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0 pointsbenrbray5y ago0 comments

I have a different idea that maybe I can get some feedback on here. Maybe it's really dumb for obvious reasons, so please tell me.

Construction companies that build residences are clearly creating value for society, so they should be allowed to make some kind of profit. Real estate agencies that buy property from construction companies are doing a very bad thing by renting them as "luxury" housing to people who otherwise have no choice since their livelihood is tied to an urban area.

Why not put a cap on the profit that can be made from a residence? Something like 5x construction costs, plus ongoing costs of maintenance. Suddenly, the "luxury" housing market is no longer suffocating all the affordable housing out of town since the property owner can't expect to rake in the piles of money every month.

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ryanianian5y ago

If we say "no more profit after 5x" then buildings will constantly be torn down and rebuilt or otherwise "re-constructed" to reset the clock. Renting property has its own ongoing risks as any landlord will tell you, and we reward risk with (potential) profit.

Many buildings are "luxury" in that they cost 15% more to build but then ask for 50% higher rent. It's not hard to find buildings that were once "luxury" but are now kinda gross since the veneer has peeled off. But there's not enough competition in housing to force the rent lower.

What gets people fed up is the seemingly universal constant of rents raising 10% every year despite no additional investment.

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