
Vacant Homes Are a Global Epidemic, and Paris Is Fighting It with a 60% Tax - paulpauper
https://betterdwelling.com/vacant-homes-global-epidemic-paris-fighting-60-tax/
======
ptaipale
It sounds like Paris is regulating to beat a problem that is at least in a a
significant part caused by regulation. Paris has very extraordinary tenant
protections, even for people who weren't actually tenants and who don't pay
their rent.

The article [0] I read is in Finnish and now behind a paywall, but it explains
that a woman more or less out of her good heart allowed someone to stay in her
flat for a time while she was on an assignment in another country. The person
staying in the apartment never really paid any rent, but became a "tenant" so
that it is impossible to evict her. The owner has to refurbish and fix the
apartment at her own cost, while the person staying there is protected by law
and lives there and pays nothing. And makes a horrible mess which the owner
has to pay.

It is obvious that such examples send a very strong message: if you're away
for a year or two, DON'T give your apartment to let. Keep it empty. If you
plan never to use it, then sell it. But if you intent to come back it, just
keep it empty. Everything else is too risky, due to the regulations.

Then it's now fashionable to frame this as a xenophobic "rich foreigners come
and hoard our apartments and cause housing shortage". The actually guilty to
the shortage is local, populist regulation.

[0]
[http://www.hs.fi/ulkomaat/art-2000002659821.html](http://www.hs.fi/ulkomaat/art-2000002659821.html)

~~~
anigbrowl
I need something better than anecdotal evidence for your claim that tenancy
rights are the primary problem. You can find horror stories about problem
tenants in any city, same as you can find horror stories about terrible
landlords. Do you have quantitative evidence that documents the scale of this
problem? Property vacancies, speculation, rents, and related issues are hardly
unique to Paris; this is an unsolved problem in economics precisely because
living accommodations are not simply fungible commodities and applying crude
economic models to complex economic situations leads to inefficient outcomes.

~~~
ttoinou
Sadly quantitative evidence (i.e. statistics) also don't prove anything.

All I can tell you is that here in France property squatter have rights, and
the more the original owner awaits before calling the police, the less he has
a chance to recover his property and evict squatters. I would be interested in
knowing if others country have the same laws ?

~~~
collyw
"Sadly quantitative evidence (i.e. statistics) also don't prove anything."

Still better than a single anecdote on the internet.

------
solatic
Jerusalem has the same problem. Lots of wealthy Disapora Jews who buy up
apartments just so they can vacation there a few weeks out of the year during
religious holidays. A cursory walk through some of these neighborhoods makes
it clear that they were not built to actually be inhabited in - no vehicular
streets, so no parking or access for emergency vehicles or garbage collection;
no easy access to public transportation, no corner shops or grocery stores -
why would you need them if you're just going to eat out most of the time or
pick up groceries while you're touristing around?

The municipality tried to raise taxes, but it isn't working. The owners'
pockets are too deep and the apartments are bought for social reasons, not
economic ones. Whatever the city charges, the wealthy will pay.

There isn't an easy solution. If the law were to require occupancy, then the
law would penalize honest landlords who do seek to rent out their apartments
and deal with frictional vacancy as an investment risk. If their apartments
were to be "raided" during frictional vacancy, what then? Should law
enforcement accept that the vacancy was frictional and not long-term? How is
law support supposed to tell the difference? If the law is too hostile to
honest landlords, then they'll sell their investments, and the cost of rent
will rise, which is regressive.

The only real solution I can think of is require mixed-use zoning and fine
developers for failing to lease the retail space. If the developers sell too
many apartments to ghost owners, then the retail won't get foot traffic, so
the retail space will fail to lease, causing the developer to be fined, and
incentivizing the developer to ensure that he sells to long-term occupants
instead of ghost owners.

~~~
redsummer
The only decent solution for this problem in Jerusalem would be to house the
millions of refugees streaming out of next door Syria. Israel has accepted
none so far.

~~~
petre
Israel has enough problems already without the refugees.

The US and Saudi Arabia who created this mess in the first place are accepting
none so far. Anti muslim sentiment is growing across Europe exactly because
Merkel invited these refugees over without asking anyone and then imposed
refugee quotas on other EU countries. Now we have nutcackes like Marine LePen
and Geert Wilders gaining in popularity and threatening with Fr/Nl exits that
would most likely break the EU apart.

~~~
redsummer
Israel is next door. Germany, Sweden, Holland, USA are not. 5 million need to
be allowed into Israel right now. Surely Israel is not a racist society?

~~~
golergka
"Need to be allowed"? I'm genuinly curious as to how one can even
theoretically come to such a phrasing, regardless particular countries and
their politics.

~~~
dpc59
International law didn't have any problem doing just that.

~~~
golergka
Appeal to authority? In my eyes, "international law" has very shaky moral
authority anyway, so it's not very effective.

------
breischl
They're missing a bit of context here. It's normal for some units to be empty
at any time for various reasons: remodelling, attempting to find a tenant,
attempting to sell, waiting to be demolished/replaced, etc. So there's a
baseline "normal" vacancy rate.

If a unit is vacant for one month per year that would be an 8.3% vacancy rate.
Certainly not all units turn over every year, particularly owner-occupied, but
it's something to calibrate from. Another data point: the US nationwide
average vacancy rate is 6.8%. I realize these are crowded cities and thus not
entirely average, but that still gives us some baseline.

The cities in the article have anywhere from 1.71% to 9% vacancy rates. 1.71%
is actually a very tight market by most standards I've heard of - equivalent
to 6 days of vacancy per year per unit. 9% is rather high vacancy,
particularly in an expensive market, but not completely out of line.

It seems like they may be overstating their case here.

[https://ycharts.com/indicators/us_rental_vacancy_rate](https://ycharts.com/indicators/us_rental_vacancy_rate)

~~~
vidarh
I remember seeing numbers for London, where the "story" that gets regularly
regurgitated that half the town is empty (ok, so I'm exaggerating a bit) due
to the Chinese buying investment properties that they for some strange reason
supposedly leave empty rather than renting (which would be particularly
strange in the UK, which, though squatters rights have been curtailed still is
one of the most risky places to leave property empty).

Except the numbers showed vacancy rates at similar levels in expensive,
"investment friendly" boroughs like Kensington and Chelsea compared to
boroughs where large portions of the rental market is social housing where the
council gets tenants in ASAP after cleanup/refurbishment.

I'm sure there are areas with problems, but many pleases it seems to me that
the problem is more one of flawed assumptions. E.g. articles about the
situation in London have more than once talked about dark streets and no
children out playing.

But if there is one thing that has always been different between rich and poor
areas, it is _density_ and likelihood that the occupants will be spending
money on activities away from home vs. playing around the block. I remember
that distinction well even from growing up in Norway with class distinction
far flatter than anywhere in London - the "normal" working class
neighbourhoods I grew up in were lit and surrounded by kids playing outdoors
in the evenings, while e.g. when I went to visit my grandparents in one of the
wealthier parts of town, it was always darker - the flats in their building
all had two living rooms and a couple of bedrooms with windows facing the
road, and more rooms facing the inner courtyard. Even when people were home at
night, there would be far less lit windows for the simple reason there were
not enough people there to use all the rooms at once.

It seemed to me like people had started from a flawed feeling, and gotten hold
of the statistics and asked no critical questions whatsoever about why the
numbers where similar in the poorer areas and similar for social housing.

It's appealing story because it "explains" the high house prices people have
to deal with by blaming it on some undefined evil absentee investor which
won't show up to defend themselves.

I'll note that I've not looked at the issues related to Paris etc.; maybe it's
different there and they have a genuine issue, but even if these numbers were
abnormally high, "solving" that problem would not in any case be enough to
drive the house prices down to affordable levels - no matter what it's clear
that if governments want these prices down to affordable levels, they either
have to resort to regulation or to stimulate housebuilding, whether by easing
regulations or pouring money into it. But it's much easier to blame people for
leaving properties empty.

~~~
mafribe

       Neighbourhoods I grew up in were 
       lit and ...
    

This is often a generational thing. Most people move to a bigger dewelling
when the form a family and stay there until the end of their life. Often young
families move to newly built areas, where almost everybody else is also a
young family, whence lots of children. 3-4 decades later, the children have
moved out, the parents are still about but in their 70s and 80s.

    
    
        * . * . * . 
    

I have discussed the issue of empty properties in London with builders and
developers, and they generaly laugh at the suggestion that many properties are
deliberately left empty. What does happen though is that the top end
properties are difficult to sell -- there are just not that many people who
will pay > £10 Mill for a flat in London, overlooking the Thames. So they stay
empty for a while, simply because nobody can afford them. The owners would
love to rent them out, or sell them on. And if you look at what gets build now
in London (e.g. Nine Elms, or Docklands) it's not large luxury flats, it's
almost exclusively studios, 1 and 2 bedrooms, i.e. targeting the lowest end of
the market.

~~~
vidarh
To put it another way: The neighbourhood I live in now is also usually lit in
the evenings. I mentioned my childhood because I have very vivid memories of
exactly that - you notice the light much more somewhere where the winters are
particularly dark.

> And if you look at what gets build now in London (e.g. Nine Elms, or
> Docklands) it's not large luxury flats, it's almost exclusively studios, 1
> and 2 bedrooms, i.e. targeting the lowest end of the market.

This is another trap people go into, though: London is far more than the
central areas. Go further out, and things are still closer to "normal".

~~~
mafribe

       things are still closer to "normal".
    

What do you mean by normal here? Everything is left empty by fabulously
wealthy owners, or everything is packed to the rafters? I guess the latter.

~~~
vidarh
Neither. I mean the mix of properties is not skewed so heavily towards one
type of properties, and you have a spread of bigger blocks of flats, smaller
ones, terraced housing, detached houses. I live in Croydon, and here you'll
find a wide mix from studio flats to mansions, often quite near each other.

The proportion of empty properties does not vary much across London as far as
I know. Certainly not enough to be noticeable.

~~~
mafribe
You are right, I'm only familiar with central London.

I doubt Croydon currently has enough glamour to attract the super rich to park
their money with empty mansions.

I imagine that the main reason for property to be empty in Croydon is that it
can't be sold/rented at the target price level.

~~~
vidarh
Empty mansions or super-expensive flats over the long term does not contribute
much to the stats - that type of housing make up a vanishingly small part of
the total housing volume, so even if they were all empty it wouldn't make much
difference.

But Croydon actually has some of the most expensive areas of the UK. When
people think of Croydon, they often think only of Croydon town centre, but
that's a tiny part of the borough. It doesn't have the 10+ million flats you
might find a handful of in Kensington etc., but it does have lots of multi-
million properties, in numbers big enough that those _are_ significant for
these stats.

E.g. here's an example of the type of things you might find in Purley, which
is part of Croydon [1], [2]. In Shirley (also Croydon) you're more likely to
find properties around the million mark, but you do have roads where the
average is around 1.5-2.5 million.

In terms of empty properties, there's minimal difference between those areas,
or the luxury flats near the station, or the middle class areas, or the couple
of run down council estates.

[1] [http://www.zoopla.co.uk/for-
sale/details/41807624?search_ide...](http://www.zoopla.co.uk/for-
sale/details/41807624?search_identifier=b86ad45a3c9062e09cc4e7cefaadb2fc)

[2] [http://www.zoopla.co.uk/for-
sale/details/33270402?search_ide...](http://www.zoopla.co.uk/for-
sale/details/33270402?search_identifier=b86ad45a3c9062e09cc4e7cefaadb2fc)

------
gregpilling
this was interesting ---- "There’s now 107,000 vacant homes, representing 7.5%
of all residential dwellings in the city according to France’s INSEE. Deputy
Mayor Ian Brossat told Le Monde that 40,000 of those vacant homes aren’t even
connected to the electrical grid."

So almost 40% don't even have the power turned on? Vacant or abandonded?

As an interesting anecdote to add, I have a close friend who purchased an
industrial building in Tucson Arizona. It had been there for 40 years when he
purchased it and he took ownership of it and did not turn the electric service
on for 7 months while he did some landscaping and stuff outside. Turns out
that was a big mistake. The code says that if the electric is off for 6 month
plus a day, it has to be brought up to current year code spec. So my friend
had to spend 3 years and thousands of dollars to upgrade this industrial
building in order to get a permit to use it.

I wonder how many of those Paris housing units could even have their
electricity turned on even if they wanted to. Would it pass code? Then do they
get taxed 60% of fair market in this scenario? My friend spent well over
$50,000 just on electrical upgrades, not to mention the cost of an unusable
building for 3 years.

Does anyone know current Paris electric code?

~~~
dsr_
I don't think Tucson believes that's a mistake. Cities would prefer that all
buildings are up to code, all the time. Tucson was lenient enough to say that
if your friend can afford to keep the building dark for six months, he can
afford to bring it up to code. It's entirely likely that if he tried to insure
the building, his insurance company would require an inspection and similar
work.

Perhaps he needed better inspection before purchase.

~~~
gregpilling
it was my friends mistake - the city code was clear but he was not aware of
it. He owns a lot of buildings, so he self insures and has done so for 20+
years. This particular building they were making into a new business
headquarters, so it was disconnected just -slightly- too long.

There was nothing wrong with the electrical. He was forced to make the 40 year
old building ADA compliant, with handicap bathrooms, parking, etc. and a whole
other list of requirements that did not apply when the building was built.

So take it as a lesson, not a complaint about code. Also, never shut off
utilities if you can help it :)

~~~
Frondo
I bet people with disabilities who go there will appreciate the ADA
compliance, too.

~~~
gregpilling
Its a sewage treatment plant. He has not had anyone come to his business in 25
years that needed ADA compliance. It is part of the current building code, so
that is that. No ADA, no final approval.

------
yardie
Good luck, Paris. There is a non-negligible number of apartments where the
owners can't be found. Paris is an old city. Some of these apartments are very
old. The chain of ownership can be quite complex especially when descendants
are involved. A friend told me he asked the guardian of a building for the
owner details because he wanted to buy it. The guardian only had a 4-digit
telephone number, that's how old the information was.

The last person to live there died in 80s. They did have 2 grandchildren one
in Canada and the other in Australia. They did not know they inherited an
apartment. Do to inheritance laws them and a cousin were the beneficiaries.
And to sell this property it required their approval and a split of the
proceeds. In total it took 18 months to buy this flat.

I'm sure there are other stories like this.

~~~
collyw
I really hope squatters take advantage of these apartments. I mean, who
actually looses in such a scenario when people don't even know they have
inherited an apprtment?

~~~
yardie
Squatters do. Some of the most famous squats in Paris, i.e. 88 Rivoli, were
abandoned and inherited by the state.

------
nickjarboe
Please note this 60% tax is 60% of what one could rent the property for, not
60% of the value. Yearly rents are maybe 5-10% of the value, so a 3% to 6% tax
as the word is normally used. Still something, but not nearly extreme as the
headline.

~~~
hbbio
No, this is 60% of the property tax, not the rental value. It's much less than
rental value, and although quite interesting for the city of Paris (which
should net about $30M / year) it is nowhere close 60% of the rental value of
those flats.

~~~
djrogers
No, the article clearly states it is 60% of rent:

"Starting in 2015 the city elected to tax vacant homes the equivalent of 20%
of the fair market value of rent. On January 30 this year, they decided to
triple that amount to 60%. "

~~~
Timshel
The article is crap, the change is to the property tax (taxe d'habitation
[http://www.lemonde.fr/argent/article/2017/01/25/a-paris-
la-s...](http://www.lemonde.fr/argent/article/2017/01/25/a-paris-la-surtaxe-
sur-les-residences-secondaires-va-passer-de-20-a-60_5068843_1657007.html)).
The property tax is really low in Paris, for a 200ke flat you'll pay less than
200e a year, so while it will bring more tax it will change nothing to the
problem.

------
kingmanaz
Rural Arizonan here. One wealthy Californian bought the three houses adjacent
to my home ~8 years ago. All have been vacant since purchase. The guy drops by
on his brand new Harley once a year, at most. Bare minimum upkeep of property:
weeds, flaking paint, unpainted siding, etc. Owner does occasionally show up
at city council meetings to protest tax increases, however.

Fairly common to encounter the above in small town historic districts across
the nation. Perhaps it's inevitable when housing is viewed as a "holding"
rather than a home.

~~~
anigbrowl
What does he say in response to being called out as an absentee? I'd be pretty
aggravated; I feel like if you buy property you should do something with it,
and would support use-it-or-lose-it approach.

~~~
paulddraper
There's a viewpoint out there called "property rights". It means that the
owner has the ability to live in his property, rent out his property, make it
into a orca preserve, or use it as a temple to the salamander god.

Weird, I know.

~~~
anigbrowl
Don't patronize me. I already made it clear that I adhere to a 'use it or lose
it' view of property rights, so your reply that there are such things as
property rights is superfluous.

Just because we disagree doesn't mean I'm ignorant of your position, and it is
rude of your to pretend otherwise.

~~~
paulddraper
Sorry.

I figured the wealthy Californian already made it pretty clear that he adheres
to a 'I buy it and I own it' view of property rights. "What does he say in
response to being called out as an absentee?" seems obvious.

------
chrismealy
Why are all the nice places getting so insanely expensive? Why not make more
nice places? It's no coincidence that the nicest places were built before cars
became dominant. If you want your place to be valuable, build for people and
not for cars.

~~~
wool_gather
> Why are all the nice places getting so insanely expensive?

Because, over the last century, the non-liquid surface area of the planet
remained roughly constant while the human population tripled.

And that happened because some incredible portion of the humans believes that
birth control is wrong.

~~~
yummyfajitas
At Paris levels of density we could fit the entire population of the world
into New Mexico. There is no shortage of space.

Your explanation simply doesn't work.

------
sologoub
This is a much better article on this topic, providing some important
additional facts: [http://m.leparisien.fr/paris-75004/nouvelles-taxes-sur-
les-r...](http://m.leparisien.fr/paris-75004/nouvelles-taxes-sur-les-
residences-secondaires-et-les-logements-vacants-a-
paris-13-06-2016-5880311.php)

Using google translate: "For an apartment located on Saint-Louis Island, one
of the most speculative sectors in France, the average amount is € 142 per
year."

The current vacation home surtax is 20%, so this means the base tax must be
€710, so new total for a vacation home would be €1420. Seems like a bargain to
what we pay in LA.

~~~
Timshel
In the article they are speaking of the "l’île Saint-Louis" which is over
there : [http://www.meilleursagents.com/prix-
immobilier/paris-75000/r...](http://www.meilleursagents.com/prix-
immobilier/paris-75000/rue-saint-louis-en-l-ile-4405/). The price is at least
13ke/m2 so it will have no impact.

------
pasbesoin
Small symptom of a larger concern. "Wealth" and "ownership" are not simply
material. More importantly, they represent _control_ over institutions and the
livelihood and welfare of those institutions employees, members, and managed
resources.

Past a point, if that control shifts welfare too far from some sort of common
good, should -- and can -- the "ownership" shift to counter-act this?

Or, to put it in old terms, in their way not entirely outdated -- certainly
not in sentiment, regardless of those specific words: Noblesse oblige.

Some of our current elites -- like always -- think this should be "trickle
down" and that they should retain absolute control. That they are inherently
superior, and that their position proves this and justifies whatever they
decide and do.

Well, no. It is much more dynamic than that. Just, most people these days
would prefer that dynamism exert itself effectively without e.g. war and
wholesale exploitation.

My perspective is, more people doing better makes for a happier, more
enjoyable, _more interesting_ world.

But I find myself butting up against a lot of not just me-first, but also zero
sum gain -- belief and behavior.

When people are using their control to make a bunch of other people
unnecessarily miserable, take it away from them.

Perhaps our greatest achievement is the means of doing so without guns and
death. Maybe. Sometimes.

------
MrTonyD
This is a real problem. For a while I was running my own company and making
more than I could spend - so I bought a house in a nice older neighborhood -
walking distance to the beach, restaurants, and a pier, and very pleasant. But
I soon discovered that most of my neighbors were never there - perhaps 10% of
the houses were owned by wealthy people who would visit once or twice a year.
So most residents of my town can't afford to live there - while the wealthy
can afford to buy those properties and leave them empty.

Something is very wrong with the US economy and needs to be fixed. I don't
want things to be "fair" only for the rich - I want things to be "fair" for
our entire society.

~~~
AJ007
If the owners are paying property tax on (very expensive) homes then the extra
revenue should be very beneficial to poor people who use city services and
contribute little to no tax revenue. If there is no property tax, or it is
abated (NYC), or the city prevents new construction, then it is another issue.

~~~
j2bax
It's the lower middle class who used to be able to afford to own a home in
these areas that now can't, that are really hurt. I've seen this happen in
small towns around rural upstate NY in the adirondack park where wealthy
people from the city spend massive amounts of money on property and spend a
holiday or two per year in them. The economies of these small towns are
generally almost non existent and the couple holidays a year isn't enough to
lift them up to match the ridiculous rise in real estate and property. It's a
really unfortunate situation.

~~~
wbl
Small town in rural area seems could enable more construction so that people
could live in new houses. Don't forget second homes pay taxes.

------
hartator
Worth noting you can't evict people in Paris if they are not paying rent. Some
- actually most - ends up _paying_ their renters to make them move out. Maybe
these regulations are more the issue than the assumed laziness of landlords.

~~~
camus2
This is definitely an issue. Even I who is left leaning think it shouldn't be
the case.It makes things hard for both the owners and those who seek an
accommodation, especially minorities. Owners now ask for crazy guarantees.
Imagine you're 40 with an IT job and house owners still ask for your parents
to guarantee the rent will be paid!

Bad tenants should definitely be easier to evict. In some parts of the world,
if you're 24 hours late paying the rent you can get evicted manu militari, in
France, it can take years.

Frankly anybody who is airbnb'ing his house or apartment in France is playing
with fire. He could be stuck with squatters for years, there is nothing he
could do about it.

~~~
hackermailman
The cost of landlord insurance to protect against delinquent tenants is surely
passed on to renters though, driving up the rents as well and maybe
contributing to the empty homes problem as nobody can afford to live there.

Vancouver has bypassed the lengthy process of eviction and limits on rent
increases with landlords now forcing you to sign yearly contracts with clauses
that specify you agree to move out on the day the lease expires, so they can
increase the rent however much they wish or toss you out more easily. I have
yet to find anywhere that doesn't dangle this yearly lease scheme so I have to
now plan a vacation week around lease negotiation time in case they skyrocket
it and I'm forced to move.

------
nickgrosvenor
This boom in Real Estate investment is a consequence of global interest rates
being historically low. People want to put their money to work, borrowing is
cheap, so they buy assets. Art, commodities, real estate, etc.

When interest rates go up. Fixed-income securities will be much more
attractive.

Combine that with local home owners having to pay a higher monthly mortgage
payment due to higher rates. Their affordability will go down.

The pendulum will swing and a sellers market will turn into a buyers market.

It will be sellers racing for the exit and patient buyers on the sidelines
hoping a little longer wait will produce even better deals.

When interest rates go up, this issue will take care of itself.

~~~
TheCowboy
The article appears to be talking about vacant homes that are a result of
people buying flats and only using them when they visit the city, not
vacancies due to demand bottoming out for new housing. A person wealthy enough
to buy a spare Manhattan apartment isn't going broke if interest rates go up.

Fixed-income securities are less attractive when there is increasing
inflation. A bond that returns 1% will still only return 1%. You don't want
your money stuck in 1% bonds when seeing double digit inflation.

Interest rates basically go up to either counter or prevent an increase in the
rate of inflation. It's difficult to target a single market to head off a
speculative bubble with the tool of interest rates alone, especially if
inflation is low and stable.

------
kerkeslager
This trend is downright offensive when you realize that many cities with
vacant home problems also have homelessness problems.

~~~
jedberg
Boston is actually trying to solve this. They are redirecting the money they
spend on homeless shelters towards paying rent for the homeless in otherwise
vacant properties and providing lawyers for the owners in case the tenants
cause any problems.

------
DINKDINK
Time for to report where you live and to have your home inspected citizen, how
else will we know if you're abiding by this law

~~~
pjc50
France requires that you register with the municipality for your identity card
anyway.

------
chrismealy
Not an expert, but I've heard a lot of property purchases are a way for rich
people in China to evade capital controls.

~~~
hackerboos
It's not just capital controls. There is a lot of fraud in China that ends up
being laundered in real estate here in Canada:

[http://theprovince.com/business/real-estate/mysterious-
wheel...](http://theprovince.com/business/real-estate/mysterious-wheeler-
dealer-is-at-centre-of-a-web-of-b-c-real-estate-deals?__lsa=5505-e545)

~~~
mistermann
Toronto is now also completely out of control:

[http://www.greaterfool.ca/2017/03/04/its-official-its-a-
bubb...](http://www.greaterfool.ca/2017/03/04/its-official-its-a-bubble/)

Normally there would be an epic crash in the near future, but I have come to
the conclusion that this time really is different, and I'm not joking.

~~~
hackerboos
Shame the government of Ontario won't even consider the BC foreigner tax.

~~~
kspaans
Numbers I've seen suggest that the proportion of "foreign money" in Toronto is
even lower than in Vancouver (mostly from GreaterFool.ca), so the tax may not
have a large effect.

~~~
mistermann
My question would be: what is their definition of "foreign money", and how are
they determining how much of it is involved in their housing market.

------
lazyjones
This is just rampant populism and greedy politics in action. Everyone
understands that the most reasonable solution would be to simply build more
(yes, it's possible even in old cities like Paris, just allow adding a few
floors on top of every building). If a 20% tax in addition to operating costs
of apartments did not help their cause, what - except more tax money - do they
expect from 60%? A hypothetical greedy speculator will just rent 1 of 3
apartments and break even.

~~~
stuaxo
The point is, that we hav3 already built more but they are not being used to
live in, what's to say the same wouldn't continue to happen.

~~~
lazyjones
Nobody builds new apartments in order to leave them empty, that's a terrible
use of capital (exception: extremely luxurious flats). Speculative investments
in real estate are usually old/desolate buildings, where it's worth it to wait
until the last renter leaves/dies in order to sell or tear down the whole
building. I know that's how things are here in Vienna, I don't see why things
would be any different in Paris, where there are very similar problems (old
city, strict laws for tenant protection, influx of migrants, investments
increasing prices since the 2008 crisis, complaints about empty flats).

------
m3kw9
People using 10x leverage to get homes, what do you expect?

------
m52go
Has anyone analysed the value of these vacant homes?

Something tells me they're not cheap. They're bought to speculate/invest,
after all, right?

So is this trend really hurting those who the government is claiming to
protect?

Although I guess one could claim that this trend encourages builders to make
more expensive housing when they could make more affordable housing...but
that's just how markets work, no?

~~~
MrTonyD
Markets are not created by God. They are the result of laws and policies - as
is also true of the distribution of income. We, as a society, can decide how
we want our economy to work. (There is plenty of literature describing how
free market is a myth.) So "how markets work" in Paris will be with a 60% tax
- hopefully it will achieve their goals - otherwise, they can try other
things.

~~~
brightball
Ehhh...free market is a myth is a bit of a myth. Free market hasn't really
existed in our lifetime is more accurate.

The free market is essentially a natural law. It's the root of economics.
Policies and laws merely try to control portions of the formula and when they
do that the reaction is predictable.

Put price controls on something, demand will rise and supply will fall.
Provide money for a service regardless of price without increasing supply,
demand will increase and the price will along with it. Control the price and
the supply, then as demand increases you create a market for access.

These are the basic effects that have happened with education, health care,
real estate, etc. Everytime policy tries to interfere, the market merely
adjusts. When money is handed out from government policy, inflation happens.

You can pass a law that gravity must behave differently...doesn't mean it can
actually control it.

The only controls that laws and policies have on markets is tampering.

~~~
anigbrowl
This is a very simplistic view of markets, ignoring the fact that demand can
be both cultivated and suppressed, elasticity of demand, and sufficiency of
supply. Supply and demand give rise to Strange behavior (in the sense of
equilibria following strange attractors), but claiming that all interaction is
tampering is just the naturalistic fallacy over again. It reminds me of people
who object to doctors because they believe medical intervention runs contrary
to God's will.

~~~
brightball
What is cultivating or suppressing demand if not tampering? It doesn't change
the formula. Marketing affects demand...but doesn't change the formula at all.

------
IvanK_net
I don't understand, why owners buy such vacant homes, which they use twice a
year. Renting the same house for two days would be much cheaper.

Also, once they own such property, they could rent it for the time when they
are away. They could make a lot of money this way.

In the first case, people are giving away money for nothing. In the second
case, people refuse to take money. Why do they do that?

~~~
imgabe
I think it is a place to park money. Homes in highly desirable areas tend to
maintain their value and usually increase over time. If you're sitting on
hundreds of millions or billions of dollars, you can't just stick it all in a
savings account or an index fund. It has to go _somewhere_. Real estate is one
place.

Consider a $20 million Manhattan apartment. Even if it has a "management fee"
of $5k per month (not uncommon), that's still only 0.3% per year. Far less
than you'd pay to a hedge fund or other investment manager to hold on to the
money.

Ultimately I think it will be self-defeating. If too many people do this, the
vibrancy of the city that makes the real estate valuable in the first place
will disappear, because nobody will be able to afford to live there.

~~~
mafribe

       Far less than you'd pay to a hedge 
       fund or other investment manager 
       to hold on to the money.
    

And yet, renting it out or AirBnBing it would be what? +$10k per month? There
are not many people rich enough not to care about foregoing that much money
every month.

~~~
0xcde4c3db
> There are not many people rich enough not to care about foregoing that much
> money every month.

However, the few people who _are_ that rich hold a wildly disproportionate
share of total real estate. I don't remember the exact numbers and am having
trouble finding a decent reference, but it's something like 10% of real estate
being held by the top 0.01%.

~~~
mafribe

       10% of real estate being 
       held by the top 0.01%.
    

First I doubt the veracity of such claims.

Second, yes, you are right, there are real estate tycoons owning a lot of
property, but they typically make their money by renting and selling
dwellings, _not_ by leaving them empty. For example which of the world's
richest real estate tycoons in the list [1] is leaving substantial numbers of
their property empty? My conjecture is: nobody.

[1]
[https://www.forbes.com/sites/erincarlyle/2016/03/14/the-20-r...](https://www.forbes.com/sites/erincarlyle/2016/03/14/the-20-richest-
real-estate-barons-in-the-world-2016/#7220bd636540)

------
jwilk
Archvied copy, which doesn't require JS:

[https://archive.fo/gtByt](https://archive.fo/gtByt)

------
bendmorris
I believe this is responding to a symptom (vacancies) without addressing its
primary cause (land speculation.) Housing is viewed as an investment;
speculators capture the value of location and public spending by increasing
the rent they charge, but don't add any value themselves, essentially
siphoning value out of the community. The result is a boom/bust cycle and
unaffordable rents. Disincentivizing vacancies may increase supply and lower
prices, but occupied properties still have the same fundamental problem. A
land tax on the unimproved value of the land is an elegant solution which
incentivizes adding value to property rather than using it to park money.

Edit: I'm surprised I'm being downvoted so much - maybe you disagree, but this
is at least an attempt to add to the discussion.

~~~
lkrubner
"without addressing its primary cause (land speculation.)"

I don't understand what you mean. We can quibble about the details of this
particular tax, but set that aside for a moment.

The best way to fight speculation is to put a tax on it. To see what I mean,
imagine these 2 scenarios:

1.) There is a country without any land tax. You see a house that you can buy.
You believe prices will be 10% higher within one year. Do you buy the house?

2.) There is a country with a 10% annual land tax. You see a house that you
can buy. You believe prices will be 10% higher within one year. Do you buy the
house?

In scenario #1 the house is a good investment.

In scenario #2, you would only buy the house if you are going to live in it,
or if you can rent it out and make money off of it. In either case, in
scenario #2, the house is not vacant.

A land tax forces the owners of land to use the land for productive purposes,
rather than just holding it.

~~~
bendmorris
Maybe I was unclear, but it sounds like we agree: "A land tax on the
unimproved value of the land is an elegant solution which incentivizes adding
value to property rather than using it to park money."

Vacancies are caused by the fact that we live in scenario #1. Speculators can
buy up properties, keep them empty, and reap a financial reward (as long as
they time it right) as demand for the location increases.

------
spoonie
Interesting that they don't mention Vancouver, who also implemented a vacant-
housing tax last year.

~~~
stolk
Indeed. And Vancouver seems to have a simpler method too: A tax of 1% of
assessed value.

In Paris, they need to come up with a "market rent" figure for each and every
property to tax. Do they have those numbers? Using assessment value as
Vancouver does, seems a lot easier.

Also, I wonder what's a bigger number: 1% of assessed value, or 60% of market
rent. The previous 20% of market rent seems to be a low number, compared to
the wealth stored in the property.

~~~
spunwasi
Market rent would likely be established through a cap rate of assessed value.
So I'm assuming it's not really that much harder to do. Works out to around
30% higher than Vancouver's tax.

The problem with Vancouver's system is they determine vacancies through a
survey. If you lie, you pay a severe penalty. However, they have a track
record of not enforcing anything.

For example, the city has a law preventing the use of a home for an AirBnB
full-time without a B&B license. Only 56 B&B licenses have issued in the metro
area, and there were more than 2,570 listings that violated that rule at last
check. City's response to our article was they have no idea how to figure that
out...we offered the bot that cross references it and they said no thanks.

------
robk
It's quite bad in London too. Take a walk down Bishop's Avenue in Hampstead.
It's one of the richest roads in the country yet there are 10m+ value mansions
literally disintegrating. Some have thick Moss growing on the driveway and
many have piles of garbage in the yard.

------
ChuckMcM
I've suggested this in the past and it's great to see a large municipality
trying it out. Now to put together a list of people who want to live in Paris
rent free by signing up to a program of 'bonded house occupiers'. :-)

------
stuaxo
There is absolutely no way London has that few empty homes.

Going to work every day, seeing the amount of new homes being built (including
many where Estates of poorer people are moved out first), vs the high prices,
does not add up.

------
wyager
The market has a solution to this; it comes in the form of AirBnB. However,
many municipalities are aggressively attempting to legislate this market
mechanism away.

~~~
kovacs
No, AirBnB isn't a solution to this problem. The problem is there's a
constrained supply of housing in Paris and the city wants to try to ensure
that people who own housing there actually live there. You know, so there's an
actual thriving community and culture instead of fly-by owners that aren't
actually residents.

How in the world does a service that encourages turning residential housing
into hotel rooms solve that problem exactly? Local wanna be residents are
going to rent rooms in the homes of the wealthy absentee homeowners? Maybe
some, but I suspect a vast majority are fine just letting them sit vacant.
Even if they do, that's no way to build a healthy, thriving community. It's
fast food housing. I, as well as many others, don't want to live in a building
that's part residential, part hotel.

So your solution is "Let AirBnB enable the absentee owner to rent out their
place to the local baker that is priced out of owning.", thereby giving the
illusion of a solution but really not solving the problem because the fabric
of the community becomes provisional at best.

Seems like a fairly poor solution to me. I hate red tape as much as anyone but
I've come around to think that well crafted and executed policy that focuses
on the common good is a better option to strive for than figuring out how to
enable even more wealth concentration than we already have. The trick is "well
crafted and executed" which I agree is rarely the case but we already know the
end game with unbridled capitalism. Just ask the pope -
[https://www.theguardian.com/world/2015/jul/10/poor-must-
chan...](https://www.theguardian.com/world/2015/jul/10/poor-must-change-new-
colonialism-of-economic-order-says-pope-francis)

~~~
wyager
You've invented a new problem explicitly designed to exclude the solution I
mentioned.

The problem in the article is that there is unused/abandoned housing. AirBnB
fixes that. If you have a xenophobic fear of tourists or something, that's a
different issue. AirBnB also decreases the profitability of large hotels,
which means more building space allocated to residential housing.

~~~
mshook
AirBnB makes it worse for the local population, that's what this 60% thing is
about.

Sure it's great as a tourist but as an owner, when you could rent your place
for X € a month, on AirBnB you could probably rent it for 70% of that for a
week. Bottom line is you're not looking for people to rent it all year long,
now you want to make a quick buck and rent it on AirBnB.

There's an article in the HuffPost:
[http://www.huffingtonpost.fr/2016/03/30/airbnb-paris-
locatio...](http://www.huffingtonpost.fr/2016/03/30/airbnb-paris-location-
rentable-loyer-appartement-logement-hotel_n_9572252.html)

"In the 10 most touristy areas, 9 to 10 nights on AirBnB cover a whole month
of 'regular' rent".

To get there, they analyzed 8000 places out of 35000 (studios and one
bedroom).

~~~
mshook
Not sure why that was down voted: I mean the goal of the 60% tax measure is to
offer places to rent for locals, AirBnB doesn't solve that, it makes it
worse...

------
phkahler
The 60 percent tax sound high, but it is a tax on the going rate for rent, not
the value of the property.

------
itisbiz
Lonelyhomes.ca is attempt to get grassroots enumeration of vacant homes in
Vancouver, BC Canada

------
aaron695
People paying for assets then not using them.

I don't get this meme on how this could be bad?

I guess because peoples lives often suck and they need to defer blame?

Blaming 'rich' people for why you can't afford to live in the exact spot you
want is easier?

These people are subsidising the rest. They are paying year long taxes for
assets they don't use.

I really don't get this groupthink.

------
interstitial
Whatever the problem is, more government and taxes is surely the solution.

------
mnglkhn2
This will deflate house prices by getting demand down.

------
rafiki6
Good

