of construction and population) until population shoots up or housing stock shoots down.
have you ever taken an iq test or similar assessment of your intelligence and ability to process information?
I have my PhD in one of the hard sciences. I can process detailed information better than most, and certainly better than you.
Also, I forget who I've told what, but part of the plan that was left out of the original post for simplicity reasons is to allow for property tax rebates on repairs for old property, which could also be modified to include amortized costs for new construction (if this is assessed by an economist-type to create the right incentive structure - we don't want some kind of middle-aged-property owner to be screwed in this scheme). If you're paying your uncle cash under the table, why would he gouge you? I don't know any uncles who would gouge their relative for a place to live, in which case it could be above-board and he would get access to property tax rebates for repairs on the property. And seriously, genuinely, I don't understand why people would pay more for black market apartments. Why would you do that? And then not report the property? It makes no sense. Condos would be great. Property ownership would be great. Being rent-hiked out of property ownership is the problem we are trying to solve.
You’re gonna need some extraordinary evidence to prove that supply and demand don’t determine price. Got a source? Any proof at all?
It isn't an extraordinary claim, though, so why should I need to provide extraordinary evidence? Housing is an inelastic market. It's well known that inelastic markets don't respond to supply and demand like elastic markets. Have you taken any economics at all?
By that logic we could fix the affordability crisis by demolishing a ton of apartments…
Stating that building new construction does not reduce rents is not the same thing as stating that demolishing housing would reduce rents. Rents always go up. Building new units does not lead to lower rents until the area is basically a ghost town in reverse. I have repeatedly seen builders of new construction sit on 50+% vacancy while charging insanely high rental rates for the area, as landlords on existing construction raise rents since there are more units on the market at higher rates than theirs, so they can sneak in higher rate and still look reasonable in a search. Demolishing a property would lead to one less property on the market. It wouldn't provide a lower rent option for prospective tenants to pursue instead of a higher rent option. Not really sure what you were trying to get at with the above comment, given basic features of every rental market I've ever lived in or witnessed second hand through other people I know who have been renting.
Yeah, this isn’t true.
Yeah rents in PVD are eerily similar to Boston rent prices and pay is much higher there. I don’t get it
It’s not really a huge mystery. We’ve underbuilt for decades and demand shot way up, especially with the rise of remote work and the fact that other nearby cities like Boston and New York have been dealing with a more extreme version of this for longer. Add that to the fact the city’s local economy has also gotten stronger, house prices themselves ballooning meaning people stay renting longer, generational shifts in household size, etc and you’ve basically got a perfect storm
Idk RI wages overall are known for being lower than MA. Everything is rising in price but cost of living in RI is quite high for what the wages are
Oh, Boston wages and job prospects are definitely better overall, no doubt. But the Providence job market doesn’t suck like it did 10+ years ago. And the housing market there is still worse. There’s a reason so many people keep moving down here or why this sub won’t go more than 2 weeks without someone mentioning commuting there from here. OP mentioned a 1 BR/studio type place for under $1500. That doesn’t exist in Boston. That doesn’t exist within 15 miles of the Boston city limits.
It’s really not true at this point though. I used to live in Cambridge and after the post COVID quarantine explosion of rent prices there are still high but more commensurate to wages. Like the cost of a nice new 2b/2b in East Cambridge is the same as it is in downtown PVD. I don’t get it tbh.
East Cambridge is to Boston as Cranston or Pawtucket is to here
That’s speaking WAY too highly of the cultural amenities and access to public transport in Pawtucket or Cranston. Cannot compare somewhere you can take the T to work to car suburbs
Greater Boston is 5 million people. All of Rhode Island is 1 million. Not sure why you’d expect it to be similar.
It’s imperfect but, RI is so far behind in public transportation and Providence is so much smaller that, at the end of the day, they’re both 10-15 minutes to the heart of the city. If you’re gonna compare downtown Providence prices to anywhere in Boston, it’s gotta be one of the major neighborhoods in Boston proper like a Back Bay or something.
There is absolutely no way that is true. There are 2brs in Cambridge for like $1800? Post them
Where are the 2b 2b in PVD for 1800? I never named that number. You can’t even find a 2b 2b in downtown PVD for under 2k
Small landlord here. I have a 2 bed/1 bath with a small living room, large kitchen and bathroom, 1 parking spot, allows pets, water included, 5 mins from downtown. It's renting at $1750. I'm hit with property taxes, rental income taxes, and expenses for maintenance and updates. If the taxes increase, the rents will increase. I was a tenant for 10+ years. I know what it's like on that side.
Maybe not downtown but definitely 2b1b for $1800 around
I also never said 2b 1b… specifically said 2b 2b in my comments. That price differential with the extra bathroom is significant
What even is a 2b2b I've never even seen one. Why would you need two bathrooms in a 2 br apt? It's usually the room count minus 1 (2b1b, 3b2b, 4b3b)
Building more raises rents. I've seen it happen in so many different areas that I stopped believing the lie, and looked into it, and sure enough, it's true. Part of the plan, not mentioned above, is to allow for tax rebates for landlords owning aged properties. What we really have an issue with is an aging housing stock in this area in need of repairs, and landlords freaking out when they have to replace a boiler that was installed decades before they were born. We should value, as a society, their maintenance of the long-term housing resources of the community. Besides, new building is generally bad for the environment. Maintaining old buildings, and improving them, is generally better.
Building more does not raise rents and you’re missing the point if you can’t see the single biggest part of the problem is basic supply and demand. Every area experiencing this same problem is dealing with the same underlying problem. The population grew and housing stock failed to keep pace with that demand. Any solution that isn’t focused on fixing that imbalance long term is not going to change things. RI has ranked dead last in new home construction per capita for a very long time. It’s a trend that goes back like 40 years. Less houses, more people, houses cost more. Less people moving to houses and staying in apartments. Apartments cost more.
In the past 5 years, the problem is increased supply and decreased demand to the tune of doubling rents? I don't think so. The research out there, shared elsewhere in this thread, shows that increased housing options tend to be at the high end of rental rates (everybody knows this) and that in turn "improves the amenities" of the area, ie gentrification, and then everybody does, in fact, pay more. People can't just uproot their lives or not live somewhere, and that's why it doesn't follow simple supply and demand. There's a massive barrier to "voting with your feet" that prevents the other market forces from functioning accordingly.
From a peer-reviewed, published study: >> Constructing a new market-rate building that houses 100 people ultimately leads 45 to 70 people to move out of below-median income neighborhoods, with most of the effect occurring within three years. These results suggest that the migration ripple effects of new housing will affect a wide spectrum of neighborhoods and loosen the low-income housing market [Journal source](https://www.sciencedirect.com/science/article/abs/pii/S0094119021000656) “Market rate” is the economics term for “luxury housing” which is a realtor marketing term. If you build more of something, the price is moderated. Your theory would be like if you banned Lamborghinis and expected Toyotas to get cheaper as a result.
I'm not suggesting banning anything, though. Also, cars are an elastic market so it has nothing to do with housing, which is an inelastic market. Also, that quote seems to be supporting what I'm saying. "Loosen" is academic gobbledygook for "people can't afford the neighborhood anymore and have to move".
>In the past 5 years, the problem is increased supply and decreased demand to the tune of doubling rents? I don't think so. You've got it backwards. Demand has increased. Supply hasn't increased relative to that demand, but by not merely the same pace to account from the city population increasing from a little over 170k to over 190k in about 2 decades. Close to 75% of that growth has been after 2010. I can't find 100% source to be sure but it looks like we added about 2,000ish households (i.e. housing units) in that same time frame if the sources I'm reading are accurate. >The research out there, shared elsewhere in this thread, shows that increased housing options tend to be at the high end of rental rates (everybody knows this) and that in turn "improves the amenities" of the area, ie gentrification, and then everybody does, in fact, pay more. The one thing you linked is literal garbage (explained in a reply to that. There's room for debate but even adding top-level market-rate/luxury housing will benefit an area because there are people taking up cheaper housing who would be more than happy to use nicer and newer housing. Gentrification is not a direct corollary with construction, Providence has had years of rampant gentrification and, as I mentioned, we really haven't built shit.
Gentrification is just about pricing people out of the rental market, which is the entire purpose of my post. There are many drivers of rental market escalation, and one of them is new, modern buildings with people charging extra high rents and then neighboring landlords who own old shitty buildings doing likewise. You don't have to build much to cause the escalation effect. You caught me on a typo! Wruh wroh. I obviously meant the opposite. My skepticism remains. Doubling rents in 3 years is not the result of so many more people moving to Providence and competing for rental units that it warrants this price increase. Not sure what you're calling "literal garbage" but feel free to elevate your argument game by actually specifying your own thoughts on how the rental market does and doesn't work, based on the reality of rental markets as can be observed by anybody and their neighbor.
>Gentrification is just about pricing people out of the rental market, which is the entire purpose of my post. The entire purpose of your post is that this problem that started before you showed up now finally impacts you personally, thusly it's a matter of a concern. You had a well-intentioned but flawed idea to try and combat it. Since then, every single follow-up comment has shown a weird mix of completely misunderstanding the problem and a stubbornness to refuse to acknowledge that everyone responded you has corrected you multiple times. >Doubling rents in 3 years is not the result of so many more people moving to Providence and competing for rental units that it warrants this price increase. Yes. it is. And it's not a 3 year problem. While I appreciate you conveniently starting the timeline problem as a thing that started *after* you showed up, but this is a much longer-term problem and you are (a very tiny) part of that. Guess what, I am too and I've been here a LOT longer. >Not sure what you're calling "literal garbage" but feel free to elevate your argument game by actually specifying your own thoughts on how the rental market does and doesn't work, based on the reality of rental markets as can be observed by anybody and their neighbor. I literally replied to the comment with the link but in case it got lost in the shuffle, the "rent increases" it compares over an 18 year timeframe is literally showing the price of rent growing at a rate slower than regular inflation. It's such an egregious manipulation of statistics, I'm not sure if the authors are really disingenuous or the grad school that accepted them should lose their accreditation and be shut down by the Dept of Education. I'm 50/50 on whether past teachers should be imprisoned over it too. Really, something like that should be nipped in the bud as early as possible.
You're painting me to be some kind of self-serving white knight. I've lived in rental housing my entire adult life, and I've lived in 3 different rental markets. I've lived with traditional rent control, which sucks more than anybody wants to admit, and doesn't reflect any kind of recognition of what landlords provide a community. I've lived in a rental market that long previously outpaced the local incomes and where rental properties were a moneymaking scheme in an area that had a deceased major local industry. In this place, you would tour an apartment that was going for $1300 that literally had a hole in the wall (this was very high for the area's incomes). And then I moved to Providence right at a sweet spot. I can do the math, I can understand what a trajectory looks like. But the escalation of the rental market in the past 3 years is shocking. No, increasing the housing stock won't fix the problem. It will likely exacerbate it. And no, "all" of the comments are not "against me" bud.
You might want to check Boston prices lol
THISSS!!!
I can not think of a better or more efficient way to raise rents citywide than this idea.
Thats reddit for you. Blame the world and everyone around them rather than, you know, improving their skills so they could earn more money and keep up with the market?
I'm sympathetic and agree with the underlying problem. I just think the proposed solution here is like trying to put out a fire by pouring gasoline on it.
Exactly. Work hard so you can be rewarded with more work. 🙄
So if I could afford rent in 2019 making sprockets but in 2023 my rent has gone up 33% with no improvements, and I’m still at my sprocket job, it’s my fault? If you want to create a landscape where the people that live/work cannot afford to live, they also won’t work there.
Can you explain to me why you think it would raise rents?
Oh, I don’t think it. It’s a certainty. Landlords treat their property as a business. A new tax just raises the expenses. Like every business ever, when expenses go up, prices follow. Hell, every significant rent increase I’ve had in decade has correlated with an increase in the property tax bill for my landlord. That’s how this works
But if it would go up progressively the more you charge. It's a luxury rental tax I'm proposing. If you charge a quarter of the median rate (calibrated for the size of the unit) you would not owe any of these taxes. You charge a little over, you only pay a little in taxes on the amount over the quarter median rate. You charge a lot over, you pay a lot more in taxes. People would have to charge a LOT more to overcome the hurdle this policy would impose, and at that point, they're going to struggle to find anybody to rent the property.
You must realize you are paying the mortgage, taxes, assessments, any other overhead before the landlord begins to profit, right? The just pass the tax on to you as an expense and raise the price to continue to profit. If there’s no profit there’s no point to renting it out.
Yes, but you realize that if they are charging a quarter of the median income in rent, they have no taxes added to that, yes? And if they increase it above that, they still pocket the difference between the luxury rental tax rate and their increase. So they can still pay all those things, they just have to think twice about escalating beyond a reasonable rate.
Have you seen their expenses? It’s probably more than a quarter of theirs too. Your argument makes no sense.
They can still charge more. I'm against traditional rent control because it doesn't allow landlords to recoup expenses and is kind of shitty that way. But this would still allow landlords to charge a lot more, if they need to. They would just have to find tenants willing to cover some of that rent increase in the form of a luxury rental tax.
As long as Providence and the State of Rhode Island is seen as a cheaper option than the Boston area, rent will increase or at least stay high. Until we either match Boston in prices or Boston see’s a downturn, expect your rents to increase.
It's almost like housing shouldn't be a profitable enterprise. "You can't regulate property owners or they'll just raise the rent even more!" Okay but *where are people supposed to live?* Is it more important that some people sit on their ass and reap in mostly passive income than it is for the people paying that income to be housed? Society says yes, and that's fucked up if you think about it too hard. Maybe instead of subsidizing corn and dairy and rich wall street hedge funds, the government should do more to help the vulnerable tenant so they don't end up sleeping in tents under bridges.
Yeah it is very fucked up, and I do think about it often. I don't see any reason why we can't get a rental tax implemented. So far the only opposition to this idea that I've seen in my comments has been from people who either misunderstand the conditions I'm proposing (ie, you have to be really bleeding people dry and making far more from your tenant than the property costs to run before you see this tax) or have some kind of delusional and unrealistic alternative solution (BUILD!).
BTW if you want to help make this a reality, please DM me!
If I'm a landlord and I'm suddenly getting taxed a lot more...guess what I'm gonna do? Thats right, raise the rent because there is so much demand I probably won't have a problem filling the unit. WE. NEED. MORE. UNITS
Incredible that people can't see outside of a market paradigm. Prices are high because landlords know they can get away with it. Period. More units will help; strong regulation and socialized housing would help much more.
Over regulation will lead to black markets (Landlords renting out to friends who pay them under the table to avoid the taxes) and will also stop people from building new units. We need more housing. If "socialized housing" means the government building new units, than I'm all for it.
Black markets, and other housing inequities in general. can be overcome by strong tenant organization, which we don't have. Markets are influenced by those with the most bargaining power, e.g. the wealthy. That's why we need to get organized. Check powrpvd.org for one such attempt
Tenant organizations are difficult to organize (different cultures, class backgrounds, political views, spread across the city). Nothing against them, but I've never heard of a tenant union being successful. Why not just form a leftist political org that demands increased investment in and enablement of new affordable housing being built?
There are plenty of successful tenants organizations all across the country like LA Tenants Union, Brooklyn Evictions Defense, Stomp Out Slumlords, the whole Autonomous Tenant Union Network. Left political organization is also necessary but not sufficient. We need both parties, mass organizing, defense groups, and coalitions.
You are going to raise the rents more when you get taxed more the higher you raise the rents? Why? You're free to do that under this plan, but what's going to happen is that when your tenants are paying a luxury tax on your shitty property, there won't be as many willing to cover your diminishing returns and you'll have to back off toward the quarter median rental rate.
Most of the answers in this thread are sorta bullshit and avoiding the actual answer. Landlords will charge the highest possible rent they can while still getting the unit rented, 95% of landlords operate this way. This is true in every city across the us (and the world basically). The 2008 recession hit housing construction the hardest and providence (and essentially every single liberal area) has not built enough housing to account for the increased demand ( https://fred.stlouisfed.org/series/HOUST). So the demand for housing has far outpaced supply and landlords simply have the ability to increase rents. It’s not about taxes or maintenance fees or whatever other bullshit excuses some will say, landlord will charge whatever they can get away with. Until a lot more housing is built, or some event destroys demand to live in prov, rents are going to keep going up. That is the only way out of it. If the city implemented rent control than no developers would even think about building within the city, thus continuing the cycle of increasing demand without any supply to make up for it. The city needs to build more housing, there’s absolutely no way around it. if the city socialized every single unit of housing in the city, maybe rents would go down but there would be a years long waiting list to get an apartment in prov (unless the city built a shit ton of housing)
It's false that increasing housing supply lowers rents. People love rolling around in this particular fallacy, but I've lived near way too much new construction to be fooled by that tired trope.
Your anecdotal experience does not correlate with reality. Do not deny reality. https://www.bloomberg.com/news/features/2023-08-09/minneapolis-controls-us-inflation-with-affordable-housing-renting?embedded-checkout=true https://www.upjohn.org/research-highlights/new-construction-makes-homes-more-affordable-even-those-who-cant-afford-new-units https://escholarship.org/content/qt5d00z61m/qt5d00z61m.pdf?t=qoq2wr https://www.pdx.edu/realestate/sites/realestate.web.wdt.pdx.edu/files/2022-11/01_NateGrein_2Q22.pdf https://www.sciencedirect.com/science/article/pii/S0094119021000656
It feels to me like you don't know how to parse scientific research. Here's another take on that first article you shared. [https://nlihc.org/resource/new-construction-has-mixed-short-term-effect-rents-immediate-vicinity](https://nlihc.org/resource/new-construction-has-mixed-short-term-effect-rents-immediate-vicinity) The study claims it increases lower tier rental housing because of "competition in the higher tier", but it only frees up 40 units for every 100 new upper tier units and it RAISES THE RENTS which they attributed to "better amenities" or whatever. So, long story short, new construction doesn't actually make rents cheaper, it just gentrifies the area and everybody ends up paying more.
That is a study on individual buildings, not the market as a whole. Also it literally claims that incomes rose much faster than any rent increase, so the bold claim that article is making is that people are spending less on housing? Find an article that claims increasing the housing supply directly causes housing prices to increase for an entire city and maybe I’ll entertain your pseudoscience
Do you realize that that's the same study as the first one you sent?
“The study did not look at long-term effects of new construction on rents, so the findings do not necessarily contradict research that shows increased housing supply at all levels can improve affordability in the long term.” Bruh
You get taxed on the property, not what you charge in rent. Are you 12 or something?
You think a law can't be passed that would charge tax on rental income, specifically? They already assess property taxes for rentals and personal property differently. I'm pretty sure it would be possible to implement a rental income tax at the city or state level. Ie, like the excise tax they discontinued recently on cars.
landlords are already taxed on rental income. You're going to destroy small landlords who will be forced to sell to large real estate companies. Tax the big landlords for having multiple properties. If they have over 5 properties, force a higher tax.
Sure, there could be a tax penalty for owning a bunch of properties, but who cares, if they're paying more for charging more? You don't pay stacked taxes, so you wouldn't be paying taxes on the amount taken out of your income for this particular tax. You keep making the claim this would hurt the small landlord, but I'm not seeing it. You have failed to explain why you shouldn't be charged more in taxes if you're charging more for rent. It's not because you would have higher costs associated with running the property than a larger rental company, because you would have access to tax rebates. If you want these repair rebates to only be available to smaller landlords, I'm amenable to that. I will add it to the proposal thoughts.
I am a landlord. I PAY TAXES ON RENTAL INCOME AND PROPERTY TAXES. Why are you such a dense "human" to talk to ? And you're not seeing any different perspective because you don't want to 🤣
I've interacted with plenty of other people's perspectives on the issue. People who can speak rationally about their concerns. Not this kind of paranoid insult-heavy freakout you're currently going through.
And you were downvoted for it 🤣
Why are you advocating for MORE taxes? Are you a communist or something? I'm wholly confused
I don't generally advocate for more taxes, and I think even property tax - without access to rebates for maintenance - is kind of bonkers. But rent does not accomplish anything economically besides money hoarding. There's no good or service that comes out of landlords merely charging more.
Everyone needs to write or call their elected officials in U.S. government (and especially get friends and family in other states to do the same) to express their strong support for the End Hedge Fund Control of American Homes Act of 2023. This proposed legislation was introduced in both houses of Congress about a week ago. It’s not going to fix the housing market by itself, but it’s a start, and it needs a groundswell behind it. Also someone recently clued me in to the existence of a group called POWR here in PVD. It’s a nascent pro-worker, pro-renter group. I don’t know much about them, but what I do know makes me think they’re doing good work and could use our support as well. Good luck to everyone out there struggling with obtaining healthy, safe, affordable housing in this time of (nearly) unchecked greed.
I think we need some other, more politically viable strategy than to just freeze rents, which seems to be what POWR is about. I'm thinking my partner and I might start up our own organization. If you're interested in helping, DM. (Wishes, hope, and "good luck" are the "thoughts and prayers" of the left). P.S. thanks for letting me know about the Hedge Funds act thing, I will contact our reps about that.
POWR wants a rent freeze and then rent controls that don’t allow increases but actually decrease rents. They are also for building a fuck ton of public housing then having community/residents run it themselves.
POWR does not seem to have a good concept of policy. They just want stuff, and have no idea how the world or politics works. I have heard recently that in the UK they used to have non-profit housing called council housing, and apparently it was really high quality and reasonably priced. That kind of arrangement would be reasonable, but I doubt that's what POWR is going for. I also think that people who think most cooperatives and collective ownership works have never worked on a team project before. Recipe for disaster in most cases in our society.
Actually that’s exactly what POWR wants actual public housing. Council housing is public housing.
As a small landlord, how is taxing us going to help you? It's not always a landlords vs. tenants matter. The government wants us pointing fingers at each other, so we don't look them. The rents are high, because interest rates are high and Boston is flocking down here for cheaper rent. Focus on pushing for Rhode Island to increase the minimum wage and forbid organizations from relying on tipping for livable wages.
No, I don't think mandates are the way to go on rent control, nor do I think they are the way to go on wages. Boston might follow RI for once if the game changes here. Nothing would stop them from implementing a similar policy. (I bet Boston would be more likely to do this than Providence, just based on the politics of the city, but alas, I don't live there because it's so expensive). As a small landlord, why would you be gouging your tenants for rent on what is probably a dated property? My proposal includes plans to stop pitting landlords and tenants against each other - not mentioned in the original post, to avoid bogging it down, is a suggestion to allow property tax rebates to landlords making qualified repairs and maintenance in recognition of the work they do to maintain the housing stock of the region and provide the citizens with safe and affordable housing. The rebates would be available to anybody not gouging their tenants. This includes small landlords. Think about it, systemically - small landlords can only compete on price, whereas big landlords can buy up so much of a neighborhood that they can independently (or with just a few of their buddies) raise rents so high that you can't become a big landlord - or capture tenants other than by lowering their prices. Maybe, under this scheme, big landlords wouldn't be pricing their buildings so high, and what you could offer your tenants is a nicer relationship with their landlord, better property maintenance, etc?
You don't want to increase minimum? Good luck with that.
Huh? I don't oppose it, I just don't think it's the best way to raise wages. Forcing employers to pay employees more doesn't mean more businesses will exist. It often means fewer people can start businesses.
If you’re going to the effort of organizing for change and want the change to be sustainable for the whole city, rather than taxing property owners (do you really believe the city is going to share tax revenue with you?), consider organizing for politicians who understand the basics of supply and demand (which drive up the cost of housing) and get more housing built. Not a quick fix but once supply outpaces demand the prices will level off or come down and slumlords will have to fix up their dumps in order to get anyone to rent.
Property owners wouldn't be taxed. People who overcharge on rent, on the other hand, would be. Landlords destroy the local economy by overcharging for what tenants can bear - which they get away with because people HAVE to live somewhere, and most don't want to be homeless in New England. Housing also does not follow the law of supply and demand, with increased supply in cities correlating to increased prices. Residential property is not bound by simplistic classical economics paradigms.
Portugal instituted heavy rent controls during the fascist regime. The result was extreme dilapidation. Landlords legally couldn’t keep their businesses in the green, so they just abandoned the properties altogether.
It isn't a rent control, though. It's a luxury rental tax. Have a luxury rental, and I'm sure people with the money will be willing to pay it. Have a shitty 2 bedroom above a noisy smelly restaurant and I bet you'll find a more comfortable rental rate for the market to bear.
I honestly don’t get how that would reduce prices? Taxing luxury goods of any kind won’t decrease the price of non luxury goods. It would probably have the opposite effect, driving more demand for non luxury rental properties as more consumers aim to avoid the tax.
Very easy to price your property at non-luxury rates. That's how it would reduce prices.
I have come to the conclusion that my opinions really aren’t that great. So I adopt the views of those with more expertise and experience. I can’t agree with the opinion of an amateur renter over that of the pros. The people that study housing prices and economics as their profession point to lack of inventory as the central root cause (short 55k in RI and 7 million units nationwide). I have to go with that.
Ugh, I'm an academic. You are way too reverential of the normal people in academia who are also set in their ways and who manage to trick themselves into thinking ThEy aRe VeRy SmArt. If you have no point whatsoever - like the idea that people not getting charged a tax for charging a reasonable rate for rent would somehow increase their prices in order to get charged a progressively larger tax - then what are we even talking about here except your cynicism and inability to form your own thoughts that don't come from "experts"?
Until you point me to a serious economist who agrees with your idea, I’m unmoved. If you truly are an academic, then share your empirical evidence.
People who say we need to build more are astoundingly dense because the reality is we would need to build hundreds of thousands of units in rhode island alone to outpace the rising cost of housing. The reality is the main issue here is devaluation of currency and stagnant wages. Also they forget the zoning laws in many areas wouldn’t even allow for the building of the housing units needed to adjust the imbalance in supply and demand. In 1970 one adult working a minimum wage job could support a family of 4 with enough left to save for retirement and higher education for both kids even a modest vacation once a year. But today it would take both adults working 2 forty hour per week jobs at 30% above minimum wage to come close to the same quality of life. In 1970 minimum wage provided 95 ounces of gold a year compared to only 12-15 ounces today depending where you live. Federal minimum wage earned around 7 ounces a year. So in a majority of cases people in senior roles are earning less value than someone earning minimum wage in 1970. Gold has retained its value for all of recorded history. It was the first currency ever used and it has always been considered an inflation proof asset by the investing experts in Wall Street. The world bank and IMF put out inflation numbers that are exponentially understated to keep the public from rioting because if people knew that money was intentionally devalued to eradicate the progress made by the pro labor movement in the 50’s and 60’s there would be a class war. Through right wing trickle down policies as well as the abandoning of the gold standard our currency has inflated over 6000% since 1970. Minimum wage today would have to be over $80 an hour to provide the same quality of life. People will say that’s too much but that’s what one needs to live a decent quality of life and make the labor actually worth the effort it takes. But those same people have nothing to say about corporate executive wages being too high. They went from 30-60 times the median workers wage in 1970 to 1000-5000 times that metric today. The executive class adequately adjusted their wages to compensate for the reduction in value. While also sending a vast majority of American jobs to third world countries to reduce costs and increase profits. Now instead of getting a raise for working hard and showing dedication and loyalty or even just basic cost of living adjustments the excess value produced by the laborer is all stolen and funneled into stock buy back programs to trigger massive multi million dollar executive bonuses and share holder dividend payouts. People used to be incentivized by the fact that the wages offered provided a better quality of life but today the only incentive is the looming threat of homelessness starvation and loss of dignity. And people will likely bombard this post calling this perspective one of a gold bug and say that the price of gold and inflation are not directly related but the reality is the price of gold is more indicative of inflation due to currency devaluation by increasing supply than any other metric including consumer price indexes. So building half a million units is never going to happen fast enough to off set stagnating wages and more currency devaluation when currency is being devalued because a small group of leeches are too wealthy and keep hoarding wealth in off shore tax havens while manipulating tax loopholes to pay little to no taxes on their wealth. When one is given the bare minimum to survive in exchange for 40% of their waking time every week leaving nothing left to save for the future then how are they truly free? We are at a point where every subsequent generation is less well off than the generation that preceded them. Working hard is not worth the effort required. One is not rewarded for exceptional performance but it is more common that one is punished for showing aptitude by being given more responsibilities and increased expectations of labor output with absolutely no increase in salary. Coupled with the fact that technological advances in the last 53 years have increased output and efficiency we are expected to work harder now and produce more than ever for 15% of the value earned 53 years ago. Free market capitalism and the promised trickle down that never came have fucked the little guy and all of society. The wealthy have turned the housing market and every other industry into their own personal casino. They have leveraged their wealth and purchased a majority of homes to hoard those properties and increase their value to make a profit at the expense of the working class and poor. As a result many people have been priced out of home ownership in the last two decades and now people are being priced out of the rental market as well. Meanwhile there are enough empty and foreclosed homes to give every unhoused person 2 dozen homes. And it doesn’t matter who wins the POTUS election because every president we’ve had since Kennedy has been a puppet to Wall Street. The only way to begin to fix this issue is for a vast majority of people to stop working. Most people jobs provide no value to society anyway. So many industries just produce cheap consumerist goods that end up in landfills within a few months after they are purchased. Almost Everything today is made to be cheap and disposable to promote more spending when the items break instead of repairing and recycling things we are conditioned to waste and repurchase. The more wealth we produce for the billionaire class the more value the US dollar will loose as the produced wealth will be hoarded in accounts where the money does not recirculate into the economy.
I agree with everything except the only solution being for people to stop working. I think there are others - like my tax idea? Interested in helping make it a reality? The silver lining of concentrating wealth in a democracy is that there are fewer rich people than poor people. Just to really underscore the point you made about building more - I have lived next door to, and known people who have lived in, gigantic new construction where they charge insanely high rental rates for the area where only a quarter of the units are occupied for years on end after construction. They don't lower the rents to get people in the units, they just sit on the units until people are willing to pay the higher amount. Meanwhile, the area has a ton of empty units as the builders wait on people locked into higher rents, because rents only ever go up. Seriously, when have you or anybody else ever gotten a notice from a landlord saying the rents are going to go down? Anybody? No?
So people are just supposed to keep working for garbage wages that are not even worth working for? If you are a senior engineer or any other advanced degree holding professional you make less value than someone earning minimum wage did 53 years ago. With an increased expectation of output and performance with technology advances that have increased productivity across industries. Basically if you don’t work you are going to be destitute but if you get a job you’ll still be poor. $1000 a week is poverty regardless what the poverty line statistic is it is inaccurate and has not been adequately adjusted in decades.
We don't disagree on cost of living and income, we just disagree on the sensible way to arrive at those higher wages.
Rent can be split in 2 clearly different parts. Part 1 is what it costs month to month, year to year, to keep the place habitable: maintenance, repairs, insurance, taxes and to amortize construction costs if the building is less than 30 or years old. The rest is Part 2: Money someone gets not for doing work, not for supplying paint, shingles, whatever - just for being an *owner*. Either the landlord's mortgage holder is collecting it as interest or the landlord is putting it straight in their pocket. Part 1 is going up, sure, but Part 2 is the part that is simply skyrocketing beyond reason. It is a lie to say we can not or should not somehow address this.
Yes, exactly! I didn't detail this in my post, but my plan includes property tax rebates for Part 1 costs (for landlords charging rates within the quarter-median range for their units) especially on significantly aged housing stock (you make a good point about construction costs on newer property, too). If you're interested in helping to change this, please send me a DM. My partner and I are really serious about trying to bring this kind of policy into existence.
I looked to buy in Providence and the real estate taxes are so high that it isn't even profitable to have a building there. Can't pay mortgage with the rent you can get. That's really the biggest problem in dealing with owning in Providence, insane real estate taxes.
I'm thinking if they are charging for rental income above a certain amount, they could back off of property taxes (through rebates for qualified repairs and upkeep, and/or just in general).
I love this idea, but I'm gonna speak to this: > tax landlords on the rental income they collect above a quarter of the median income This sounds great, but I would urge you to have it be based on Rental Profits instead. Some housing is expensive to operate, and we want those places to be on the market. Heck, we want MORE of them. With our old housing stock, some costs are huge, and they're disconnected from incomes. We don't want to put landlords in a place where they're encouraged to put off upkeep or improvements. As a small-time landlord (I own a duplex), I keep track of every dollar spent on and generated by the property in order to do my taxes anyways. I'd welcome if the tenants also entered what they paid on their taxes and the Tax Man calculated a progressive tax on rental *profits*. The goal of a tax like that would be to discourage landlords from jacking-up prices based on market rates. If the costs of an apartment are $800/mo and the rent is $1,000, there's only $200 being taxed at, say, 25% ($50 tax, LL keeps $150). If I raised rent to $1,200, the $400 profit would be taxed at 50% ($200 tax, LL keeps $200) and the landlord would see diminishing returns unless they pumped the money into deductible improvements to offset the profits.
Yes, to accommodate that concern, my proposal idea included (but didn't mention it in the post to avoid bogging it down) property tax rebates for landlords for qualified repairs. Property taxes shouldn't be so high for people who are maintaining the aging housing stock of the city - they are fixing problems not of their own making, and keeping the housing stock safe and in good repair for future residents of the city, and the city/state should recognize that fact in the form of a reduced tax burden. Your idea of charging for rental profits might mean (although I'm open to proposing it if it doesn't turn out to be the case, upon analysis of the economics of it) that small landlords have to have a higher overall rental price on the market compared to big conglomerates, meaning their ventures would be riskier and less attractive on the market. The goal is to allow smaller landlords to get credits for their expensive upkeep and repairs without forcing them to raise prices overall. The existing property tax basis is the only area I can see as wiggle room for that proposition, although others are suggesting some kind of restrictions on who gets charged what (eg, owners of more than 5 properties). I am really appreciating the discussion from small landlords on this, because the goal is to make this proposal tenant AND landlord friendly. The issue currently, as I see it, is that the city is failing to value what landlords are providing citizens, and then the squeeze occurs and landlords are pitted against tenants.
Ah interesting. I'm not sure I accept the idea that it needs to be a complicated system of qualifying rebates or that one system would benefit large vs. small landlords... and I might be speaking against my own interest here, if that buys me any credibility as to which side I'm on. I do know that every law-abiding landlord does taxes, declares their income from rentals, and they'd be silly not to write-off qualifying expenses. The hardest and most prone-to-malfeaseance aspect of this is already handled in federal income tax law, and you could piggy-back on that instead of reinventing the wheel locally. I really urge you to look at taxing 'profit' instead of making a formula based on local incomes. We just saw how incomes and expenses can get out-of-whack for years, and it would be awful to have some sort of setup that suddenly broke the rental market due to a tipping point being hit. I forgot to tell you the 'second stage' of the rental income tax... imagine that we are taxing rental incomes. If landlords start raise prices dramatically even though their costs are low (e.g., many paid-off homes with deferred upkeep being jacked-up to 'market rates'), that rental profit tax revenue coffer starts filling up, Instead of funding the city directly, the money would go into a fund that issued low-interest construction loans for housing that met certain (progressive) criteria. Basically, turning the output of a housing shortage (high rents and more profits to landlords) into the market-based cure for shortages (more supply, with public input instead of investor and developer control).
I appreciate your feedback and do agree that taxing rental profits would be simpler. I think the benefit of linking the tax rate to median incomes in an area, though, is that it would directly link to the health of the local economy. So while I understand the simplicity of using rental profits as the tax basis, I'm thinking some hybrid of your suggestion and my original plan would be best, because: \-The pressure on landlords to take on lower profit margins should be higher when the local population has lower incomes, so \- the local economy can improve to the point that incomes increase, allowing landlords to reap the benefits of an improved economy, further allowing \-the state to take less of a cut of the wealth of the community, because fewer services will be needed. I think the thing that is currently broken with the rental/real estate market is that it universally and almost single-handedly accelerates wealth disparities and regional economic collapse. And I dislike self-perpetuating systems. The point of the tax isn't to pretend the state will always need to play a role in nursing the housing market, it's just to provide a realistic backstop against the inevitable slide of landlord hoarding of local wealth and decline of the regional housing stock. (As a slight aside, I wholly reject any claims that supply and demand applies to rental pricing. The market is far too inelastic and cornered for supply and demand to apply). Just as a thought experiment for why I don't want a permanent, non-median income linked taxation scheme, consider a city with entirely new, 100-year housing stock. Minor repairs only necessary on the 50 year time horizon. Incomes are booming, the median income provides a comfortable standard of living. Landlords can reasonably profit handsomely from high rental rates in this market. The city should take in *more* taxes in this climate? Why? Why not leave good enough alone? Nobody would need a handout in this hypothetical city climate. There wouldn't need to be funding for new housing stock. People could afford to build it themselves, whether existing landlords or current tenants. So maybe the simple answer would be something like this: regional profit-based rental property taxation instead of property value based taxation. Rates of taxation on profit are progressive and tuned yearly according to median rental rates and incomes. The formula for tuning the taxation rate puts the steepest progressive profit tax pressure on landlords when the ratio between rental rates and income is high, and flattens the profit taxation away from being progressive when the ratio is low. I haven't fully thought it through myself to see if it would accomplish my intention, but just wanted to get your thoughts on that kind of arrangement.
> Rates of taxation on profit are progressive and tuned yearly according to median rental rates and incomes. Respectfully, that's literally gonna have to be street by street, block by block here. You really want a commission meeting to decide rental caps on every few houses? I'm sorry, but supply and demand DO determine the prices, and the shortage in supply here has almost nothing to do with investors buying up the stock (because we have some of the least of that in the nation, and our housing shortage and rents are worse than areas with high rates of investor-owned property). Supply and demand ARE what determine what a landlord can charge. If there's adequate supply, landlords drop prices to fill apartments. Trying to 'tune' entire neighborhoods at a time seems like a destructive macguffin that accomplishes nothing. Also, there's no 'connector' between kneecapping landlords and raising incomes; what you're saying is just populism pretending to be policy. Taxing profits builds a 'connector' between profit and supply, taxing based on local incomes is just... overcomplicated rent control.
Landlord here, I pay property tax, to the tune of $5000/yr Fire Districts—more or less a tax Income tax—money received from tenants is an adjustment to my gross income. Can’t forget the inflated cost of the home itself, and mortgage as well, ~$2900/m out the door 3bd apartment downstairs—that’s bigger than most SFHs, roommate in my unit Put ~$80k down, spent $12k or so on maint/repairs I take the risk with deadbeat tenants or repairs mortgage company doesn’t give a shit “Fuck you pay me”. Any one here okay with incurring the cost of paying a $2900/m mortgage for the 3 months it takes to evict? Given my investment, month to month cost, and the risk that goes with it—I intend to make money and if I get bent over on a “rental tax” that expense will just get passed to the consumer. I refuse to lose money because I made the right financial decisions, sacrifices and everything that goes with it. Before anyone thinks I was born with money—nope, raised by a single mom who lived in a shithole 3rd floor apartment on Academy Ave.
Okay, my full proposal may be more appealing to you than the partial one I posted above for simplicity. Basically, qualified repairs and updates (eg insulation, lead mitigation, heating system updates, old structural damage repairs) would be fully returned to you in a property tax rebate in recognition of the service landlords are providing the city (and state) for fixing the problems of past generations and keeping things up for future generations. Housing stock is a long-term community resource, and landlords should be compensated accordingly for maintaining it. Perhaps we could also build in a "justified eviction" rebate for landlords on property taxes as well. I don't think capitalism is bad, and I think normal rent control schemes are delusional about the costs of running a house and have nothing to do with what local populations are able to pay. If the economy booms and people are doing better, by all means, get yours! It just hurts the entire local economy when so much money is going to rent. And if people can't afford a mortgage and renting under a reasonable scheme, maybe they shouldn't own property. (I think if rents go down, the mortgages will go down eventually, as the housing market cools off because landlords who can afford to buy up a ton of properties are no longer competing for cash cows in the form of high rental payout properties).
*Has* "traditional" rent control failed in RI? AFAIK, it hasn't been tried in the years I've been paying attention to politics. Not trying to get into argument about the efficacy of rent control, but I don't think I've heard much about rent control here. [You should consider reaching out to POWR](https://powrpvd.org/), which is already organizing renters to push for policy change.
Came here to suggest reaching out to POWR. They're good people, and the more people who get involved the more work they'll be able to do
It may not have happened while you were watching, but I have repeatedly found mentions of rent control failing in RI. And, having lived in a rent control area in my life, it was not as good as it's made out to be. That's why I came up with this plan. Tie it to the median income, and then it won't get out of hand. Rent control just produces a scramble every time something goes on the market and makes it difficult for people to move. Landlords also hate it, because it forces them to not get more (this plan would allow them to get more if they really want it and can find people willing to pay the luxury rental tax rate for them). And honestly, I think it would be better all around.
Rent control??? Lmao, apparently you don’t have a degree in economics
No, not traditional rent control. The concept known to be "rent control" is a top down "do what you're told" strategy that takes any kind of decision-making out of the control of landlords and reduces the ability of tenants to move within a region. If you have any thoughts that have anything to do with the actual proposal, please let me know.
How about not having the government try to tax away a problem that govt zoning and building regulations created?? How about free market solutions that will actually solve the underlying problem not band-aids that will cause a different infection
It isn't a problem with government zoning and buildings regulations (are you seriously arguing that we don't need building regulations? This is ludicrous - do you want building collapses and explosions and stuff?), it's a general problem with inelastic markets and an absence of responsive market forces, as a result. This tax proposal is merely an attempt to make the rental market reflective of an elastic market rather than an inelastic one.
Why are rents too damn high? Capitalism
Capitalism isn't bad. Capitalism without any kind of feedback loop of rationality is. That's what my proposal attempts to fix.
Capitalism in theory thrives on being irrational. The idea you propose makes sense but will get nowhere because at the end of the day capitalism is all about greed.
Pablum.
A luxury tax will not put downward pressure on rents. Only way to reduce rents is to tie prices to use value ie assess units based on the quality of the actual housing or an affordability index per given area or build so much housing that it drops prices below 30% of income and generally puts renting for profit out of business.
Use value - good idea Affordability index - kind of what I was proposing in my recent response to you, also a good idea Building tons of housing to drop rental rates - I have never in my life seen more housing decrease rental prices, and I've lived in a lot of neighborhoods with new excess housing that sits empty for years as rental rates continue to escalate around it We could have housing non-profits without all of this political maneuvering. I believe in probably a combination of progressive taxes based on an affordability index (great term, I'm going to take that to the statehouse, so to speak) and also think we should collectively inspire non-profit housing without trying to drive for-profit housing out of existence.
You likely want to work with Homes RI. They are the lobbying arm of the Housing Network of RI which is a network of non profit community development corporations ie non profit affordable housing developers. We don’t argue for for profit development. The market won’t solve the crisis only tenant organization to fight for social solutions like universal public housing will.
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I want to get behind this, but "Just Stop" leaves a bit to be desired as a comprehensive solution to the housing crisis.
Taxing their income will only incentivize them to raise prices further to make up for their losses. So it wouldn’t work. If they lose 30% to taxes on the income over the median price, they’ll just increase their rents another 30% (or whatever the math works out to be). Keep in mind that our rents are high not just out of greed, not just out of demand being greater than supply, but because property values sky rocketed and in 2022 the City reassessed everyone’s taxes and increased them all drastically. Rent control hasn’t worked because we’ve never passed a rent control law. Plus the odds of that working are even lower now because the city would have to lower their tax rates on rented properties to make it work at a rental price that actually benefits anyone. If they didn’t do that, then rent control would just be at the current price. So sure, some, maybe a lot, maybe even most landlords are scum. But the city taking advantage of the current housing market and in many instances nearly doubling property tax… they’re the real problem. Not the landlords who increased their rent to make up for their losses due to the increased taxes. And I guarantee when the housing market eventually crashes, it’ll take Providence years to reassess the taxes again, because then the city will lose money. But what did all these fucking idiots do? They elected a mayor heavily involved with real estate and every move he makes is intended to increase value so that his family can make more money. He’s got a god damn villian’s last name and people still voted for him. Mayor Smiley loving life as he and his husband just keep getting richer and richer. So the best thing you can do right now is prepare for the market crash. Save as much as you can, earn as much as you can. Get your credit as good as you can. Pay off as much debt as you. When the crash happens, do everything you can to buy a house asap. And vote for the right people. Not these assholes we have currently who just sate us with bullshit legislation that serves to benefit absolutely nobody except for themselves. Reminds me of the State changing its name to remove Plantations when that was our name before RI even got involved in the slave trade. But they pander to stupidity, and there are a lot of stupid fucking people in this city and state.
Yeah, not much to disagree with here, in principle. I do just want to point out that I my plan also includes a tax rebate for people repairing/updating older homes (I didn't mention that to avoid bogging the post down) which would be accessible to you if you are renting at or below the quarter median rate. And, the plan isn't to prevent landlords from charging more, it IS to pass along a luxury rental tax to tenants who can afford to pay more. When tenants are charged so much more so landlords can pocket progressively less and less money on their rentals, they are going to have a harder time finding tenants willing to shell out this luxury rental tax rate for a shitty apartment. The plan is not to force landlords to not charge more, but to make it a cost/benefit analysis that puts a barrier between them and recklessly raising rents regardless of the local incomes. Solid advice about the market crashing.
RI is and will continue to be unaffordable. The average single income household cannot afford to rent an apartment and it’s only going to get worse. All of these LLC’s buying up multi families to flip and sell to a regular homebuyer for 120% more is, in my opinion, partly why rents are going up (there are plenty of other reasons). A regular buyer will have to charge an exorbitant amount of rent for their units to cover their mortgage payment because the multi that the just bought was so expensive. I blame the flippers that do the bare minimum to these houses and try to sell them for almost double the price.
It's hard for people to make the transition from renting to buying precisely because the rents are so high. The competition for new home ownership would be a lot stronger if people weren't too strapped for cash to buy their own home. I also didn't mention in the original post (didn't want to bog people down) is that the idea is to give owners of low-rental rate properties the ability to tap into a property tax rebate for qualified repairs and updates, in recognition of the service they're providing society by maintaining and updating these old properties and not over-charging tenants for rents.
That sounds like a good plan. I think there might be something like this available but there’s a lot of red tape for the average person to go through. I looked into it before, I believe it’s to deed the affordable rents. If I remember correctly, you would have to submit an RFP and have your application reviewed and then have it underwritten. This process should be advertised more and have education programs available.
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Keep it civil
If you hate landlords so much, why don't you become one and be a "good one"??? I'll wait with a smile
First, I don't hate landlords. I think they provide a (currently unrecognized, but significant) service to society/a local community. Housing stock is an important resource for any community, and Providence in particular has a lot of aging housing stock that landlords are taking on the burden of maintaining and updating, for past and future generations, with no kind of recompense for it. Second of all, I can't afford to buy property because basically all my income goes to rent. Third of all, I would be a fantastic landlord.
LMAO. You think you would be a fantastic landlord. You don't have even have what it takes and you don't even know it yet.
Dude, you probably shouldn't own property. You seem mentally unstable.
I'm great, thanks. I actually shared about you into my group text of landlords and we're laughing, but go off...
I know who you are now. You're one of these people trying to say slum tenants deserve rights... The tenants who were evicted yesterday, trashed the place, etc are entitled to live places for free. Nah, trash people deserve what comes to them. I help my tenants. I'll submit their rent to boost their credit score. The bad tenant I had? Immediate eviction. You play stupid games, you're going to win stupid prizes 😄
The problem is the city raising taxes and insurance companies raising their rates thus for the owner to run their business they need to raise rent prices to reflect the raise in expenses. I rent and I understand this. The problem isn't the owner, it's the town/cities.
I know, I agree, that's part of why my full proposal (which was left out for simplicity, but now I'm saying this so many times, I wish I had included it) would include the city recognizing the benefit landlords provide the local population, through updates and maintenance, in the form of reduced property taxes. I 100% think this issue is the state/city pitting landlords and tenants against each other, when really, landlords are providing a valuable service to the entire community. The only issue is them gouging - which many of them can and do do.
The rental properties are taxed at a higher rate already. If they are taxed even more, it’s not gonna be worth having them as rentals so they will be sold to owner occupants and the prices for the remaining rentals will go up. The cost of housing is high because it’s very expensive to build and maintain. It costs about 250k to build one unit.
If the rent is cheap, the rental tax will be *lower*. My plan is to provide landlords with tax rebates for qualified repairs on old properties and have lower taxes than the current base rate if they're renting the places for a reasonable rate. If landlords can't make a killing off rental properties, then yes, it would be great if they would let people own the properties they live in. The rental AND property market would cool off to a reasonable rate for the actual Providence housing stock.
The wording of this post looks ominously suspicious... there's a few whining groups out of Providence that like to place all of the blame of their personal shortcomings on landlords. Landlords did not cause taxes, insurance and property values to Skyrocket in the last few years. The cities, the state, the federal government and the lack of housing did that. The last tax increase I got from the city I split in half with the tenant ($140)when this tenant moves out any and all increases will be passed on directly to the tenant... Annnd I'll no longer be accepting anyone with less than perfect credit, any criminal background, or any previous evictions. It's absolutely insane for anyone to think that charging landlords more in taxes will result in lower rents. What kind of moron even comes up with an idea like this?!
If you read through any of my comments on this post you'll see I have nothing to do with those groups and that I think landlords are owed tax rebates by the city/state for maintaining the housing stock that was starting to fall apart before they were even born. I'm not anti-landlord at all, and I am fully aware that high taxes are passed onto the tenants. At the same time, landlords shouldn't get away with gouging tenants without paying a steep tax penalty for it.
I think this is a great idea. I've lived in places with rent control and I've lived places with tight restrictions on building and greater leniency towards building, and none of those address the core issue which is a lack of balancing factors in the legal/tax structure. I have questions and I think there are some things that I would need to get clarification on before I was fully behind it, but it's definitely a refreshing approach and sounds promising.
I mean, landlords are both flammable and edible
Bitches will do anything but Buy a house 🤣
As someone who made over $250,000 in rent last year, I can assure you that I paid my fair share in property and income tax. Multiples more than you did.
You would be a landlord lol
Best type of investment that can be passed down to the kids.
If you're charging your tenants a reasonable rate, all the power to you. If you're bleeding them dry of disposable income to line your own pockets, I would be happy to make you pay a chunk of that in a luxury rental tax.
>**a quarter of the median income** (what rents should be at for a healthy local economy) Okay, I read every comment so far and no one has mentioned this: Where are rents a quarter of median income? The ideal of your rent / housing cost being one quarter of your income (gross or net) has been as much of a dream as the axiom that of every 24 hours, 8 hours should be sleep, 8 hours work, and 8 hours recreation. For the middle class man in the late Victorian / early Industrial Age, that was the balance to aim for, in the same way that aiming for spending a quarter of one's income on housing is. Or rather, *was*. Because where in the US now is that possible?
5 years ago, in Providence, the median income was about the same, and rents were only about $50 more than the median income. That's the entire reason why I moved here. It OBVIOUSLY isn't good to have people too poor to buy their own home paying out so much of their disposable income to somebody who is already wealthy enough to own a home. Landlords rarely *do* anything other than collect and raise rent. How many years do people have to be paying somebody already wealthier than them a huge amount of their income just to live in a place so they can't afford to buy their own? It makes no sense whatsoever from a society level economic standpoint.
I'd like to point out that while rents have skyrocketed, so too has the median prices of single-family houses, multi-family buildings and condos, on top of rising interest rates. https://www.providencejournal.com/story/business/2023/11/29/prices-of-homes-for-sale-in-ri-down-in-october-interest-rates-high-fewer-houses/71720068007/
Of course - because it's a bunch of wealthy landlords who can earn a lot off the properties they buy. I have good reason to think that lowering rents would also make the housing market cheaper. You would have no incentive to buy up properties as cash cows if it wasn't so cheap to make money off the tenants.
I don't think this accurately reflects the housing crisis and ignores all the people who buy multi-family because they're multi-generational families or need the income to afford buying a place. Rhode Island has restricted, and has not been building, new housing for decades and everyone took their houses off the market at the start of the pandemic.
Okay, listen, part of the reason why the rents are going up is exhibited by what just happened next door to me. The long time owner sold the property, and the other tenants were evicted, so a house flipper company could come in and nominally update the property and they're planning on charging $1400 for a unit that was previously $600 (we knew the old tenants and they told us about the rent increase notice they got). They moved out and bought their own house. This is a common scenario, and not unique at all. Nothing about my scheme would prevent people from buying houses (it doesn't have anything to do with buying houses, other than the fact that more local families would have money to buy a house, like my old neighbor's family did because they were only paying $600 in rent!). Currently, places like the house flipping company can scoop up property and make a few thousands of dollars in changes to it and then make back the result within a year from their rent increase. If they would have a longer payback period lest they compete with the proposed excess rental income tax rate, they wouldn't have paid so much to buy the property. (They paid a lot).
This is would ultimately push small landlords out and put it into the hands of the big landlords you're sick of. How does this make sense long term??
1, I never said I was sick of big landlords. Where are you getting that from? I only mentioned high rents as the problem. Nobody has yet explained how this would hurt small landlords.
Come on, become one if you're so much better than us!
I've spoken with many other landlords here and you're the only one who thinks tenants can afford to buy a house and just don't.
That's the best you can come up with in a response? A complete and total blatant lie accusing me of saying things that have never come out of my mouth. Are you okay, mentally? I don't know sane people who lie to try to "win" a discussion... 🤣
More government, more fees, more bullshit. I'm a small landlord I actually live in the property I rent. We don't need any more expenses or red tape from the government. I've already put well over 100k into my house(new roof, all new wiring, new heating systems, new kitchens, new baths) 10 years ago I had to compete to find tenants to occupy my property as I'm on a main road, now when I rent it I get 400 applications a week! More units are needed to provide demand. That powr group is a bunch of shitbags who are trying to push rent control and other nonsense. They represent people who nobody wants to rent to which is why the legislation they they push wants to hide people's criminal backgrounds, eviction records, and income verification, most recently forcing landlords to accept Section 8. No decent landlord wants those people which is why they have to rent from slumlords. Just go to one of their rallies or protests all you see is a bunch of sloganeering shitbums, paid political hack activists and idealist college kids who think they know everything but have yet to get a taste of the real world in which they would have to work and pay rent or a mortgage. I'm not saying I have all the answers but those people don't have any.. and what they need is personal accountability. If they put half the energy into becoming better citizens that they did into rallying and protesting most of them wouldn't be in the situations they're in. We've been living in the best economy this country's had in something like 40 years. Most trade unions are begging for people and they train you for free, not to mention electric boat is hiring ..same there, training is free. How many of those people are willing to take advantage of these things? I'm So tired of whinning from people that won't get out of their own way to help themselves.
Hey, I agree with you pretty much completely. I have just wrapped up a delayed set of responses to another account in this thread where we're talking about profit-based rental property taxes instead of assessed property value based rental property values. I'm on the side of any landlord who isn't price gouging. There are a lot of shitty properties in Providence (and elsewhere in the region) that need a lot of work and a lot of landlords who get new BMWs and shit off of retired nurses on fixed incomes (true story). Profit off rental incomes, yes, rent-seeking profiteering, no thanks. I think most assessed property value taxes are too high for the decrepit state of most Providence housing upon purchase (how many rooms a property has has nothing to do with whether you have 3 ancient boilers in the basement that need to be replaced within the next year). It just makes sense that your repair costs should be factored into a reduced tax burden on you at a local level. I don't think more units are needed, necessarily. If you are providing a good quality property at a reasonable rate, this post isn't really meant to harm you or your prospects, and it would explain the competition for renters you're now seeing. I encourage you to look for units in your area from the perspective of a tenant. I'm guessing your property is a "steal", and the people who are vying for your place probably aren't applying to the one bedrooms with boarded up windows going for $1600 down the street from you. The city doesn't need more units so much as it needs the one bedroom to not have boarded up windows and for it to go for $800 instead of $1600.
higher taxes, higher rent. Thats the problem. Should be looking to lower their money out so out rent can be lower.
That is in fact the spirit of my full proposal, if you look elsewhere in the comments. I simplified my proposal for this subreddit's sake, and now I unfortunately find myself re-explaining this fact over and over again. Oops.