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.
You’re assuming there’s too much supply, both landlords will be able to rent the unit, one will make more money.
> And the other one is forced to charge 1200.
No.
Nobody is forced to charge anything. The market forces limit what can be charged, as an upper bound.
And I'm saying this with experience as an actual landlord.