Comment 95776

By kevlahan (registered) | Posted December 10, 2013 at 14:43:30 in reply to Comment 95775

Well, the answer is that speculators (and rentiers in general) make their money by hoping that other people will make productive investments, and they can reap windfall profits when the property values rise without having to actually do anything themselves.

Of course, the problem is that if everyone did this no one would ever make any money and everyone would be worse off. One of the purposes of regulations and taxes is to incentivize good behaviour and penalize bad behaviour. Unfortunately, in this case the incentives are the wrong way around (taxes go down for demolition) and speculators call themselves developers to confuse the public (and some councillors).

The City tried to stop this neglect/demolish/wait for decades speculation trap in downtown Hamilton by at least ensuring that speculators do not have a nice little income stream from parking while they wait for someone to offer them a windfall profit on their lot. But it has turned out to be hard to put real teeth in the regulation. The City could also insist that they will only grant a demolition permit if there is a solid plan (with financing) to rebuild within a short time on the lot.

Comment edited by kevlahan on 2013-12-10 14:44:37

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