The chair of the Tenants’ Association says that a tax on capital gains will not reduce landlords’ incentives to accumulate housing. Reducing the tax exemption on capital gains for those who own multiple properties was among the measures announced by the government last week.
Guðmundur Hrafn Arngrímsson, chair of Samtök leigjenda á Íslandi (the Tenants’ Association), was speaking on Rás 2. He says the measures announced by the government may in fact primarily hurt tenants – and that more needs to be done to prevent landlords from amassing large property holdings.
There needs to be some sort of limit on how much residential housing each individual can buy. In many European countries there are various restrictions. In Norway, for instance, you simply cannot get a loan for these additional flats, so you’re not taking out expensive loans and then passing the financing costs onto tenants. And there, additional flats are also subject to very high property taxes.
Tenants pay for the investment
He says limiting tax exemptions on capital gains will not have the desired effect.
On the contrary, if capital gains are to be taxed, it’s perhaps less likely that people will put these flats on the open rental market, for young people or those trying to buy their first home. It’s not capital gains that speculators or investors are after. It’s making tenants pay for the investment the entire time they’re living there.
Guðmundur says investors keep property prices high by outbidding people who cannot afford to compete.
These are individuals who can and do compete with young people on the housing market, outbidding them and maintaining high prices, because there’s so much to gain from the rental market. You don’t have to worry if you offer ISK 5 million more for a property to secure it, because you’ll have tenants to cover all the costs of the flat. But young people who want to move into the flat themselves don’t have that option.
Home-sharing not the main problem
Guðmundur says restrictions on home-sharing – such as offering short-term accommodation through Airbnb or similar – may have some effect, but that it is not the biggest issue. The problem, he says, lies with short-term accommodation operations in business category 2.
That’s where investors were buying up entire stairwells in new buildings in central areas of the city and converting them into accommodation businesses… There have been 400 permits issued by Reykjavíkurborg (City of Reykjavík) to convert apartment buildings into something akin to hotels.
Source: Ruv.is
