Microblog Memes

As it applies to residence, the concept of "renting" is fundamentally broken and damaging. "Renting" is a commercial activity; "housing" is a human necessity. Combining the two is inherently exploitative, so "ALAB" is a reasonable and apt observation.

Renting is fantastic. You want to build a house or buy a house, or renovate your house, but it takes a few months? You move to a new area, temporary job relocation for a project? You rent. From someone who owns a house. Called a landlord. They are providing the service of making this available for you in an area you want.

A better option in these scenarios is a "land contract". This is, basically, a rent-to-own scenario. During the initial period, if the occupant withdraws or defaults on the contract, they forfeit any equity they have built, just like a rental.

Unlike a rental, however, there is no annual increase in the rent: the purchase price is fully amortized, and (so long as they maintain the agreement past the initial period), the tenant gains equity with every payment and every increase in market value.

That full amortization / fixed payment is the main reason why landlords don't currently like land contracts. They want to be able to command a 5-10% price hike every year.

To make land contracts the better option for landlords, we can establish an owner-occupant credit against property taxes. A landlord is a non-occupant owner, and is not entitled to the credit. Under a land contract, the occupant is considered the owner, and eligible for the credit. With a sufficiently high property tax rate on non-occupant investor-owners, a landlord stands to earn a significantly greater return on land contracts or private mortgages than they can earn on renting a given property.