Comment

Let’s start from the beginning: a mortgage is a neutral agreement. Effectively, the lender conveys equity to the borrower over time. Equity is the right to permanent, unlimited use of the property.

A rental agreement conveys no equity. What the tenant gains is a short-term, limited use of the property. “Temporary” is considerably less valuable than “permanent”, so a fair value for “rent” is considerably less than a fair value for a mortgage.

Rent prices don’t reflect this. Even after including a maintenance expense, (that the owner would have to pay regardless of who is living in the property), fair rent for that temporary privilege is still far less than the mortgage for the permanent right.

And yet, the market has been manipulated to the point that rent prices are well above mortgages. In a fair market, people seeking housing would generally choose the better option. If a mortgage is cheaper than rent, they would choose a mortgage. The laws of supply and demand would react to this choice by increasing the price of a mortgage, and decreasing the price of rent.

Since this isn’t happening, we know that the market is being manipulated, and tenants are being exploited. “Fair rent” does not exist: tenants are paying far more than the cost of a mortgage, yet they are not receiving the value of a mortgage.

That is even less helpful than renting it out.

You would have a point if “fair rent” existed, but it does not. In the absence of “fair rent”, we are left with the perverse position that a vacant home does, indeed, cause less harm than a rented home.

A house gets inherited.

The full context of that scenario includes the manipulated market. The scenario you present is only reasonable in a fair market.

In his case, if he had said he was renting for an overseas assignment but was going to move back

Same thing: the scenario for renting is only reasonable in a fair market, but the underlying context of your scenario is the manipulated market where the value of a temporary privilege is modeled greater than the value of a permanent right.

source

Sort:hotnew top

jj4211@lemmy.world ⁨1⁩ ⁨week⁩ ago

rent prices are well above mortgages

So this is even in the USA over here not seemingly universal. Hitting up some detached housing in Zillow in my area, even with 20% upfront, mortgaging 80% over 30 years, the minimum property tax+mortgage+insurance on a house that might be $3,000 based on the sales price of other houses in the neighborhood in the past year, the typical rent is about $2300… So absolutely someone renting out a mortgaged property in this area is paying for that equity while the renter can come in with a modest deposit and get maintenance taken care of at a much lower rate than even a 30 year mortgage. At least the rental market here seems to be aggressively competing with 30 year mortgage payments with 20% down sort of picture…

source
Alaknar@sopuli.xyz ⁨1⁩ ⁨week⁩ ago

(that the owner would have to pay regardless of who is living in the property)

Property doesn’t get damaged through use if nobody lives there, what are you talking about?

yet they are not receiving the value of a mortgage.

You’re looking at this from the perspective of someone just looking at a spreadsheet.

Sure, you’re technically correct - money-wise, they are not getting anything in exchange for them renting the apartment.

What you’re seemingly blind to is the utility. They don’t have the money for a purchase, they don’t have the ability take mortgage themselves, most importantly - they don’t want to own property in a foreign country, but due to the geopolitical situation and due to the employment status of the husband, the family wants to temporarily live in my home country.

Sure, there should be cheap rental opportunities, but both the rental market and the mortgages are fucked where I come from. I’ll be 80 by the time I’m done paying off the apartment, and thank god I was able to purchase it before getting married, because that has lowered my credit score to the point where I wouldn’t be able to purchase at all.

So, I have two options here - sell (to an investment company or a hoarder, because practically nobody else can afford apartments in that area of that city at this moment), or rent way below the average for the area, but still above my mortgage - because I can’t afford to pay that on top of being the breadwinner for my family.

source