> If a landlord can charge 1200 instead of 1000 why wouldn’t they? They’ll charge the maximum they can get away with, costs are irrelevant

This is rarely true. Only universally true for large corporate landlords where there is an entire corporate structure maximizing every dollar due to personal incentives put in place by executives/ownership.

Small landlords (yes, even those with 6 buildings) are almost never min/maxing rent like this. They are optimizing for other things like time investment and hassle factor. And even doing the right thing.

I've both rented and landlorded. In neither side of those transactions over decades was I either paying maximal rent or charging it. When property taxes went up as a renter, my small time landlord would show me the tax bill and I'd pay exactly the increase. Same went for when I had tenants.

I'd go as far as to say the majority of mom and pop landlords are not looking to charge maximum rent. They only start doing so when they have a problematic tenant they are trying to "manage out" of the unit.

> If a landlord can charge 1200 instead of 1000 why wouldn’t they?

Because someone else could undercut them. If everyone is being levied the same toll, and everyone knows that, it’s not that risky to just pass along the tax.

Yes. And the other one is forced to charge 1200. So the other one can charge for example 1190. And the renters will choose the 1190. And then the next renter has to pay 1200.

Or the one without mortgage goes like I only get 800. Maybe instead I just throw this money in government bonds for better gains and save money...

Other option for same outcome could be just to charge any renter 20% on top of their rent. Which they directly pay to this fund. That would push rents down as they are able to pay less. Achieving exactly same effect.