Somewhere, this week, I heard or read that Gary Schilling has proposed an idea to solve two of this country's problems. Here is the snippet note I made:
I don't happen to think his solution is a good one. Property ownership should not be a condition for anything resembling citizenship status, even legal residency.
But I've got one to propose in its stead.
Suppose that local governments which thought about buying foreclosed homes and fixing them did so, but instead of turning around and selling them at some significant discount to people who meet certain income criteria (income no less than $X, no more than $Y), suppose that they fixed them up, and then sold ONLY THE HOUSES to whomever was interested, and KEPT THE LAND as city property. The buyer of the house would have a land lease and would pay annually 5% of the assessed market value of the site. This would provide participating towns and cities with a reliable income source several times the property tax they currently collect, which might range from as little as 0.1% of market value in California to perhaps 2% or even 3% in a few places. It certainly beats borrowing the money to buy the land, if one has limited funds, and paying interest for 30 years on that debt.
It has parallels to the Community Land Trust movement as a way to provide affordable housing, but it doesn't require contiguous lots, and the entity that collects the land rent is the local community as a whole. Land rent is an excellent way to fund public spending.
Land appreciates, if the local economy is healthy. And over time, it may be that the neighborhood around one of these homes will shift from single-family residential to commercial or to multi-family housing. At that point, the value of the house drops to very little IN THAT LOCATION. It might be possible to move it to another lot, or a developerwill come along and offer the homeowner something for access to the site, taking over the land rent payments and spreading them over multiple residents or multiple businesses.
Mortgage payments leave town. They ultimately go to the shareholders of out of town banks. Land rent paid to the community gets recycled locally, to meet local needs.
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