Housing Crisis
Graphic – Credit: Leonie
Woods, as used by the Financial Times
Britain’s economic model is broken.
Nothing epitomises this more clearly than the housing market. For a significant
number of people under the age of 40, living in rented property is a way of
life. This is especially the case in Britain’s bigger cities.
Rent is the payment that tenants pay
to their landlords for being able to live in the property that their landlords
own. The widespread nature of landlordism in the modern British economy is the
very antithesis of a commitment to widening property ownership. Our economic
model has degenerated into a form of rentier capitalism, where the prospect of
property ownership is becoming more and more a remote fantasy for millions of
renters. Liberals need to put an end to the big landlordism that is perverting
both our economy and our housing market.
The government should pass a law
making it illegal for anyone to own more than two properties which they do not
themselves live in. Any excess properties that someone owns, above the two unlived
in properties limit, should be bought up by local councils at a fair price
(minus the amount of any rent payments already extracted from the property) and
turned into new council housing. We should also reform the Right to Buy making
it a legal requirement that for every council house sold, a new council house must
be built.
I am not going to pretend that ending
big landlordism would be easy or cheap. Sadly, it will not be. Local councils
will need significant additional funding from the state in order to buy up the new
council housing properties from the big landlords, this is on top of over a
decade of austerity whereby council budgets have been cut to the bone. However,
it would enable councils to deliver more council housing to the poorest and
most vulnerable, while also seeing an additional increase in the council’s
revenue from the tenants of council housing. This additional council revenue
could then be spent on public projects to benefit the community. Perhaps, the
additional council revenue could form the basis of a national fund to
redistribute the revenue, on an egalitarian basis, to poorer council areas with
lower property prices.
Big landlordism is parasitical and
monopolistic in its nature. It may well lie at the heart of rentier capitalism,
but it corrupts and distorts the operation of a true capitalist free market. There
is nothing wrong with people being able to buy and own the homes that they live
in. There is everything wrong with a greedy landlord owning multiple properties
and being able to sustain a life of luxury solely by extracting rent income from
other people. There is nothing more anti-capitalist in truth, than being able
to live solely on unearned rent income. Rent income should be used only to
supplement an average lifestyle for the landlord, it should not be used to
entirely fund a lifestyle of opulence and extravagance.
A policy to end big landlordism would
lead to a truly competitive housing market. Big landlordism acts, as any
private monopoly does within an economy, to prevent effective competition,
while forcing tenants to pay the rent they set, regardless of whether the rent rate
is fair or not. Whereas local councils are motivated to address the needs and
concerns of their residents, the big landlords are primarily concerned with
profit maximisation and the expansion of their property portfolios. In
addition, councils can be held to account at the ballot box and their tenants would
have the right to buy their properties, so long as the council replaces them
like for like.
With big landlordism prevented,
landlords would no longer be able to dominate entire sections of communities. The
landlords that remain would have to offer fairer rents in order to attract
tenants in what would be a fairer, more equal, competitive housing market. The policy
of preventing people from owning more than two properties that they do not live
in would also end egregious property speculation. This has seen private
property owners buy up multiple properties only in order to increase their own
personal wealth assets. This in turn, increases the property prices of other
properties in the neighbourhood and thus, makes those properties more unaffordable
for poorer and first-time buyers.
Big landlordism is a barrier to the
creation of an egalitarian capitalist economy or what James Meade and John Rawls
called a
property-owning democracy. It is the barrier to the creation of an economy
based on radical social liberal principles. Liberals, even those classical and
economic liberals that value competitive free markets, should oppose the
predominance of big landlordism and rentier capitalism within our contemporary
economy.
The end of greedy and monopolistic big
landlordism would represent a great step on the road towards the establishment
of a true property-owning democracy. It would represent a great step towards an
egalitarian capitalism. But most of all, it would help to deliver social
justice for those most in need of council housing, especially for the poorest
and most vulnerable members of our society.
