There's a couple of "ifs" there and the scenario seems implausible. If I look at the prime real estate in a city it tends to be a lot of skyscrapers rather than very large homes (with occasional exceptions like say a Buckingham Palace). But it looks like the economic equilibrium is lots of cheaper apartments rather than large homes for rich people.

> ... and even investment properties occupied by nobody ...

Not much of an investment. Something is wrong if that is happening, probably manifesting as a lack of supply. Otherwise what is the point of an "asset" that doesn't generate income, degrades over time and could easily be rented out at a profit rather than sitting unused?

Whatever scenario there is where it makes sense to have an empty property, assuming a sane policy backdrop, it'd always be better for the owner do what they were going to do anyway but also rent it out.

People don't want to rent those homes out because once you're doing so it's difficult to evict a long-term tenant. You just lose out a lot on flexibility - even if you try and manage that risk by leasing out housing e.g. on a yearly basis, landlord-tenant law often overrides that since there are strong ethical reasons for not evicting someone who has since come to treat that rental space as their home.

Short term rentals are better on that score: no one sensible forms a long-term expectation that they're going to live in an Airbnb that they've rented for a few days. (If you think short-term rentals are "bad" for the long-term market or have negative side-effects on the neighborhood, then tax them to manage that tradeoff. But banning them altogether is unconscionable and just leads to houses sitting empty and unused.)

There are some places in the UK (mostly new developments in London) that have a significant number of deliberately empty investment properties despite the law here making it easy to evict tenants. They are not being used for short term rentals either.

Although the easiest route (no-fault eviction) is being abolished soon, wanting to sell a property remains a valid reason to evict.

Some people just buy property as a speculative investment.

I do not think it is the main cause of shortages in London - that is people buying holiday homes, which are often large and centrally located. London provides a lot (restaurants, nightclubs, gambling, prostitution, financial services...) that attracts people with a lot of money to spend from all over the world.

> despite the law here making it easy to evict tenants

"Easy" is relative. "Evicting" an airbnb'er once the term is up will always be orders of magnitude easier than kicking out a long-term tenant who regards that as their actual home. There's not even anything necessarily wrong with this! The easiest way to address the issue is literally to slash any remaining red-tape that's making things difficult for those who would want to AirBnb these properties out, while managing the resulting side-effects (including the plausible effect on the long-term rentals market) by levying a special fee if necessary.

As a bonus, easy AirBnb rental provides an alternative for some who might otherwise want a permanent holiday home.

If we don't have an excess of housing why should we allow ANYONE even one single property to serve as an unlicensed hotel. If we tax un-lived in property extremely punitively nobody will hold them at all and it should soon be sold or rented out.

I'm fine with taxing both long-term vacant properties and AirBnb at fairly high rates, since both have negative effects on the surrounding neighborhood - the latter to a markedly less extent than the former, of course.

The purpose of housing is not to provide an investment vehicle nor should we optimize for this. Airbnb should just regulated out of existence in most urban markets because we are chronically low on housing and the city doesn't need short term rentals at all.

The purpose of most real estate is to provide shelter for people, not to sit empty and unused. That's exactly what AirBnb allows to those who are only willing to rent short term (because it's their vacation home and they want to be able to use it).

You are referring to properties held by the already rich (only the rich can afford 'vacation homes').

If they can't afford a 'vacation home' without short term rentals then it should be sold and provide housing year-round and build equity for a new homeowner.

Housing someone provides a fundamentally different kind of value than offering a second home or short-term stay. A home meets an essential social need, while vacation homes and similar uses provide far less public benefit. On that scale, the social value of housing a person is vastly greater than the value of adding another short-term rental bed.

That does not mean hotels would stop being built, because developers and hotel operators are optimizing for a different kind of value. But it is more than enough reason to oppose turning even a single home into a de facto short-term hotel.

The reality is not simply that people are monetizing unused space. The ability to rent homes short term encourages people to buy more second homes than they otherwise would, because the income offsets the cost. It also encourages investment in housing that would otherwise remain in the long-term market, since owners know unused time can be monetized. Some buyers purchase properties specifically to operate them as Airbnbs, and many landlords convert homes that once served monthly or yearly tenants into short-term rentals because they can charge more, adjust rates freely, and often earn more overall.

There is more than enough land for everyone, and rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes. The demand of the rich does not eliminate demand of the poor, so the market produces different kinds of housing for different clientele.

Think about it this way: assume you supply all the housing to all the rich people. Then there still remains untapped demand of others that can be fulfilled by further production of homes for those specific people.

This story fails when land becomes restricted, which is exactly what zoning laws cause. Zoning is a big harm to the poor.

But zoning is required to maintain order. Nobody wants anybody to live in favelas.

As with everything the regulator needs to strike a balance to make the market work.

Given the choice between being homeless and living in favelas, millions in Brazil have chosen to live in favelas.

The reality of zoning laws in Western countries is to provide a target for regulatory capture by the NIMBY crowd. With the result that we're systemically underbuilding housing, then wonder why we wound up with homelessness.

Favelas are a local optimum which systemically is very difficult to get out of and is a sign that the regulator is powerless. It's a great example of a market failure.

Rich and poor alike are competing for scarce land near where people actually live and work.

> rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes.

This disregards basic geometry. Sure, in some rare situations you only have one small plot of land surrounded by existing construction or natural boundaries. But, in the majority of cases, you have one large plot of land, and you can either construct one big house on it, 5 smaller houses, 10 small houses, or 200 apartments in a block. The rich are absolutely competing for this lot with the poor.

And as inequality goes up, the rich can even start contemplating buying up surrounding properties, tearing down construction, and transforming a small plot into a much larger one.

If you want second homes to be used productively, just allow folks to list them on AirBnb for planned short-term rental. Long-term rentals are a total non-starter politically for second homes, since you obviously can't ethically throw out someone who regards that rental space as their home. But short-term is actually fine.

As for larger homes, people should be allowed to live in there as larger, extended family groups - a common pattern in non-Anglo cultures. Ban "single family" restrictions since they amount to unconscionable discrimination against such reasonable living arrangements.