Why Ending Big Landlordism is the Liberal Thing to do

 

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.