Public health consequences of becoming a nation of petty landlords
December 5, 2023 7:17 AM Subscribe
Living in a privately rented home, as opposed to owning a home or living in social housing, is associated with twice the ageing effect of obesity and half that of smoking, according to a study of DNA methylation published in the the BMJ Journal of Epidemiology and Community Health. The study also found that the biological ageing effect was associated with falling behind with rent payments or living in a home affected by pollution.
Seems like important info:
As an observational study, the research was not able to determine what is causing the link between housing tenure and biological ageing, and the DNA samples analysed so far were only from white, European householders.
posted by tiny frying pan at 7:43 AM on December 5, 2023 [16 favorites]
As an observational study, the research was not able to determine what is causing the link between housing tenure and biological ageing, and the DNA samples analysed so far were only from white, European householders.
posted by tiny frying pan at 7:43 AM on December 5, 2023 [16 favorites]
From back when I was lower income and was renting from petty landlords, my main memory is of how stressful it was. Calling them about an issue was stressful, wondering if they were going to sell the place at any moment was stressful, interacting with the weirdo landlord who likes to stop by unannounced is stressful. There was just nothing good about it and I'm not surprised there are health effects.
posted by Dip Flash at 7:49 AM on December 5, 2023 [43 favorites]
posted by Dip Flash at 7:49 AM on December 5, 2023 [43 favorites]
For US people: It's worth noting that this study is UK-specific and about renting from private landlords vs owning OR living in "social housing" which is essentially income-adjusted apartments, aka public housing. And the actual ill effects are more closely correlated with poor housing condition, unaffordability and precarity of tenancy than whether the unit is rented or owned.
TL;DR: apartments aren't inherently bad for your health. But being in a crappy building and unsure if you can make your next rent payment definitely is.
posted by grumpybear69 at 7:57 AM on December 5, 2023 [61 favorites]
TL;DR: apartments aren't inherently bad for your health. But being in a crappy building and unsure if you can make your next rent payment definitely is.
posted by grumpybear69 at 7:57 AM on December 5, 2023 [61 favorites]
Turns out being poor is stressful!
😮
posted by tiny frying pan at 8:00 AM on December 5, 2023 [38 favorites]
😮
posted by tiny frying pan at 8:00 AM on December 5, 2023 [38 favorites]
Neighbours are often stressful, and if you're renting you're more likely to be separated from them by possibly very thin walls. I currently only share one wall with (blessedly quiet) neighbours but in the past I had apartments bordering multiple Unapologetic Loud Assholes, and if I hadn't been able to move the stress of being continually subjected to their demonstrated contempt for the social contract would almost certainly have had a negative effect on my health.
posted by The Card Cheat at 8:08 AM on December 5, 2023 [12 favorites]
posted by The Card Cheat at 8:08 AM on December 5, 2023 [12 favorites]
This is UK only dataset and the subpopulation examined within the overall study was only 6.9% of the total population. This is an interesting result but there needs to be more research to validate the conclusions.
posted by interogative mood at 8:19 AM on December 5, 2023 [3 favorites]
posted by interogative mood at 8:19 AM on December 5, 2023 [3 favorites]
"Turns out being poor is stressful!"
Yeah.
And, also: you can have a good experience as a well-off renter. You can have a bad experience if you can't afford to move out of the home you own but also can't afford to maintain properly.
We tend to associate renting with one form of housing and buying with another, but people can and do buy condos in shared buildings, or rent single-family detached homes.
Maybe rent vs buy isn't the most important distinction to focus on.
Not just an academic point, because I'm wary we get into "supporting homeownership" as a goal in itself--on average those policies tend not to direct the most support to the people that need it most.
posted by bfields at 8:21 AM on December 5, 2023 [10 favorites]
Yeah.
And, also: you can have a good experience as a well-off renter. You can have a bad experience if you can't afford to move out of the home you own but also can't afford to maintain properly.
We tend to associate renting with one form of housing and buying with another, but people can and do buy condos in shared buildings, or rent single-family detached homes.
Maybe rent vs buy isn't the most important distinction to focus on.
Not just an academic point, because I'm wary we get into "supporting homeownership" as a goal in itself--on average those policies tend not to direct the most support to the people that need it most.
posted by bfields at 8:21 AM on December 5, 2023 [10 favorites]
From back when I was lower income and was renting from petty landlords, my main memory is of how stressful it was. Calling them about an issue was stressful
10 years ago at a previous apartment I came back from a trip to find one corner of my bathroom ceiling collapsed into my tub from a water leak above. When I called my landlord about it his first response was "So what?"
posted by star gentle uterus at 8:38 AM on December 5, 2023 [8 favorites]
10 years ago at a previous apartment I came back from a trip to find one corner of my bathroom ceiling collapsed into my tub from a water leak above. When I called my landlord about it his first response was "So what?"
posted by star gentle uterus at 8:38 AM on December 5, 2023 [8 favorites]
> Not just an academic point, because I'm wary we get into "supporting homeownership" as a goal in itself--on average those policies tend not to direct the most support to the people that need it most.
by tremendously stupid luck i've somehow class touristed from lumpenprole all the way up to petty-bourgeois mortgage-payer, despite having done my absolute damnedest to dodge money my entire life.
my experiences before some fool decided i owned a house led me to the certitude that renting out property to live in is an intolerable crime and that therefore landlording must be abolished. my experiences since owning a house have led me to the certitude that both landlording and homeownership itself are intolerable crimes and that therefore both must be abolished.
down with real estate. down with it!
this has been your bombastic lowercase pronouncement for the day
posted by bombastic lowercase pronouncements at 9:19 AM on December 5, 2023 [23 favorites]
by tremendously stupid luck i've somehow class touristed from lumpenprole all the way up to petty-bourgeois mortgage-payer, despite having done my absolute damnedest to dodge money my entire life.
my experiences before some fool decided i owned a house led me to the certitude that renting out property to live in is an intolerable crime and that therefore landlording must be abolished. my experiences since owning a house have led me to the certitude that both landlording and homeownership itself are intolerable crimes and that therefore both must be abolished.
down with real estate. down with it!
this has been your bombastic lowercase pronouncement for the day
posted by bombastic lowercase pronouncements at 9:19 AM on December 5, 2023 [23 favorites]
Degraded dwelling places and a constant threat of habitat loss are detrimental for some other species too. That's not just us being weird.
posted by Ashenmote at 9:21 AM on December 5, 2023 [16 favorites]
posted by Ashenmote at 9:21 AM on December 5, 2023 [16 favorites]
Like, you needed a study to figure that?
Yes. It's how we turn anecdotes into data.
posted by LooseFilter at 9:23 AM on December 5, 2023 [40 favorites]
Yes. It's how we turn anecdotes into data.
posted by LooseFilter at 9:23 AM on December 5, 2023 [40 favorites]
This is UK only dataset and the subpopulation examined within the overall study was only 6.9% of the total population. This is an interesting result but there needs to be more research to validate the conclusions.
Yeah, renters are 6.9% of the study population. If you studied a population cohort and found that lung cancer killed a bunch of them, would you say "well, that subpopulation within the study was only the 6% of the people who had lung cancer, so we need more research"? Let's get everybody lung cancer and see!
Turns out being poor is stressful!
It's interesting that the models control for income, both by income quartile* and by a perceived measure ("just about getting by" / "finding it quite difficult" / etc.), and they were not significant; educational attainment was, but barely and at a more marginal level than renting. So it suggests that being poor but with stable owned housing is less stressful than not being poor but renting and having less stable housing.
* income is always a tough measure; there's the time-delay effect of past and future income -- income is measured based on the past year, and an Oxford graduate will have had little income the day they graduate and a factory worker may have a decent income the day the plant shuts down, but they have different futures -- as well as the effect of household size on income. But two income measures are in there.
posted by Superilla at 9:48 AM on December 5, 2023 [6 favorites]
Yeah, renters are 6.9% of the study population. If you studied a population cohort and found that lung cancer killed a bunch of them, would you say "well, that subpopulation within the study was only the 6% of the people who had lung cancer, so we need more research"? Let's get everybody lung cancer and see!
Turns out being poor is stressful!
It's interesting that the models control for income, both by income quartile* and by a perceived measure ("just about getting by" / "finding it quite difficult" / etc.), and they were not significant; educational attainment was, but barely and at a more marginal level than renting. So it suggests that being poor but with stable owned housing is less stressful than not being poor but renting and having less stable housing.
* income is always a tough measure; there's the time-delay effect of past and future income -- income is measured based on the past year, and an Oxford graduate will have had little income the day they graduate and a factory worker may have a decent income the day the plant shuts down, but they have different futures -- as well as the effect of household size on income. But two income measures are in there.
posted by Superilla at 9:48 AM on December 5, 2023 [6 favorites]
TL;DR: apartments aren't inherently bad for your health. But being in a crappy building and unsure if you can make your next rent payment definitely is.
Not only that, but also (a) being unsure if you're going to be chucked out at the drop of a hat whether you can make your next rent payment or not, and (b) knowing that the landlord can hike the rent at any time by any amount they like and that there are no safeguards or legislation to stop them.
That's of course if you can find anywhere to live to start with. The situation in London is now so horrendous that CNN could publish an article about it the other day with the clickbaity headline 'The crushing reality of renting in this city'. Londoners didn't even have to click to know what 'this city' was going to be.
A neighbour is advertising his 1,050 sq. ft. 3-bedroom semidetached house just like ours for £3,100 per month. The median gross salary in London is £44,370. This equates to £2,850 net per month.
Not pretty, is it.
posted by Cardinal Fang at 9:50 AM on December 5, 2023 [10 favorites]
Not only that, but also (a) being unsure if you're going to be chucked out at the drop of a hat whether you can make your next rent payment or not, and (b) knowing that the landlord can hike the rent at any time by any amount they like and that there are no safeguards or legislation to stop them.
That's of course if you can find anywhere to live to start with. The situation in London is now so horrendous that CNN could publish an article about it the other day with the clickbaity headline 'The crushing reality of renting in this city'. Londoners didn't even have to click to know what 'this city' was going to be.
A neighbour is advertising his 1,050 sq. ft. 3-bedroom semidetached house just like ours for £3,100 per month. The median gross salary in London is £44,370. This equates to £2,850 net per month.
Not pretty, is it.
posted by Cardinal Fang at 9:50 AM on December 5, 2023 [10 favorites]
Not just an academic point, because I'm wary we get into "supporting homeownership" as a goal in itself--on average those policies tend not to direct the most support to the people that need it most.
Quite right, and it was "supporting homeownership" that got the UK into this mess to start with; Thatcher's 'right to buy' policy not only depleted the public housing stock, but made it no longer cost-effective for local councils to build more.
What we need is "supporting public housing".
Here I get very bloody angry at Jeremy Corbyn. The Tory party was in such a mess in 2017 that all he had to do to become Prime Minister was to turn up and keep his gob shut, whereupon he would have instituted a sweeping plan of social housing. (Incidentally this would have caused the market value of my house to fall considerably, but I'm with bombastic lowercase pronouncements here; I don't care. I bought it to live in, not as an investment.) Instead, he just couldn't bring himself to announce Labour as the party of Remain; he got hung up on his ideological point of principle, and insisted that Brexit must happen because it was the 'will of the people'. (It wasn't, and that was the actual f**king point, in my opinion; but let's not go there, not in this thread at any rate.)
posted by Cardinal Fang at 10:00 AM on December 5, 2023 [13 favorites]
Quite right, and it was "supporting homeownership" that got the UK into this mess to start with; Thatcher's 'right to buy' policy not only depleted the public housing stock, but made it no longer cost-effective for local councils to build more.
What we need is "supporting public housing".
Here I get very bloody angry at Jeremy Corbyn. The Tory party was in such a mess in 2017 that all he had to do to become Prime Minister was to turn up and keep his gob shut, whereupon he would have instituted a sweeping plan of social housing. (Incidentally this would have caused the market value of my house to fall considerably, but I'm with bombastic lowercase pronouncements here; I don't care. I bought it to live in, not as an investment.) Instead, he just couldn't bring himself to announce Labour as the party of Remain; he got hung up on his ideological point of principle, and insisted that Brexit must happen because it was the 'will of the people'. (It wasn't, and that was the actual f**king point, in my opinion; but let's not go there, not in this thread at any rate.)
posted by Cardinal Fang at 10:00 AM on December 5, 2023 [13 favorites]
It's interesting that the models control for income, both by income quartile* and by a perceived measure ("just about getting by" / "finding it quite difficult" / etc.), and they were not significant; educational attainment was, but barely and at a more marginal level than renting. So it suggests that being poor but with stable owned housing is less stressful than not being poor but renting and having less stable housing.
You cannot interpret control variables in any meaningful way without some sort of theory/assumptions about conditional independence. It doesn't matter if the sign is big/small/positive/negative.
posted by MisantropicPainforest at 10:00 AM on December 5, 2023 [3 favorites]
You cannot interpret control variables in any meaningful way without some sort of theory/assumptions about conditional independence. It doesn't matter if the sign is big/small/positive/negative.
posted by MisantropicPainforest at 10:00 AM on December 5, 2023 [3 favorites]
When we moved to London in 2008, we easily got a flat on Bloomsbury Square, overlooking the garden and a block from the British museum. We were paying about £1700 a month for a really nice flat. This was a lot for us but it was a wonderful place to be. Our neighbors included a fashion writer and a University Chancellor.
When we left in 2011, no viewings were scheduled for our place. There was already a long line of people anxious to take it, sight unseen. The listed price we saw was already £2500. Our landlord was the Duke of Bedford and his people were ok but its not even a landlord that needs money. He owns a big chunk of central London.
I just looked and a similar place to ours seems to be going now for about £5000 a month. This is completely insane.
posted by vacapinta at 10:19 AM on December 5, 2023 [9 favorites]
When we left in 2011, no viewings were scheduled for our place. There was already a long line of people anxious to take it, sight unseen. The listed price we saw was already £2500. Our landlord was the Duke of Bedford and his people were ok but its not even a landlord that needs money. He owns a big chunk of central London.
I just looked and a similar place to ours seems to be going now for about £5000 a month. This is completely insane.
posted by vacapinta at 10:19 AM on December 5, 2023 [9 favorites]
It seems like Ontario, Canada the homeowner class is happy to eat the rental class alive.
Approaching retirement with no personal savings, home owners are leveraging whatever equity is in the inflated values of their property to purchase and rent out second homes or condos. There's no rent controls and there won't be any imposed because of the huge mass of the population relying on rental income ( the rising values of those second properties). Building more homes won't help because they'll just get gobbled up by the people who already have home equity enough to secure bank loans.
Private landlords see their rental property as their only chance at a secure retirement …so fuck you, everybody else.
posted by brachiopod at 10:41 AM on December 5, 2023 [15 favorites]
Approaching retirement with no personal savings, home owners are leveraging whatever equity is in the inflated values of their property to purchase and rent out second homes or condos. There's no rent controls and there won't be any imposed because of the huge mass of the population relying on rental income ( the rising values of those second properties). Building more homes won't help because they'll just get gobbled up by the people who already have home equity enough to secure bank loans.
Private landlords see their rental property as their only chance at a secure retirement …so fuck you, everybody else.
posted by brachiopod at 10:41 AM on December 5, 2023 [15 favorites]
> There's no rent controls and there won't be any imposed because of the huge mass of the population relying on rental income
the problem with the housing market is that there's a market in housing. somewhere out there there may be a context where market allocation makes sense, but even if that hypothetical context exists housing's not it.
posted by bombastic lowercase pronouncements at 10:50 AM on December 5, 2023 [5 favorites]
the problem with the housing market is that there's a market in housing. somewhere out there there may be a context where market allocation makes sense, but even if that hypothetical context exists housing's not it.
posted by bombastic lowercase pronouncements at 10:50 AM on December 5, 2023 [5 favorites]
The use of homes as investment vehicles is perverse and tearing society apart.
It's time to reverse the incentives that encourage house scalping.
People before profits.
posted by neonamber at 11:00 AM on December 5, 2023 [18 favorites]
It's time to reverse the incentives that encourage house scalping.
People before profits.
posted by neonamber at 11:00 AM on December 5, 2023 [18 favorites]
posted by bombastic lowercase pronouncements at 11:12 AM on December 5, 2023 [3 favorites]
Science doesn't need to be surprising. Also did you know the effect size before reading the article? If so why didn't you share it with anyone? If not, you learned something.
posted by MisantropicPainforest at 11:21 AM on December 5, 2023 [7 favorites]
posted by MisantropicPainforest at 11:21 AM on December 5, 2023 [7 favorites]
Approaching retirement with no personal savings, [Ontario] home owners are leveraging whatever equity is in the inflated values of their property to purchase and rent out second homes or condos.
In fairness, this is what we were taught (like 30+ years ago), by example and by stated advice: own your home. It was the bedrock of the American/Canadian dream. Paying off a house was deemed more important than saving for retirement. Ergo, for most boomers, their principal residence IS the bulk of their retirement savings. For most of that time, the appreciation in value was relatively modest but steady; it's only in the last decade or so that prices and rates have gone nuts and become such a perverse incentive.
Using equity in the first property to buy a second (for recreation or income) was the done thing a few years back, when prices were at their peak and mortgage rates were stupid low. I can't see how the same move is as possible now (in Ontario), with the current mortgage-rate levels and still-high prices. And listings are down, which holds up prices.
I got reamed in a previous thread for having the audacity to suggest that small landlords could be incentivized to offer more affordable housing, to ease the current shortage. The suggestion included a govt-run rental registry for affordable units that would, among other things, inspect the offered suites, and have some influence on the rental rates, which could in theory provide a better quality of affordable rental. The idea didn't fly there, so I'm sure it's a nonstarter here.
I agree with most that the best answer is more and better social housing, more co-ops, etc. Like, 10 years ago, do that.
posted by Artful Codger at 11:27 AM on December 5, 2023 [3 favorites]
In fairness, this is what we were taught (like 30+ years ago), by example and by stated advice: own your home. It was the bedrock of the American/Canadian dream. Paying off a house was deemed more important than saving for retirement. Ergo, for most boomers, their principal residence IS the bulk of their retirement savings. For most of that time, the appreciation in value was relatively modest but steady; it's only in the last decade or so that prices and rates have gone nuts and become such a perverse incentive.
Using equity in the first property to buy a second (for recreation or income) was the done thing a few years back, when prices were at their peak and mortgage rates were stupid low. I can't see how the same move is as possible now (in Ontario), with the current mortgage-rate levels and still-high prices. And listings are down, which holds up prices.
I got reamed in a previous thread for having the audacity to suggest that small landlords could be incentivized to offer more affordable housing, to ease the current shortage. The suggestion included a govt-run rental registry for affordable units that would, among other things, inspect the offered suites, and have some influence on the rental rates, which could in theory provide a better quality of affordable rental. The idea didn't fly there, so I'm sure it's a nonstarter here.
I agree with most that the best answer is more and better social housing, more co-ops, etc. Like, 10 years ago, do that.
posted by Artful Codger at 11:27 AM on December 5, 2023 [3 favorites]
So you're saying I should be allowed to smoke in the house?
[Triumphantly emails spouse]
posted by Alvy Ampersand at 11:53 AM on December 5, 2023 [1 favorite]
[Triumphantly emails spouse]
posted by Alvy Ampersand at 11:53 AM on December 5, 2023 [1 favorite]
This has popped up before in the housing literature. See Waldegrave, C., Urbanová, M. (2016, November) Social and Economic Impacts of Housing Tenure. New Zealand Housing Foundation.
It really does seem like renting as housing tenure induces a lot more stress & precarity, and you see it in people's health when you control for income and age and ethnicity.
posted by pmv at 12:14 PM on December 5, 2023 [1 favorite]
It really does seem like renting as housing tenure induces a lot more stress & precarity, and you see it in people's health when you control for income and age and ethnicity.
posted by pmv at 12:14 PM on December 5, 2023 [1 favorite]
Here's a map showing percentage of home ownership in European countries. I now wonder what the rental experience is like in affluent western countries where the percentage of renters is relatively high. Is renting awful, everywhere, or are there places where it is... not awful?
posted by Artful Codger at 12:32 PM on December 5, 2023 [1 favorite]
posted by Artful Codger at 12:32 PM on December 5, 2023 [1 favorite]
Haven’t had time to read yet, but I wonder how much of these effects are ameliorated by robust rent and eviction controls.
posted by flamk at 12:41 PM on December 5, 2023 [1 favorite]
posted by flamk at 12:41 PM on December 5, 2023 [1 favorite]
Haven’t had time to read yet, but I wonder how much of these effects are ameliorated by robust rent and eviction controls.
UK data sure won't tell you anything about what life is like with those things in place.
posted by Dysk at 12:45 PM on December 5, 2023 [6 favorites]
UK data sure won't tell you anything about what life is like with those things in place.
posted by Dysk at 12:45 PM on December 5, 2023 [6 favorites]
Pretty sure I read something decades ago that was explicitly trying to disentangle security and ownership. Security was better (comparisons within West Germany’s various models iirc).
posted by clew at 1:19 PM on December 5, 2023 [1 favorite]
posted by clew at 1:19 PM on December 5, 2023 [1 favorite]
Yeah, security is the reason I own. If I could get a 99-year lease from the government I'd probably have gone with that.
posted by grumpybear69 at 1:23 PM on December 5, 2023 [4 favorites]
posted by grumpybear69 at 1:23 PM on December 5, 2023 [4 favorites]
It seems like Ontario, Canada the homeowner class is happy to eat the rental class alive.
I can’t speak for Boomers entirely but in Canada, for some Boomers and Gen X, part of this comes from the culture shifting from DBPP (direct benefit pension plan) which ensured you would get X percentage of your salary to DCPP plans where you contribute X percentage of your salary to the company-sponsored financial company and you get…whatever you can based on how those investments did.
I got switched in my media job so my years of contribution under the first will net me, not kidding, $700 per YEAR based on having contributed like $20k, and then ended up in a set of mutual funds that when I was laid off were dumped into funds with high expenses…I’ve had multiple retirement plans to consolidate. multiply that a bunch and you have people with very spotty retirement savings.
(Yes, smart investors can do better but a lot of people are mot great at it! And the switch but calling them both “pension plans” was horribly sneaky.)
In the meetings I was in over the switch at that one company, they did a terrible job of explaining the difference. I think a lot of people my age got to 50, looked at their portfolios, and panicked. We almost did, but my husband and I have been landlords (basement apartment) and hated it, both for the power dynamic and because we had to evict people which we also hated, after 9 months of non-payment, and they trashed it. Also, we’re okay. And also, we’re both now in jobs with defined benefit plans even though we’re starting late so those will be in addition to our portfolio of RRSPs.
posted by warriorqueen at 1:34 PM on December 5, 2023 [4 favorites]
I can’t speak for Boomers entirely but in Canada, for some Boomers and Gen X, part of this comes from the culture shifting from DBPP (direct benefit pension plan) which ensured you would get X percentage of your salary to DCPP plans where you contribute X percentage of your salary to the company-sponsored financial company and you get…whatever you can based on how those investments did.
I got switched in my media job so my years of contribution under the first will net me, not kidding, $700 per YEAR based on having contributed like $20k, and then ended up in a set of mutual funds that when I was laid off were dumped into funds with high expenses…I’ve had multiple retirement plans to consolidate. multiply that a bunch and you have people with very spotty retirement savings.
(Yes, smart investors can do better but a lot of people are mot great at it! And the switch but calling them both “pension plans” was horribly sneaky.)
In the meetings I was in over the switch at that one company, they did a terrible job of explaining the difference. I think a lot of people my age got to 50, looked at their portfolios, and panicked. We almost did, but my husband and I have been landlords (basement apartment) and hated it, both for the power dynamic and because we had to evict people which we also hated, after 9 months of non-payment, and they trashed it. Also, we’re okay. And also, we’re both now in jobs with defined benefit plans even though we’re starting late so those will be in addition to our portfolio of RRSPs.
posted by warriorqueen at 1:34 PM on December 5, 2023 [4 favorites]
"Petty" landlords seems like quite the editorialization that the article itself didn't make.
Is the stress of the situation that leads to bad health outcomes, really the landlords' fault? If not, can we not pile up a bunch of kneejerk landlord hate?
Once upon a time I was a landlord. I was stuck with a place I couldn't sell. Having been a renter for many years myself, I tried hard to be -fair- above anything else. But fair doesn't mean I put on a maid's uniform and made dinner for my tenants. It also doesn't mean I charged less than market. I had a mortgage and property taxes to pay, and my own mouth to feed, I could not afford to subsidize someone else's life just because I was a landlord and they wanted to pay less mean rent. I don't know where the expectation comes from, that landlords should undercharge just because they own property. I mean, that's about as sane as expecting that every adult should give $200 a month to another random person, just because they have some. We all dream of free money, but in any economy, money comes from some other person who has their own stressors. Ok, rant over.
posted by Dashy at 1:44 PM on December 5, 2023 [6 favorites]
Is the stress of the situation that leads to bad health outcomes, really the landlords' fault? If not, can we not pile up a bunch of kneejerk landlord hate?
Once upon a time I was a landlord. I was stuck with a place I couldn't sell. Having been a renter for many years myself, I tried hard to be -fair- above anything else. But fair doesn't mean I put on a maid's uniform and made dinner for my tenants. It also doesn't mean I charged less than market. I had a mortgage and property taxes to pay, and my own mouth to feed, I could not afford to subsidize someone else's life just because I was a landlord and they wanted to pay less mean rent. I don't know where the expectation comes from, that landlords should undercharge just because they own property. I mean, that's about as sane as expecting that every adult should give $200 a month to another random person, just because they have some. We all dream of free money, but in any economy, money comes from some other person who has their own stressors. Ok, rant over.
posted by Dashy at 1:44 PM on December 5, 2023 [6 favorites]
If not, can we not pile up a bunch of kneejerk landlord hate?
dunno, can we not pile up a bunch of housing that we're not ourselves using, in order to exploit the human need for shelter, for profit?
posted by busted_crayons at 1:48 PM on December 5, 2023 [21 favorites]
dunno, can we not pile up a bunch of housing that we're not ourselves using, in order to exploit the human need for shelter, for profit?
posted by busted_crayons at 1:48 PM on December 5, 2023 [21 favorites]
We all dream of free money, but in any economy, money comes from some other person who has their own stressors.
Perhaps, then, we could pay closer attention to those people whose stressors are being multi-billionaire oligarchs?
posted by EmpressCallipygos at 2:03 PM on December 5, 2023 [9 favorites]
Perhaps, then, we could pay closer attention to those people whose stressors are being multi-billionaire oligarchs?
posted by EmpressCallipygos at 2:03 PM on December 5, 2023 [9 favorites]
Sorry, got the acronyms wrong:
DBPP - defined benefit pension plan - financial risk is mostly with employer, government should set standards for reserves
DCPP - define contribution pension plan - financial risk is with employee. All the employer has to do is a deal with a company that provides the plans, and usually provide some matching contributions - but once you’re retired, they’re done.
How this rolled out: your DBPP is switching to a DCPP! Complete your forms and fill out your retirement profile here so we can recommend your mutual funds! Call Standard Life for more info.
posted by warriorqueen at 2:10 PM on December 5, 2023 [3 favorites]
DBPP - defined benefit pension plan - financial risk is mostly with employer, government should set standards for reserves
DCPP - define contribution pension plan - financial risk is with employee. All the employer has to do is a deal with a company that provides the plans, and usually provide some matching contributions - but once you’re retired, they’re done.
How this rolled out: your DBPP is switching to a DCPP! Complete your forms and fill out your retirement profile here so we can recommend your mutual funds! Call Standard Life for more info.
posted by warriorqueen at 2:10 PM on December 5, 2023 [3 favorites]
"Petty" landlords seems like quite the editorialization that the article itself didn't make.
It's worth noting that in the UK context, average rents are well above average mortgage payments in many areas (meaning you aren't just paying your landlord's equity for him, you're paying him a fee on top of that) because of onerous deposit requirements. There is no ongoing property tax here either - instead there is council tax, which is paid by the tenant, not the landlord.
So below market rate is reasonable, because market rates are extortionate and exploitative.
posted by Dysk at 2:40 PM on December 5, 2023 [10 favorites]
It's worth noting that in the UK context, average rents are well above average mortgage payments in many areas (meaning you aren't just paying your landlord's equity for him, you're paying him a fee on top of that) because of onerous deposit requirements. There is no ongoing property tax here either - instead there is council tax, which is paid by the tenant, not the landlord.
So below market rate is reasonable, because market rates are extortionate and exploitative.
posted by Dysk at 2:40 PM on December 5, 2023 [10 favorites]
>that landlords should undercharge just because they own property.
that's one load-bearing undercharge you put in there
posted by torokunai at 3:09 PM on December 5, 2023 [9 favorites]
that's one load-bearing undercharge you put in there
posted by torokunai at 3:09 PM on December 5, 2023 [9 favorites]
It's worth noting that in the UK context, average rents are well above average mortgage payments in many areas (meaning you aren't just paying your landlord's equity for him, you're paying him a fee on top of that) because of onerous deposit requirements. There is no ongoing property tax here either - instead there is council tax, which is paid by the tenant, not the landlord.
So below market rate is reasonable, because market rates are extortionate and exploitative.
Personally, I'd restate your final sentence (in bold above) as that "market rate" rents in many places are excessively high, caused by artificially low supply and especially by the near-total lack of what the FPP calls "social housing." If there was plenty of safe, reasonable-quality, "social" (whether owned by local or central government, or owned by private owners but rented under controlled terms) housing available, then the market rate would be at a reasonable level.
But that's probably mostly semantics, and I agree 100% that in many places (certainly here where I live) that market rates reflect an exploitative element.
posted by Dip Flash at 3:34 PM on December 5, 2023 [1 favorite]
So below market rate is reasonable, because market rates are extortionate and exploitative.
Personally, I'd restate your final sentence (in bold above) as that "market rate" rents in many places are excessively high, caused by artificially low supply and especially by the near-total lack of what the FPP calls "social housing." If there was plenty of safe, reasonable-quality, "social" (whether owned by local or central government, or owned by private owners but rented under controlled terms) housing available, then the market rate would be at a reasonable level.
But that's probably mostly semantics, and I agree 100% that in many places (certainly here where I live) that market rates reflect an exploitative element.
posted by Dip Flash at 3:34 PM on December 5, 2023 [1 favorite]
Personally, I'd restate your final sentence (in bold above) as that "market rate" rents in many places are excessively high
The paragraph before the sentence you quote is indeed making that argument, yes. I don't think it's a restatement: one follows from the other. Charging market rate is exploitative because market rate is excessively high, regardless of the cause of that. It doesn't stop being price gouging just because everyone else is doing it too.
posted by Dysk at 5:01 PM on December 5, 2023 [4 favorites]
The paragraph before the sentence you quote is indeed making that argument, yes. I don't think it's a restatement: one follows from the other. Charging market rate is exploitative because market rate is excessively high, regardless of the cause of that. It doesn't stop being price gouging just because everyone else is doing it too.
posted by Dysk at 5:01 PM on December 5, 2023 [4 favorites]
So below market rate is reasonable, because market rates are extortionate and exploitative.
The market rates are what they are because of an insufficient supply of housing and that's the case regardless of whether you're buying or renting. The worst of this is that, as with most things, housing supply is cyclical and and some point in the future, there won't be a shortage and the pressure on home prices will ease. Why is that a bad thing? Because even if the cost of buying homes goes down, rents won't go down. Unlike home buyers who can time purchases to take advantage of market fluctuations, renters are stuck in a world of ever-increasing costs.
I'm not disputing the study as such, but I don't see it as renting that's the actual cause here - renting is associated with insecurity and it's that insecurity of people's homes that's the problem itself. Getting people out of private rentals won't solve the problem unless they can be moved to a position where they feel safe in their home and aren't constantly stressed by a combination of high costs and insecurity.
I got reamed in a previous thread for having the audacity to suggest that small landlords could be incentivized to offer more affordable housing, to ease the current shortage. The suggestion included a govt-run rental registry for affordable units that would, among other things, inspect the offered suites, and have some influence on the rental rates, which could in theory provide a better quality of affordable rental. The idea didn't fly there, so I'm sure it's a nonstarter here.
The Australian Government has operated something like this since 2008. It's a scheme that provides incentives for investors to make homes available at rent at least 20% below market value in return for incentives of around $11k per year, with access by tenants means tested. There isn't and hasn't been for some years now any funding for new properties to enter the scheme, there are only around 4,800 homes left in the scheme and the arrangement will cease entirely mid-2025. Like many government-run schemes, it is expensive to maintain and has been one of the factors influencing dramatic increases in rent overall. Even at 20% below market, people are paying far more rent than they were two years ago and landlords still get the same incentive on top of that.
Like negative gearing tax incentives (which are evil and should be removed), it has encouraged people to invest in properties that are not viable as investments without government incentives. The biggest culprit is institutional investors that actively seek properties that can be rented at a loss to take advantage of tax incentives and, because they don't care much about the purchase price, they drive prices up. The worst of these is superannuation funds, because they're forced to invest members' funds as the members have directed and have time limits on how long they hold funds without investing them. So they have to keep buying property without regard to price, driving prices up further. When prices go up, rents go up and when rents go up, prices go up.
posted by dg at 5:08 PM on December 5, 2023 [4 favorites]
The market rates are what they are because of an insufficient supply of housing and that's the case regardless of whether you're buying or renting. The worst of this is that, as with most things, housing supply is cyclical and and some point in the future, there won't be a shortage and the pressure on home prices will ease. Why is that a bad thing? Because even if the cost of buying homes goes down, rents won't go down. Unlike home buyers who can time purchases to take advantage of market fluctuations, renters are stuck in a world of ever-increasing costs.
I'm not disputing the study as such, but I don't see it as renting that's the actual cause here - renting is associated with insecurity and it's that insecurity of people's homes that's the problem itself. Getting people out of private rentals won't solve the problem unless they can be moved to a position where they feel safe in their home and aren't constantly stressed by a combination of high costs and insecurity.
I got reamed in a previous thread for having the audacity to suggest that small landlords could be incentivized to offer more affordable housing, to ease the current shortage. The suggestion included a govt-run rental registry for affordable units that would, among other things, inspect the offered suites, and have some influence on the rental rates, which could in theory provide a better quality of affordable rental. The idea didn't fly there, so I'm sure it's a nonstarter here.
The Australian Government has operated something like this since 2008. It's a scheme that provides incentives for investors to make homes available at rent at least 20% below market value in return for incentives of around $11k per year, with access by tenants means tested. There isn't and hasn't been for some years now any funding for new properties to enter the scheme, there are only around 4,800 homes left in the scheme and the arrangement will cease entirely mid-2025. Like many government-run schemes, it is expensive to maintain and has been one of the factors influencing dramatic increases in rent overall. Even at 20% below market, people are paying far more rent than they were two years ago and landlords still get the same incentive on top of that.
Like negative gearing tax incentives (which are evil and should be removed), it has encouraged people to invest in properties that are not viable as investments without government incentives. The biggest culprit is institutional investors that actively seek properties that can be rented at a loss to take advantage of tax incentives and, because they don't care much about the purchase price, they drive prices up. The worst of these is superannuation funds, because they're forced to invest members' funds as the members have directed and have time limits on how long they hold funds without investing them. So they have to keep buying property without regard to price, driving prices up further. When prices go up, rents go up and when rents go up, prices go up.
posted by dg at 5:08 PM on December 5, 2023 [4 favorites]
Bad idea, or bad implementation?
Like many government-run schemes, it is expensive to maintain
Yet we're all cheerleading for social housing.
posted by Artful Codger at 6:16 PM on December 5, 2023
Like many government-run schemes, it is expensive to maintain
Yet we're all cheerleading for social housing.
posted by Artful Codger at 6:16 PM on December 5, 2023
Dashy: "Petty" landlords seems like quite the editorialization that the article itself didn't make.
You say yourself that you were landlord of a single property. That makes you a petty landlord - "of secondary or lesser importance, as in a petty official" - in any scheme of things. You're not a billionaire who lords over many lands.
posted by clawsoon at 6:34 PM on December 5, 2023 [2 favorites]
You say yourself that you were landlord of a single property. That makes you a petty landlord - "of secondary or lesser importance, as in a petty official" - in any scheme of things. You're not a billionaire who lords over many lands.
posted by clawsoon at 6:34 PM on December 5, 2023 [2 favorites]
It's worth noting that in the UK context, average rents are well above average mortgage payments in many areas
It definitely varies by country. In Melbourne, Australia, rents are generally lower than the interest payments, never mind total mortgage payments or other expenses like maintenance, etc.
For example these two houses with comparable size and location, one is asking for $680,000 and the other is asking for $600 per week. That's $31,200 of rent per year, which is a 4.5% gross yield, while variable interest rates are around 6.1% right now.
The actual cash return is actually much lower - you'd pay about $2,000 in advertising and agent fees, about $2,000 in council rates, about $2,800 in land taxes (from this year onwards, it just doubled), $1,800 in building and public liability insurance, set aside about $1,000 for general repairs and maintenance, $800 for mandatory smoke alarm, gas, and electrical checks, about $200 in fixed parks and water charges
So that reduces the yield from $31,200 to $20,600, which is a 3% yield, versus the 6.1% cost of capital.
Of course, if you want the full treatment, you'd treat different funding sources cost of capital differently, you'd look at leverage, at depreciation, at the next best alternative (non leveraged stock market investment), at the predicted rise in land values, etc.
I think you can generally make the thesis that it costs less to rent than buy in areas where land is expected to become more valuable in the future (where future expectations are already baked into the current prices), and it costs more to rent than buy in areas where the economic future is uncertain and where prices may even slide backwards.
As for negative gearing, I think there's a counter-factual where the rental market is even worse without it. Large mega-corporations owning 10,000 rentals can offset tax losses from the early years of a new rental against the profits from more established ones, while petty landlords have only the 1 or 2 properties they have to rent out - if there's a loss (like the example above) they just eat that loss in the year it occurs. Negative gearing simply allows petty landlords to offset rental losses against other income streams, which allows individuals to compete on more equal footing against mega-corporations. The thinking is that 10,000 individuals each renting out 1 property each creates a much more competitive market for renters than one mega-corporation with 10,000 properties who then has the power to set the market price.
posted by xdvesper at 6:59 PM on December 5, 2023
It definitely varies by country. In Melbourne, Australia, rents are generally lower than the interest payments, never mind total mortgage payments or other expenses like maintenance, etc.
For example these two houses with comparable size and location, one is asking for $680,000 and the other is asking for $600 per week. That's $31,200 of rent per year, which is a 4.5% gross yield, while variable interest rates are around 6.1% right now.
The actual cash return is actually much lower - you'd pay about $2,000 in advertising and agent fees, about $2,000 in council rates, about $2,800 in land taxes (from this year onwards, it just doubled), $1,800 in building and public liability insurance, set aside about $1,000 for general repairs and maintenance, $800 for mandatory smoke alarm, gas, and electrical checks, about $200 in fixed parks and water charges
So that reduces the yield from $31,200 to $20,600, which is a 3% yield, versus the 6.1% cost of capital.
Of course, if you want the full treatment, you'd treat different funding sources cost of capital differently, you'd look at leverage, at depreciation, at the next best alternative (non leveraged stock market investment), at the predicted rise in land values, etc.
I think you can generally make the thesis that it costs less to rent than buy in areas where land is expected to become more valuable in the future (where future expectations are already baked into the current prices), and it costs more to rent than buy in areas where the economic future is uncertain and where prices may even slide backwards.
As for negative gearing, I think there's a counter-factual where the rental market is even worse without it. Large mega-corporations owning 10,000 rentals can offset tax losses from the early years of a new rental against the profits from more established ones, while petty landlords have only the 1 or 2 properties they have to rent out - if there's a loss (like the example above) they just eat that loss in the year it occurs. Negative gearing simply allows petty landlords to offset rental losses against other income streams, which allows individuals to compete on more equal footing against mega-corporations. The thinking is that 10,000 individuals each renting out 1 property each creates a much more competitive market for renters than one mega-corporation with 10,000 properties who then has the power to set the market price.
posted by xdvesper at 6:59 PM on December 5, 2023
I can't see how the same move is as possible now (in Ontario), with the current mortgage-rate levels and still-high prices
The City of Toronto says the current waiting list for a one-bedroom apartment in affordable housing is fourteen years. I’m not sure how many people plan to be poor in a decade and a half, or can wait that long if things take a turn.
posted by ricochet biscuit at 7:22 PM on December 5, 2023 [6 favorites]
The City of Toronto says the current waiting list for a one-bedroom apartment in affordable housing is fourteen years. I’m not sure how many people plan to be poor in a decade and a half, or can wait that long if things take a turn.
posted by ricochet biscuit at 7:22 PM on December 5, 2023 [6 favorites]
Bad idea, or bad implementation?
Well, governments are full of good ideas (and this is a somewhat good idea implemented not terribly but still poorly) but, in my experience of working inside them for decades, absolutely shit at implementing literally anything. So we're faced with a choice between governments implementing everything poorly or giving power to corporations who will steal every cent they can in their usual reverse-robin-hood approach. In a choice between incompetent but well-meaning or dishonest and uncaring, I'd reluctantly choose incompetence.
The thinking is that 10,000 individuals each renting out 1 property each creates a much more competitive market for renters than one mega-corporation with 10,000 properties who then has the power to set the market price.
A sensible theory, but one that ignores the purchasing power of corporations. A better approach to achieve that goal would be to allow negative gearing for 'natural persons' but not for corporations or to only allow one property to be offset against income for any one tax return.
posted by dg at 7:45 PM on December 5, 2023 [2 favorites]
Well, governments are full of good ideas (and this is a somewhat good idea implemented not terribly but still poorly) but, in my experience of working inside them for decades, absolutely shit at implementing literally anything. So we're faced with a choice between governments implementing everything poorly or giving power to corporations who will steal every cent they can in their usual reverse-robin-hood approach. In a choice between incompetent but well-meaning or dishonest and uncaring, I'd reluctantly choose incompetence.
The thinking is that 10,000 individuals each renting out 1 property each creates a much more competitive market for renters than one mega-corporation with 10,000 properties who then has the power to set the market price.
A sensible theory, but one that ignores the purchasing power of corporations. A better approach to achieve that goal would be to allow negative gearing for 'natural persons' but not for corporations or to only allow one property to be offset against income for any one tax return.
posted by dg at 7:45 PM on December 5, 2023 [2 favorites]
Just to clarify - negative gearing doesn't increase the total amount of deductions available, it just changes the timing of it to allow petty landlords with just 1 property to compete against larger players with 100 or 1000 properties.
Basically, if negative gearing was removed, petty landlords would say, claim $10,000 of losses in the first year as a tax credit, then use it to offset profits of $10,000 in the later years.
With negative gearing, those petty landlords could claim the benefit of those $10,000 tax losses immediately by offsetting it against other income like salary, but it doesn't change the total amount of expenses claimed.
As mentioned, corporations or landlords with large portfolio have no need of negative gearing at all, because they submit a single tax return for their business with all profits and losses consolidated in a single statement. What you're saying - allow negative gearing for individuals but not for corporations - is pretty much exactly the situation right now.
As for purchasing power, I don't believe there would be any benefit to that - if there were efficiencies to be found, someone would have done it already, it's a free country! There's a certain point at which you have maximized economies of scale - in my industry it's a plant manufacturing about 200,000 - 300,000 cars per year, any more than that, there's not much point, you may as well start a new plant somewhere else. In fact if you grow larger, you could end up with diseconomies of scale. For building, there are residential bulk builders like Metricon, Simonds, Carlisle, Henley, etc which I am sure have already reached or exceeded the point where they've maximized how efficient they can get. There are enough bulk builders to ensure robust competition between them - just go to any new estate and you'll get 10 different builders vying for your dollar. Here's the counterfactual - if by merging Carlisle and Simonds they could have become even 3% more efficient / profitable and could use that to outcompete Metricon, they would have done it years ago. The anti-competition watchdog wouldn't even care, there are over 3000 home builders, if consolidation would lead to more efficiency, they would be in favour of it too as it benefits the customer.
posted by xdvesper at 9:29 PM on December 5, 2023
Basically, if negative gearing was removed, petty landlords would say, claim $10,000 of losses in the first year as a tax credit, then use it to offset profits of $10,000 in the later years.
With negative gearing, those petty landlords could claim the benefit of those $10,000 tax losses immediately by offsetting it against other income like salary, but it doesn't change the total amount of expenses claimed.
As mentioned, corporations or landlords with large portfolio have no need of negative gearing at all, because they submit a single tax return for their business with all profits and losses consolidated in a single statement. What you're saying - allow negative gearing for individuals but not for corporations - is pretty much exactly the situation right now.
As for purchasing power, I don't believe there would be any benefit to that - if there were efficiencies to be found, someone would have done it already, it's a free country! There's a certain point at which you have maximized economies of scale - in my industry it's a plant manufacturing about 200,000 - 300,000 cars per year, any more than that, there's not much point, you may as well start a new plant somewhere else. In fact if you grow larger, you could end up with diseconomies of scale. For building, there are residential bulk builders like Metricon, Simonds, Carlisle, Henley, etc which I am sure have already reached or exceeded the point where they've maximized how efficient they can get. There are enough bulk builders to ensure robust competition between them - just go to any new estate and you'll get 10 different builders vying for your dollar. Here's the counterfactual - if by merging Carlisle and Simonds they could have become even 3% more efficient / profitable and could use that to outcompete Metricon, they would have done it years ago. The anti-competition watchdog wouldn't even care, there are over 3000 home builders, if consolidation would lead to more efficiency, they would be in favour of it too as it benefits the customer.
posted by xdvesper at 9:29 PM on December 5, 2023
This is why I never wanted to rent from a person, or at least a person who doesn't hire a management company. Your corporate landlord's main concern is profit, but they are generally pretty serious about following rental laws: all the appliances work, they have maintenance on-site to fix things, but they don't personally care about the property the way a person does.
All the shitty landlord stories I hear are not from someone renting from a corporation, but from a landlord with a single or a few properties, who a) doesnt have some corporate compliance monkey to answer to and b) they are waaaay too personally invested (financially and emotionally) to the property and so feel like they have a say in what you can and cant do.
(For an example, I had a friend that rented a duplex, and her headboard hit the wall during sexy times. The landlord got complaints from the neighbor and so came into her home and took off her headboard while she was at work. That would almost never happen with a corporate landlord.)
Granted there are also shitty corporate landlords. The invasion of privacy, which owners-managers feel they are entitled to, is worse (to me) than having a pure profit focus.
posted by LizBoBiz at 9:59 PM on December 5, 2023 [2 favorites]
All the shitty landlord stories I hear are not from someone renting from a corporation, but from a landlord with a single or a few properties, who a) doesnt have some corporate compliance monkey to answer to and b) they are waaaay too personally invested (financially and emotionally) to the property and so feel like they have a say in what you can and cant do.
(For an example, I had a friend that rented a duplex, and her headboard hit the wall during sexy times. The landlord got complaints from the neighbor and so came into her home and took off her headboard while she was at work. That would almost never happen with a corporate landlord.)
Granted there are also shitty corporate landlords. The invasion of privacy, which owners-managers feel they are entitled to, is worse (to me) than having a pure profit focus.
posted by LizBoBiz at 9:59 PM on December 5, 2023 [2 favorites]
It definitely varies by country. In Melbourne, Australia, rents are generally lower than the interest payments, never mind total mortgage payments or other expenses like maintenance, etc.
That's great and all, but I mention the UK context because it is an important part of understanding why renting is strictly worse in every way here, which might just be part of why it leads to the differences in health outcomes that it does.
Being a typical landlord here in the UK makes you a real part of the problem: overcharging, having your tenant party your entire mortgage and a chunk on top, purely playing arbitrage on the banks' willingness to lend, while driving purchase prices up with your excess demand.
It's great the situation sucks less in Melbourne or wherever. But it's shit here, and landlords are in no small part responsible for that.
posted by Dysk at 2:13 AM on December 6, 2023 [3 favorites]
That's great and all, but I mention the UK context because it is an important part of understanding why renting is strictly worse in every way here, which might just be part of why it leads to the differences in health outcomes that it does.
Being a typical landlord here in the UK makes you a real part of the problem: overcharging, having your tenant party your entire mortgage and a chunk on top, purely playing arbitrage on the banks' willingness to lend, while driving purchase prices up with your excess demand.
It's great the situation sucks less in Melbourne or wherever. But it's shit here, and landlords are in no small part responsible for that.
posted by Dysk at 2:13 AM on December 6, 2023 [3 favorites]
Warriorqueen, I was going to reply to the DBPP / DCPP thing, thought it might be a derail, then thought maybe it's better if housing were handled like DBPPs....
I'm with a private corporation and there is a private DBPP option, done in a very transparent way. You contribute roughly 15% of your salary each month to a fund, which gets invested in a stock plan of your choice that earns a real rate of return of 3% of year. Say you work 35 years, once you retire at 65 the pension option entitles you to 60% of your final income until you die at an average age of 80.
Simplifying the issue, let's ignore promotions. You've contributed 0.15x35 = roughly 5 years of salary, which have grown to 9 years of salary due to the compounding 3%... and at a 60% payout rate, this is roughly equal to 15 years worth of payouts.
The financial efficiency of defined benefit systems comes from people who die early subsidizing those who die late. For example, one person dies 1 year after retirement, while another person dies 29 years after retirement. That's still 15 years on average. There is no way the person who lived 29 years post retirement would have been able to save enough on their own, and besides, that's terribly inefficient - you now require EVERYONE to save as if they were going to live for 29 years, even though in reality only 5% of people do.
I did know one guy who worked 45 years at the company and died 1 month after he retired. His pension fund would have been huge but the company only needed to pay him out for that one month! (there is a clause for a part pension that goes to a surviving spouse).
To make it more explicit that it's a choice, the way it works is that your fund accumulates in value just like a defined contribution plan, then upon retirement you have the option to withdraw the lump sum, or convert to the defined benefit, whichever is better value for you. So if your stocks did really well, take the lump sum (or a staged payout to reduce tax), if they were crap, take the defined benefit.
Anyway in some idle fantasy mirroring the DBPP I'm in, you could only own one property, and it was on lease from the government until you died. Once you died the property reverted back to the government who would then either rent it out as social housing or sell it to someone as their first home at an actuarial value proportional to their expected remaining life. You could also liquidate your interest in the home with the government at an actuarial value proportional to your estimated remaining life.
Actually, I could see a private mega-corporation running something like this, because they generally have a lot more control over how things are run in house. We do this for company cars - I get two company cars for private use, replaced by factory new ones every 1-2 years, and since the company has a fleet of nearly 2,000 cars, we self-insure them (it's cheaper, our accident rates are lower than the general public). Basically if your car gets damaged or destroyed you just turn it in and pick another one from the garage on the same day. Not having to worry about your car - if it gets damaged, scratched, or even agonizing on whether you prefer an SUV or hatchback, truck or sedan or what color it is - worrying whether you bought the right insurance, whether to resell it - is something I find very hard to put a dollar value on. My friend got their brand new top trim sedan (about $60,000) t-boned by another driver who was at fault, and they couldn't understand why my friend was so blasé about it. Yeah just give me your contact details, someone will be in touch with you, my company tow-truck will be along shortly and I'm taking a taxi to work.
TLDR socialism and risk sharing is great and from what I've seen it's easier for private corporations to run a private socialist closed economy than for the government to try implement one in broader society.
posted by xdvesper at 2:41 AM on December 6, 2023 [2 favorites]
I'm with a private corporation and there is a private DBPP option, done in a very transparent way. You contribute roughly 15% of your salary each month to a fund, which gets invested in a stock plan of your choice that earns a real rate of return of 3% of year. Say you work 35 years, once you retire at 65 the pension option entitles you to 60% of your final income until you die at an average age of 80.
Simplifying the issue, let's ignore promotions. You've contributed 0.15x35 = roughly 5 years of salary, which have grown to 9 years of salary due to the compounding 3%... and at a 60% payout rate, this is roughly equal to 15 years worth of payouts.
The financial efficiency of defined benefit systems comes from people who die early subsidizing those who die late. For example, one person dies 1 year after retirement, while another person dies 29 years after retirement. That's still 15 years on average. There is no way the person who lived 29 years post retirement would have been able to save enough on their own, and besides, that's terribly inefficient - you now require EVERYONE to save as if they were going to live for 29 years, even though in reality only 5% of people do.
I did know one guy who worked 45 years at the company and died 1 month after he retired. His pension fund would have been huge but the company only needed to pay him out for that one month! (there is a clause for a part pension that goes to a surviving spouse).
To make it more explicit that it's a choice, the way it works is that your fund accumulates in value just like a defined contribution plan, then upon retirement you have the option to withdraw the lump sum, or convert to the defined benefit, whichever is better value for you. So if your stocks did really well, take the lump sum (or a staged payout to reduce tax), if they were crap, take the defined benefit.
Anyway in some idle fantasy mirroring the DBPP I'm in, you could only own one property, and it was on lease from the government until you died. Once you died the property reverted back to the government who would then either rent it out as social housing or sell it to someone as their first home at an actuarial value proportional to their expected remaining life. You could also liquidate your interest in the home with the government at an actuarial value proportional to your estimated remaining life.
Actually, I could see a private mega-corporation running something like this, because they generally have a lot more control over how things are run in house. We do this for company cars - I get two company cars for private use, replaced by factory new ones every 1-2 years, and since the company has a fleet of nearly 2,000 cars, we self-insure them (it's cheaper, our accident rates are lower than the general public). Basically if your car gets damaged or destroyed you just turn it in and pick another one from the garage on the same day. Not having to worry about your car - if it gets damaged, scratched, or even agonizing on whether you prefer an SUV or hatchback, truck or sedan or what color it is - worrying whether you bought the right insurance, whether to resell it - is something I find very hard to put a dollar value on. My friend got their brand new top trim sedan (about $60,000) t-boned by another driver who was at fault, and they couldn't understand why my friend was so blasé about it. Yeah just give me your contact details, someone will be in touch with you, my company tow-truck will be along shortly and I'm taking a taxi to work.
TLDR socialism and risk sharing is great and from what I've seen it's easier for private corporations to run a private socialist closed economy than for the government to try implement one in broader society.
posted by xdvesper at 2:41 AM on December 6, 2023 [2 favorites]
Clawson, while I agree that I'm insignificant, that is not what was implied or understood or taken into discussion here from the more common use of "petty:, to which I still object.
But I guess since I've already been guillotined this morning, I'll show myself out , instead of trying to contribute to conversation.
Outrage bait and word twisting, reversion to the mean proving its gravitational force as ever.
posted by Dashy at 5:41 AM on December 6, 2023
But I guess since I've already been guillotined this morning, I'll show myself out , instead of trying to contribute to conversation.
Outrage bait and word twisting, reversion to the mean proving its gravitational force as ever.
posted by Dashy at 5:41 AM on December 6, 2023
The good landlord experiences I had were all where they lived in the same building as I did. In both cases they were rowhomes where I had a flat and the landlord occupied the other floors. In addition to having shared concerns about building maintenance, it allowed me to get to know them and establish a friendly rapport. When I rented from landlords who had multiple properties of which I was just one, it was less awesome. When I rented from a big property management firm, it was a mixed bag. The super tried to screw me out of my security deposit, but I just ignored him and went to the management co, who gave it to me without question.
posted by grumpybear69 at 6:18 AM on December 6, 2023 [2 favorites]
posted by grumpybear69 at 6:18 AM on December 6, 2023 [2 favorites]
Dashy: Clawson, while I agree that I'm insignificant, that is not what was implied or understood or taken into discussion here from the more common use of "petty:, to which I still object.
FWIW, when I wrote the title I meant it in the "small/insignificant" sense, rather than the "needlessly vindictive about small/insignificant things" sense. I had assumed that "nation of" would make that clear for readers, but obviously my assumption was wrong and I apologize if it added some unnecessary venom to the discussion.
From the discussion, it sounds like many people have had petty landlords who were also petty. It's possible that the system we've created often encourages both, with small landlords who are stressed out by the risk of going under every time they get an unexpected bill passing that stress along to their tenants.
posted by clawsoon at 7:39 AM on December 6, 2023 [3 favorites]
FWIW, when I wrote the title I meant it in the "small/insignificant" sense, rather than the "needlessly vindictive about small/insignificant things" sense. I had assumed that "nation of" would make that clear for readers, but obviously my assumption was wrong and I apologize if it added some unnecessary venom to the discussion.
From the discussion, it sounds like many people have had petty landlords who were also petty. It's possible that the system we've created often encourages both, with small landlords who are stressed out by the risk of going under every time they get an unexpected bill passing that stress along to their tenants.
posted by clawsoon at 7:39 AM on December 6, 2023 [3 favorites]
> I don't know where the expectation comes from, that landlords should undercharge just because they own property.
Because the landlord will eventually sell the house -- which the renters paid the mortgage on -- and keep all the money.
posted by The corpse in the library at 8:38 AM on December 6, 2023 [4 favorites]
Because the landlord will eventually sell the house -- which the renters paid the mortgage on -- and keep all the money.
posted by The corpse in the library at 8:38 AM on December 6, 2023 [4 favorites]
> I took pictures of the construction, which he was too cheap to get a permit for, and sold them to his insurance company for way more than enough to get us back on our feet
Wait, how did this work? I'm fascinated! Did you contact the insurance company, or did they contact you?
posted by The corpse in the library at 8:39 AM on December 6, 2023 [2 favorites]
Wait, how did this work? I'm fascinated! Did you contact the insurance company, or did they contact you?
posted by The corpse in the library at 8:39 AM on December 6, 2023 [2 favorites]
Mod note: One comment and it's reply removed. Proposing to guillotine any group of people counts as wishing violence on other people which goes against the Content Policy
posted by loup (staff) at 1:08 PM on December 6, 2023 [3 favorites]
posted by loup (staff) at 1:08 PM on December 6, 2023 [3 favorites]
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No duh!
Like, you needed a study to figure that?
posted by BlueHorse at 7:39 AM on December 5, 2023 [6 favorites]