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I had an idea that would allow people to buy their own homes that they are currently renting:
- Every home gets appraised to determine what it would sell for. This is done by the county and is used for property taxes too.
- Every renter is allowed to buy a percentage of their primary residence from the owner. The owner has no choice in this. It's a requirement for being able to rent a property. Edit: Since people are confused about this, the renter is not required to buy anything. They have an option to buy.
- Renters can pay as little as $100 extra per month and the county puts their percentage ownership on the deed. If the home is sold, the renter can't be kicked out involuntarily. If they do leave, they get the percentage of home value they own.
Pros:
- This would avoid the issue of high interest rates hurting primary homeownership.
- This would blunt the impact of corporate landlords having a monopoly where they refuse to sell. They are forced to sell at a fair price.
- This would create a simple decision between owning their home and spending money on luxuries or eating out.
Cons:
- This would hurt small landlords who would have their property bought out from under them. This is actually a good thing because the benefits of rising property values are now shared.
- The implementation is hard. This is actually a good thing because bad landlords would sell property they didn't want to manage, lowering prices for renters who want to buy.
- It would cost the county money to hire appraisers. But this could be paid for by increased property taxes due to better appraisals.
- Property taxes would go up for landlords. But this would be good, as it encourages them to sell the property. This appraisal process and increased property taxes wouldn't affect people who just lived in their home without charging rent.
Paying such a small percentage would mean it takes a lifetime to be able to afford the house. If we take the median home value($360,681), $100 a month would take 300 years to own the house. That doesn't even account for inflation and an increase in home value. You would just be pissing away money that could be better used otherwise. If you increased the payments, you would be better off saving or investing to buy a home than trying to buy the one you were renting.
How about we just ban companies from owning rental properties or homes longer than one year and nobody can rent out more than one home.
Here's what you're forgetting: as a percent owner in the home you are entitled to a portion of the rent and a portion of the sale price. As you buy more, your rent goes down. You are saving money.
The more you explain your idea, the worse an idea it becomes. The rent progressively lowering means there will be a point where the mortgage is higher than the rent payments. The only way that system makes any sort of sense is if the government owns the house and rents it to you with payments based on a yearly appraised value. That would be a pretty sweet deal that would have high demand, which would require a lottery or que that would go about as well as section 8 vouchers(horrible).
You want a roundabout system where there is no incentive to rent out property, just ban renting property.
You might not know this, but a mortgage being higher than the rent isn't abnormal. In the past, when interest rates were 8% and rents were lower, you lost money on a rental property for the first few years. Property is not a license to print money. It's an investment with costs and payoffs.
The property owner can pay off the mortgage early with the money. Or they can buy another place to rent out. Or diversify into other kinds of investments. No one is banned from anything.
Under your system, people are banned from normal rental agreements though
There are already many restrictions on rental agreements. Things that were "normal" before are clearly illegal now.
Why not get a loan and buy the house as narmal?