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.
My only point here would be I’d switch from actual ownership to more of an “option” ownership option. Similar to stock options, every time you pay rent you get more of the “options”. When a sale event happens, you can exercise your options and have a chance to buy the property there. Or, if they want to exercise now they can and they’d own shares of the building there. Once it tips to 50% then the shareholders own it.
Every year you receive more options, you are under no obligation to exercise them. However, every year you rent you receive more options. If you leave and you did exercise your options you get the value you put in back, but if you didn’t the options go back into the pool.
I think this is similar to co-ops in large cities, where there is a contract that the owners can start owning the building themselves over time.
How would that actually work? Co-ops work just like a corporation, you buy shares one apartment at a time. There are no options.
I feel like the record keeping in your idea and mine would be the hardest part. Basically every home that is rented out would have to be a mini corporation with shares available for purchase.
It was just a thought, I don’t have all the details worked out. But essentially yes, just like a co-op except since in a co-op you own, these would be options, where they unlock every year on renewal, giving you the option to own. There would have to be a whole new concept for it, a normalized thing similar to a corporation but specific to land ownership, because yes pretty much any rental property would be one, every building