Liberal Minority Government 2021 - ????

[TacticalTea]

What do you mean by “15% of the mortgage rate for the property”? You mean the mortgage principle value? The annual mortgage payments? The assessed value? I’m trying and failing to find a way to make this make sense.

And also, no. If I own a property, I have the right to ask whatever I want in rent, subject to limits on increases when there’s an existing tenant in place.

Same thoughts, had trouble understanding 15% of what.

Regardless, it strikes me as far too interventionist a policy that would result in less housing, since building would become less profitable, and thus there is less of an incentive to build.

 

[Remius]

Agreed. 15% seems off and too regulatory. The market should dictate as well as supply and demand. The issue being the market being influenced by outside factors beyond the market’s control.

Factors and rules to protect renters and landlords but price setting seems a bit too far.

 

[Brad Sallows]

Generally, any attempt at price controls produces shortages. This has been repeatedly empirically observed for decades in all sorts of markets, including rental markets. A rational person avoids demonstrably futile undertakings.

 

[Halifax Tar]

What do you mean by “15% of the mortgage rate for the property”? You mean the mortgage principle value? The annual mortgage payments? The assessed value? I’m trying and failing to find a way to make this make sense.

And also, no. If I own a property, I have the right to ask whatever I want in rent, subject to limits on increases when there’s an existing tenant in place.

15% of what you pay a month. If your mortgage is 100$ then you should only be able to ask for 115$ in rent a month.

If it's a multi unit complex you divide the monthly mortgage payment + 15% by the number units.

I would normally agree with you, unfortunately I've been witnessing a lot of greedy landlords and companies. I'm actually very pro open market, when it's fair and right now it's not.

 

[brihard]

15% of what you pay a month. If your mortgage is 100$ then you should only be able to ask for 115$ in rent a month.

If it's a multi unit complex you divide the monthly mortgage payment + 15% by the number units.

I would normally agree with you, unfortunately I've been witnessing a lot of greedy landlords and companies. I'm actually very pro open market, when it's fair and right now it's not.

Congratulations. You just incentivized the creation of an entire criminal industry to generate artificially high appraisals, and artificially high mortgages (likely with fraudulent kickbacks built in) in order to allow for higher rent to be charged. Also, your extra 15% in a lot of cases won’t cover the combination of insurance, condo fees, etc. the inability to get some decent return on investment will put a strangle on new supply. This would be brutally counterproductive.

 

[Halifax Tar]

Congratulations. You just incentivized the creation of an entire criminal industry to generate artificially high appraisals, and artificially high mortgages (likely with fraudulent kickbacks built in) in order to allow for higher rent to be charged. Also, your extra 15% in a lot of cases won’t cover the combination of insurance, condo fees, etc. the inability to get some decent return on investment will put a strangle on new supply. This would be brutally counterproductive.

So does that make me a Liberal then ?

What's your idea ?

 

[Quirky]

Severely limit immigration and international students until housing stock is normalized. You can’t grow houses on trees but you sure as hell can stop the flow of people.

 

[brihard]

What's your idea ?

Identify and tackle constraints on supply, such as zoning that resists densification, training more building trades, and planning urban growth more amendable to mass transit and dense residential.

Identify and tackle demand side challenges that don’t serve the national interest, like absentee foreign ownership, real estate as a vehicle for money laundering, etc.

Take a meat cleaver to portfolios of short term rentals like AirBNB. Treat them and regulate them fully as businesses, with narrow exceptions carved out for actual principle residences and maybe rural recreational properties that wouldn’t generally be part of primary residence supply.

 

[Halifax Tar]

Identify and tackle constraints on supply, such as zoning that resists densification, training more building trades, and planning urban growth more amendable to mass transit and dense residential.

Identify and tackle demand side challenges that don’t serve the national interest, like absentee foreign ownership, real estate as a vehicle for money laundering, etc.

Take a meat cleaver to portfolios of short term rentals like AirBNB. Treat them and regulate them fully as businesses, with narrow exceptions carved out for actual principle residences and maybe rural recreational properties that wouldn’t generally be part of primary residence supply.

Sounds great. What happens when the demand on building materials sky rockets ? Who is that cost passed onto ?

AirBnB I have no opinion on. Never used them don't know anything about it.

 

[brihard]

Sounds great. What happens when the demand on building materials sky rockets ? Who is that cost passed onto ?

AirBnB I have no opinion on. Never used them don't know anything about it.

When demand increases, prices will increase somewhat. Mills, plants, etc will increase production and hire more staff, wages in construction material sectors will grow a bit… All normal market dynamics in an industry that has fairly elastic supply and demand dynamics already. Of course prices on various inputs will shift with changes in demand and supply. That’s in no way a show stopper.

 

[Halifax Tar]

When demand increases, prices will increase somewhat. Mills, plants, etc will increase production and hire more staff, wages in construction material sectors will grow a bit… All normal market dynamics in an industry that has fairly elastic supply and demand dynamics already. Of course prices on various inputs will shift with changes in demand and supply. That’s in no way a show stopper.

I think you're down playing it. The price of lumber alone is already crazy. And that's just one family of building materials.

Higher demand equals higher prices. That's beginner economics.

 

[Remius]

I think you're down playing it. The price of lumber alone is already crazy. And that's just one family of building materials.

Higher demand equals higher prices. That's beginner economics.

What? No. When demand is higher than supply then that leads to higher prices.

 

[brihard]

I think you're down playing it. The price of lumber alone is already crazy. And that's just one family of building materials.

Higher demand equals higher prices. That's beginner economics.

Yes. Which is why I already said that. Canada is also not presently at or near historical highs for production by volume nor softwood lumber price. There’s room for expansion in supply of housing starts are allowed to increase.

Any increase in production of housing supply will mean increased demand for labour and material inputs. That’s obvious to anyone. Are you suggesting that should be a reason not to reduce other barriers to housing starts?

 

[Halifax Tar]

What? No. When demand is higher than supply then that leads to higher prices.

Which is where we are right now. That was the implied task.

Higher demand also creates lower supply.

 

[Kirkhill]

I don't know many people that bought houses before starting families. Most started families while renting.

I know one or two who started families before leaving home, starting renting or even getting married.

Sex education has a lot to answer for.

 

[AmmoTech90]

15% of what you pay a month. If your mortgage is 100$ then you should only be able to ask for 115$ in rent a month.

So a 900 dollar a month mortgage would net $135 dollars. Property tax of 2400 a year plus 1500 for insurance, not unreasonable, would result in a net loss. This doesn't take into consideration putting aside funds for a new roof, maintenance, etc.
Congratulations, you've eliminated the rental market.
What's your idea not to cause that?

 

[Halifax Tar]

Yes. Which is why I already said that. Canada is also not presently at or near historical highs for production by volume nor softwood lumber price. There’s room for expansion in supply of housing starts are allowed to increase.

Any increase in production of housing supply will mean increased demand for labour and material inputs. That’s obvious to anyone. Are you suggesting that should be a reason not to reduce other barriers to housing starts?

Of course we're not. That way companies can keep prices inflated. How do you plan to change that ? Should the Gov own the means of production? What about the near monopoly some regions like the maritimes have with Irving ?

My point is that won't create adorable housing.

That will still just drive up the prices.

 

[Halifax Tar]

So a 900 dollar a month mortgage would net $135 dollars. Property tax of 2400 a year plus 1500 for insurance, not unreasonable, would result in a net loss. This doesn't take into consideration putting aside funds for a new roof, maintenance, etc.
Congratulations, you've eliminated the rental market.
What's your idea not to cause that?

Fine, let's include insurance and property tax into the monthly mortgage payment.

 

[AmmoTech90]

Fine, let's include insurance and property tax into the monthly mortgage payment.

Sure, 350. So we're at 900+350.
1250.

And maintenance, I budget 5000 a year for potential repairs and property improvements (landscaping, etc).
420
So we're at 1670.

And profit, 20% say, 334 dollars a month.
This puts it right at 2000. That's actually more than a two to three bedroom goes for around Medicine Hat. A landlord would have to own 10 units of this type to make 50,000 a year.

 

[Remius]

Which is where we are right now. That was the implied task.

Higher demand also creates lower supply.

And a limit of 15% of your mortgage would kill supply. Nobody would rent out anything. If I had a mortgage free property I wouldn’t be able to charge any rent. I would just refinance and take a larger mortgage over a longer period , increase my tax deductible interest payments and lower my principal and charge more. Which would actually raise rent no lower it.

I was a landlord for a few years. My rent charged was based on local market equivalents, (ie my competition) my costs and my desire to attract a suitable renter.

Was 1250 a month for a two bedroom condo garden style home with parking. No yard but a balcony. Comparables were 1300. I shaved off 50$ to compete. My mortgage was about 850, condo fees were 250$ (and went up every year). Other costs were insurance. All told my actual profit/income was about 100$ a month. Now I did get tax breaks on my costs. The 100$ « income » was set aside as incidental expenses (I had to get a new fridge at one point) repairs, etc.

In the three years I had a tenant I never raised the rent. She was good and I wanted to keep her.

Using your model I would be bleeding money and would be better off leaving it vacant and claim the loss (if I have no tenant I can claim that as a business loss) and save me the hassle of dealing with a tenant.