Landlords are notorious for having a bias toward raising the rent. They’re in it for the long haul, they’ve seen downturns before, and while they’re quick to raise rents in good times, they are loathe to lower rents, even if it means sitting with an empty storefront for months at a time.
While this math might be compelling for some landlords, it’s terrible for the cities those buildings are located in.
Empty storefronts deny residents accessible services.
They lead to vandalism and other crime.
And they suck the vibrancy from the neighborhood.
They also deprive the municipality from sales tax revenue, cost jobs and take watchful eyes away from the neighborhood as well.
If we view the ability to have a well-cared for, civil neighborhood as a privilege, it’s logical to consider a vacancy tax for landlords as an incentive for them to lower rents when decreased demand happens because retailers can’t afford the old rent.
It could be something like: For any storefront that’s empty, after two months of vacancy, the landlord has to pay a tax of 20% of the average rent they’d be receiving. All the money would go to neighborhood improvements and policing.
Lower rents create new innovations, which leads to more interaction and more vibrant neighborhoods. And in the long run, it gives landlords an incentive to do what actually generates more of what they seek as well.
No comments
October 25, 2018 at 10:14 am
I don’t no, Jo, I agree there are real detriments to vacancies, and it’s often surprising the degree to which landlords would rather have no rent at all the when they could have a reduced rent.
I remember one case where a property was listed for about 35% higher than it should have been. Consequently it had sat vacant for over a year. Someone made them a fair market offer, which the owners rejected completely, not even a counter offer. It took three months to close the deal, during which time the owners decidedly did not act like the “motivated” sellers they should have been. Later on it was discovered that the owners had been the recipients of a multimillion dollar insurance settlement, so they were not motivated at all and we’re happy to sit back and rest on their high price. We should be able to do something to motivate the otherwise unmotivated.
But I still think regulation in this area should err on the side of being minimal. It’s already too alarming how comfortable municipal governments feel dictating what people can or can’t do with their own property.
And for every insurance settlement fat cat, I bet you there are many others who simply can’t afford to take on a bad deal. I know one older lady who owns her income property outright. Whenever it is rented, she incurs various overhead costs. If she can’t get a rent that will cover those costs, as well as compensate her for her time and effort, then she is quite rightly wiser to leave it vacant. We shouldn’t be bullying people into a bad deal.
At very least, if there were a vacancy tax as described, it should wait much more than 2 months. It often takes much longer than that to screen and establish a new tenant. I would think 6 months at the very least, if not a year.