Two Amsterdam tenants had great success in reporting their landlord to the Huurcommissie rent tribunal for charging them exorbitant rent. The Huurcommissie ordered the landlord to lower the rent for a small, leaky, drafty room on Keizersgracht from 1,950 euros to temporarily 95 euros per month. The rent for another room in the same building was lowered from 1,200 euros to temporarily 93 euros.
That should be separate & regardless of rent (or no rent), but rent is income and should be treated as such.
If rent was taxed at 95% we would see much less inflation pressures & more homeowners.
We would see construction grinding to a halt and owners not bothering to rent out their flats anymore because it wouldn’t be worth the trouble.
Ofc construction would continue just as it did for thousands of years - and because of the exact same reasons rents can get that high: people just need to live somewhere. Homes have intrinsic value and are necessary regardless of monetary value.
It’s not like the housing market didn’t exist before the value increase in the western world (so in the last 70 years).
There would however be less investments into homes, less financial incentive to build extra homes you don’t intend to use personally. So yes, fewer places to rent, more homeowners. And secondary market would function just as good, people move around all the time, needs change over ones life, etc - buying and selling would be easier. Prices would still vary a lot, but would reflect the majority (more democratic prices?).
For people to build or buy their own homes they need to be able to afford them. They can’t, which is why they rent. If landlords don’t offer flats for rent anymore, people don’t magically have more money to buy or build.
Corporation and private investors build rental properties because they aim to profit from them, and if that isn’t the case anymore, their construction activity slows down and then stops. As can currently be seen e.g. in Germany.
The only way to effectively counter rising rents in cities is public, non profit construction and decentralization efforts (so people don’t all flock to the few places that are hip to live in).
You just showed why prices would go up if rent were taxed that way (and why the prices are so high at the moment). No one thinks a small flat is worth 1500€/month (or what have you), but they need a place to live near their job. So they’ll pay whatever it costs. Same with deregulated health care, like in the US.
Also, for what it’s worth. Even without the construction costs and without any profit margin landlords must pay for home repairs. I don’t think 5% would even cover that