Comments on: Quality demagoguery http://www.megaspora.net/en/2007/09/19/quality-demagoguery/ Politics and economy commentary from Spain and the world. Wed, 19 Nov 2008 23:49:36 +0000 http://wordpress.org/?v=2.6.1 By: Erik http://www.megaspora.net/en/2007/09/19/quality-demagoguery/#comment-1173 Erik Mon, 24 Sep 2007 15:38:37 +0000 http://www.megaspora.net/en/2007/09/19/quality-demagoguery/#comment-1173 An alternative to subsidizing rent is that the state takes some risk from the owner. Currently, the process to kick out a person for failure to pay rent cannot be started until after two months without payment. And then it's a slow process through the legal system. Obviously, the renter will not pay any subsequent months if he knows court will rule against him. Government could guarantee paying the rent for the months beyond, just to pick a number, the first 6 months. This limits the risk for the owner and encourage the legal system to speed up the process. This maintains the renters' legal protection against abusive owners, while not relieving him from economic liability. The state likely has much more power to collect the money, for example by denying access to social welfare until the sum has been paid up. Knowing this, renters will have a clear incentive to keep their part of the agreement. Further, since the owner will pay the first 6 months, this model prevents abuse. The owner still accounts for a certain risk, but it is greatly reduced and more important it is reduced to a fixed maximum. With a limited risk, more will be inclined to offer their property for rent thus lowering the price. And it would likely be at no extra cost to the tax payers: Obviously, such a guarantee can only be offered to owners renting out their property legally, and thus paying taxes which would likely make up for the losses the state may have to cover. Everyone know that cheating the system is a national sport ranking higher in popularity than soccer, and a large part of the rental market is illegal. This model encourage all parts to follow the rules. And it is probably the least bureaucratic model to stimulate the market, since bureaucracy only kicks in in the exceptional cases. An alternative to subsidizing rent is that the state takes some risk from the owner. Currently, the process to kick out a person for failure to pay rent cannot be started until after two months without payment. And then it’s a slow process through the legal system. Obviously, the renter will not pay any subsequent months if he knows court will rule against him.

Government could guarantee paying the rent for the months beyond, just to pick a number, the first 6 months. This limits the risk for the owner and encourage the legal system to speed up the process.

This maintains the renters’ legal protection against abusive owners, while not relieving him from economic liability. The state likely has much more power to collect the money, for example by denying access to social welfare until the sum has been paid up. Knowing this, renters will have a clear incentive to keep their part of the agreement.

Further, since the owner will pay the first 6 months, this model prevents abuse. The owner still accounts for a certain risk, but it is greatly reduced and more important it is reduced to a fixed maximum.

With a limited risk, more will be inclined to offer their property for rent thus lowering the price. And it would likely be at no extra cost to the tax payers: Obviously, such a guarantee can only be offered to owners renting out their property legally, and thus paying taxes which would likely make up for the losses the state may have to cover.

Everyone know that cheating the system is a national sport ranking higher in popularity than soccer, and a large part of the rental market is illegal. This model encourage all parts to follow the rules. And it is probably the least bureaucratic model to stimulate the market, since bureaucracy only kicks in in the exceptional cases.

]]> By: Erik http://www.megaspora.net/en/2007/09/19/quality-demagoguery/#comment-1172 Erik Sun, 23 Sep 2007 21:52:29 +0000 http://www.megaspora.net/en/2007/09/19/quality-demagoguery/#comment-1172 Ok, 1) It will affect the prices subsidizing housing, the owner will simply rise rent accordingly. 2) It would be more attractive to make empty property available on the market, either for rent or sale by increasing taxes on property that is not primary house. This will make people buy other stuff for investment and houses for living, hence increasing offer and thus lowering prices. 3) To compensate for the increased tax on property owners, the legal fees on sale should be lowered to a fixed cost corresponding to the actual work. This increases peoples ability to buy and sell because they need less to finance buying. This will give more movement in the market. 2+3 should add up to no cost total for the state and on average for the individual. Ok,

1) It will affect the prices subsidizing housing, the owner will simply rise rent accordingly.

2) It would be more attractive to make empty property available on the market, either for rent or sale by increasing taxes on property that is not primary house. This will make people buy other stuff for investment and houses for living, hence increasing offer and thus lowering prices.

3) To compensate for the increased tax on property owners, the legal fees on sale should be lowered to a fixed cost corresponding to the actual work. This increases peoples ability to buy and sell because they need less to finance buying. This will give more movement in the market.

2+3 should add up to no cost total for the state and on average for the individual.

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