Why? Because apparently they need some more incentive to keep units occupied. Also, even though a property might be vacant, there’s still imputed rental income there. Its owner is just receiving it in the form of enjoying the unit for himself instead of receiving an actual rent check from a tenant. That imputed rent ought to be taxed like any other income.
It makes sense for landlords to hold out for higher rents sometimes. In NYC and probably other places, landlords can get tax breaks if they agree to rent stabilization rules, which set the limit for rent increases each year. One way for landlords to take advantage of this arrangement in to keep units off the market until they think rents are relatively high so that they can get the most out of the allowed increases, while still getting the tax break.
Also, with property values increasing, it can be very tolerable just on to hold onto a vacant unit. What do you need an annoying tenant for if the property keeps appreciating and you can even maybe get a line of credit out of it?
In the context of imputed rent, it doesn’t really matter what the owner personally gets out of keeping a property to himself. If the market rent for the unit is $2,000/month, that means the owner is getting $2,000/month worth of some kind enjoyment out of having it. That’s because if he didn’t own it he would have to pay whomever did $2,000/month for the privilege. It’s not immediately obvious, but the income is the rent you don’t have to pay when you are both the owner and possessor of a piece of property.