Reforming Home Ownership for Unequal Societies

Affordability of housing in the United States has become an enormous obstacle to personal financial stability and economic growth. With the cost of housing in all forms – single family residences, apartments, and all others – monetized and financialized by a metastatic financial system intent on absolute economic control of all humanity, reforms are desperately needed to break humanity free of the grasp of the economic elite who control our financial and economic systems.

The first proposed reform is the right of the tenant to purchase the property they reside in, regardless of the nature of the property. All leases and rentals are considered amortized purchase agreements. The value of the property is locked the moment the tenant moves in. From the point of move-in, all of the tenant’s rental or lease payments are immediately considered payments against that mortgage. When the tenant moves out, they retain a partial interest in the property representative of how much they invested in the property during their residence.

The management cost of the facility must be explicitly separated from the mortgage payments, such that the tenant knows exactly how much of their payment goes to the mortgage (based on the value of the actual real estate property) versus how much of their payment goes to the management of that property (based on the actual costs of management by the landlord or property manager).

At any time, the tenant can take an explicit mortgage on the remainder of the mortgage on the rented / leased property, and using that mortgage loan, acquire the remainder of the property value from the original landlord, thus taking full possession of the property and paying their mortgage to the bank instead of the original landlord. In such case, the tenant must continue paying management costs to the original landlord or the property manager so that the interests of all tenants can be addressed, for example, facility-wide maintenance and operations issues, security, amenities, and so on.

When the tenant moves out, the property can be reassessed for the at-that-time fair market value. The new tenant then moves in to a mortgage at the new fair market value, with the prior tenant owning their proportional share of the property. The property manager, or whoever possesses the superior mortgage on the property, has the right of first refusal to repurchase the prior tenant’s interest in the property, or they can leave it alone. As the new tenant pays rent against their mortgage, the new tenant is purchasing down the first superior mortgage, and then purchasing the interest from the prior tenant. This ensures that the originator of the property gets paid first, and the second mortgage (and any which follow) are paid following the first mortgage. Regardless, the new tenant can purchase the entire mortgage using a traditional mortgage structure against the assessed fair market value of the property at any time. This right to purchase the mortgage transfers to any tenant when they move in, and is extinguished when they terminate their lease and vacate the property.

Landlords are taxed on properties, and assessed mortgage costs, against the multiple of the number of residential units under their control. For example, in a single family housing condition, the primary residence of the landlord is taxed at a multiple of 1, and the assessed value for the mortgage is assessed at a multiple of 1, because it is the landlords actual residence.

For any properties beyond the primary residence, the landlord is assessed and taxed at the multiple equivalent to the number of units under their control.

When a landlord purchases a second single family unit, they must pay 2x the fair market value to purchase the second unit, and 2x the taxation rate for the property. For a third unit, they must pay 3x the FMV, and 3x the taxation rate. The landlord pays these sums to the local housing board, to be used by the housing board to fund tenancy for low-income residents who cannot otherwise afford their own residence. The landlord must pay these expenses, but these expenses do not modify the fair market value of the property, so the landlord cannot recover these expenses upon selling the property.

A developer for residences does not pay this multiplier upon the first-construction of the unit. The developer has their multipliers waived for one year following the advertisement of the property for sale or tenancy. If the property has no resident within one year of the residence permit and start of the advertisement of the property for sale or lease, the developer must pay the multiplier costs at that point.

For a multi-family unit where the landlord is typically the developer of the property, or the refinancier of the finished property, the landlord will have their multiplier waived until the property is occupied by a tenant, or one year after the issuance of a residency permit or the opening of the property to advertisement of availability for tenants. If the landlord finds a tenant to occupy the property and claim a mortgage against it within the first year, the landlord’s multipliers are waived.

In a multi-family case, the multipliers are assessed based on the lowest-cost unit to the highest-cost unit, when constructed concurrently (for example an apartment building), and ordered by the first-build to the last-built for units constructed subsequently (for example, building one apartment, then building a second). The multiplier extends across all the properties that the landlord owns, and does not restart based on a different set of properties.

For homeowners who own multiple residences, for example a wealthy person who owns multiple residences in multiple cities, vacation homes, and other properties that are not their primary residence, these multiple-personal-homeowners would face ever-escalating costs for acquiring more residential properties, and ever-escalating costs for owning those properties, creating a significant disincentive for homeowners of any amount of wealth to maintain ownership of properties they do not primarily occupy, or do not make extensive use of. Owning a vacation home in the mountains or on the beach may still be feasible for the wealthy on a 2x or 3x property cost or taxable basis multiplier, but would soon become a significant disincentive as the number of unoccupied or limited-occupation homes increased by the owner.

This reform would enable renters and lessees to build home equity in their residence regardless of their ability to afford an explicit mortgage. This would prevent accumulation of residential properties among landlords by imposing an escalating penalty for ownership of multiple units. This would increase the availability of funding for municipal services through the property tax multiplier, and increase the availability of funding for housing support through the assessed fair market value multiplier.

This approach would incentivize ownership of homes and other residential properties. It would prevent ownership of large amounts of unoccupied homes or residential units by banks or landlords. It would disincentivize the escalation of property values, whether through market activities or through accumulation by the wealthy or well-financed.

The only parties who are intended to have a financial impact from this policy are parties that own multiple residential properties that are not their primary residence, and that are rented or leased to non-resident owners. This includes private parties that own multiple homes for rent or lease, as well as formal corporations and organizations that act as landlords for the business purpose of leasing properties to tenants.

The intent of this policy is to be structured in such a way to create zero cost and zero financial harm to single property residential owners who reside in the single residential property they own. Existing homeowners would receive a tax credit against the depreciation of their property and the “upside down” mortgage conditions created by this reform, creating a zero-cost condition for the single-property residential owners. The upside down properties could be remortgaged for the new fair market value after 3 years, with payment of the upside down mortgage costs funded through the proceeds of the fair market value multiplier and taxable basis multiplier assessed against multiple property owners.

This reform would incentivize the immediate sale of millions of properties by landlords and multiple homeowners, dramatically relieving the burden of residential costs to the low and middle income. This would enable all renters to begin building home equity immediately, while lowering incentives by all parties to continually escalate the cost of residences and the accumulation of properties by the wealthy and/or well financed.