Empty Property & Vacancy Taxes

I was visiting London and looking at their property market and prices.
As expected, real estate prices in this part of the world are through the roof, especially in certain areas, such as Knightsbridge.
But interestingly lots of properties are empty. Why is this the case? You'd think that owning such an expensive property would give you a nice passive income.
Similar thing happened in Vancouver. There were lots of empty properties, but rent prices were higher than ever before!

Why would someone buy property worth millions and leave it vacant?
There are a 2 potential reasons for this.
First reason is that people who buy these properties have so much money, that they don't need to make extra cash from renting them out. They got the property to serve them when they're in town, or just as a diversification of their massive portfolio. They do not need the rental yield.

Another reason is that people who bought didn't buy them as an investment, but as a vehichle to preserve money. This is especially the case for people who come from countries with questionable governments. These people are afraid that their money is not safe in their countries, and they want to be safe by buying property in the first world countries, such as Canada or the UK.

All of this makes property scarce, and therefore increases the prices for local population.
This is where empty property vacancy taxes come into place.

In 2023 Vancouver will be charging 5% of property value in vancany tax. This law is supposed to force landlords to rent properties and to reduce the number of homes that are sitting empty.

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Author: Michael Rosmer

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[Deliciousindignation]

I would like you to make another video on the topic of the global residential real estate market again. Real estate is one of the most important issues we are going to face. How do we convince these governments to clear up their construction legislation?

[bjnz]

Australia has a 1% annual tax on foreign owned properties occupied for less than 183 days in the year.

[irod]

Great video. I wouldn't buy any property in those areas. Looks like another buble.

[kallaji]

AND it's for precisely the risks explained in this video, that I strongly recommend NOT touching real estate at all. The global real estate market has become a giant bubble, the extreme versions of which can be seen in china with enormous ghost towns being built. Real estate is widely overvalued pretty much everywhere when measured by any standard financial metric such as Rent-to-Price Ration or Rent-to-median-income Ratio. The 4 decade long cycle of QE has inflated a global real estate bubble which lead to houses becoming unaffordable to the common man. Zoning is NOT the issue. It's NOT a supply issue. It is a monetary issue. However, with interest rates rising, the bubble will pop as new home buyers will stay far away. Thus housing prices will inevitably come down. The buttom is nowhere insight.

Real estate is the worst option for capital preservation. Real estate is highly ILLIQUID, comes with high taxes and transaction costs. On top, you get loads of political and legal risks. If things go soar in a jurisdiction, then you're stuck with a pile of cement and steel that you can't easily sell.

The one and only reasonable choice for capital preservation is GOLD! The yellow metal doesn't pay interest coupons or dividends, but hey .... We are talking about PRESERVATION after all, am I right? 😁 Ironically, Gold has outperformed the SP500 by a very large margin since at least the year 2000. That says a lot about the nature of contemporary financial markets.

[ericeverson]

Michael, this sounds like a lot of "Nanny State" stuff by governments.

[ahmadsollam]

For UAE resident who formed a USA LLC (WYOMING). Does no business inside UAE. Are they required legally to attest their company with UAE government? (Ministry of foreign affairs) or any other UAE regulatory body? Kindly let me know. Appreciate your content a lot!

[chipyoung]

Where did you learn about the porno script placed into an environmental report?

[Carrie-jx]

Does isle of man have any residency program??

[Kinai]

request for next new scheme, Dubai 5 years green scheme, etc....

[CM-drny]

they are vacant because no one can afford them, just like in California.