this post was submitted on 13 May 2024
210 points (94.5% liked)
Housing Bubble 2: Return of the Ugly
330 readers
781 users here now
A community for discussing and documenting the second great housing bubble.
founded 7 months ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
Wouldn't that just drive rents up? Landlords would instantly pass the cost onto renters.
Not every tenant in every market can raise rents unless landlords collude which is supposed to be illegal.
You wouldn't really need collusion to figure out what your new tax liability was and raise rent by that much. Just like how the cost of an EV goes up by the exact amount of any new tax rebates you'd qualify for by buying one.
You need collusion to make sure all the landlords raise rents by the tax increase. Not every landlord is undercapitalized and lose money over a tax increase so they could not raise rents and steal rents from other landlords.
You still don't need collusion...it's got nothing to do with undercapitalization. The IRS would publish a new rule, the underwriter would increase the escrow payment to cover the new tax liability (meaning the amount the property owner pays the bank monthly would increase) and the owner would increase the rent by that same amount. You would only need collusion if you wanted to raise the rates higher than the tax increase. If you wanted to, for example, increase rents by 2x the tax increase, then collusion could be helpful...but its still super risky. It only takes 1 landlord to not be OK with it to expose the whole thing.
You do need collusion to keep the more profitable landlords from just taking the increased taxes out of their profit. Regardless landlords are proven to be colluding via RealPage so your point is moot.