The commodification of housing: Abolishing landlords is not insane

The housing crisis has become one of the West’s most pressing domestic political issues. In the UK, the government has failed year after year to meet its annual target of building 300,000 new homes, something which has not changed under Labour. One of the most touted solutions to the housing crisis that has gained popularity in recent years is that of “YIMBYism”. In short, it is an aggressive, hands-on deck approach that seeks to cut down the barrier of “regulation”, and supercharge the number of homes built. The movement’s name is a direct response to “NIMBYism”, an infamous term used to describe picky neighbourhood politics clashing with the national interest. 

Now, I want to make something clear; I don’t think building more homes is a bad idea. However, treating it as the only seemingly viable solution is a completely misguided view. YIMBYism’s emphasis on deregulation is, as will soon be clear, an heir to the Thatcher-era policies that have led us to this crisis. Instead, to truly understand how to solve the housing crisis, we must first understand how we reached it. 

The sociologists Lisa Adkins and Melinda Cooper, along with political economist Martijn Konings, detail this precisely in their book: “The Asset Economy”. In the 1970s, Western governments were locked in a constant struggle with trade unions, who demanded a continual rise in employment wages. Consequently, the prices of assets began to fall at a significant rate. To address this, individuals tied to Wall Street mounted an academic counteroffensive. They argued that maintaining this normality would lead to reduced business investment and government expenditure. 

In the UK, 25% of first-time buyers now rely entirely on parental wealth, and up to 60% use some form of family donation 

Most know the story from here. Unions were crushed, and what followed was an unprecedented splurge of deregulation and privatisation across Western economies. What such a move also did, however, was monetise housing. These policies led to a reversal of the poles. Whilst the value of wages fell, asset values have continually risen since the 1980s. This is where the grand thesis of The Asset Economy comes into play. As housing in Western economies has been allowed to become a monetised asset, accelerated by Thatcher-era schemes like “Right to Buy”, a new class division has emerged. It is one where housing ownership is not just a factor, but rather the very lines of demarcation. 

And this is where the often-cited prophecy of “social mobility” falls apart. The disparity between wages and housing prices has made it increasingly impossible to obtain a security net simply by working hard. In the UK, 25% of first-time buyers now rely entirely on parental wealth, and up to 60% use some form of family donation. On paper, there are alternatives, such as renting and support schemes for first-time buyers. Nevertheless, these still leave those on such arrangements significantly worse off in terms of wealth. This is down to the costs and/or debt incurred from these methods. These burdens are not a fair consequence of how much someone has worked. Instead, it is down to the fact that some are simply fortunate to have accumulated wealth from pre-owned housing. 

The likes of Gary’s Economics will tell you that this is largely a problem of the so-called “super-rich”, the top 1% of earners in society. The hard-to-swallow truth, however, is that this new class division permeates across all levels of society, not just the very top. This is why I believe in a radical solution to the housing crisis, one that takes money out of the equation entirely. Governments must reverse the architecture they enabled, and work towards the eventual abolition of private ownership. They must ensure that all existing and new housing is publicly owned. 

It is governments and economists that have engineered our current housing climate, and thus, they have equally as much power to reverse it 

If we allow private corporations to take the initiative, it will simply continue the vicious cycle. In England, nearly 720,000 homes are currently empty, in part due to housing market inflation. Contrary to what you might think, the councils overseeing these actually have less incentive to give these away. This is because when housing is a monetised asset, what matters is not housing people, but making a profit. While I can’t fault them for wanting the additional tax revenue, given the intensity of cuts to councils, maintaining this indefinitely will only cause more issues than it solves. This is also the reason why private landlords are an issue. They make a profit precisely by facilitating scarcity, not solving it. 

Of course, such a bold solution will have its opponents. Numerous outlets have already decried the Green Party’s proposals to crack down on private landlords, as destroying drivers of wealth creation. There is a simple argument that I’d say to this: a fair economy should reward people based on how much labour they contribute to society. It should not be dictated by the inheritance individuals receive. I do agree that undoing private ownership immediately would lead to a crisis, but in the long term, moving towards this would have undeniable benefits. The argument of private property rights also falls flat when you realise that, as mentioned earlier, it is governments and economists that have engineered our current housing climate, and thus, they have equally as much power to reverse it. 

If you believe such initiatives are some kind of economic fantasy, I implore you to look at the case of “Red Vienna”. The city embarked on an ambitious program of social housing construction after the First World War. This alleviated the poverty and poor living conditions the city faced at the time. Even after the ideological death of Keynes and the rise of Neoclassical Economics across Europe, half of Vienna’s residents remain in social housing today. The average rent for these is just €500 a month, far cheaper than most private rentals in the UK or US. Compared with London residents, just 23% are socially housed, and this figure is currently shrinking. 

A complete breakdown of the housing crisis and its causes shows that it is far from an issue of real scarcity. It is as much, if not more so, an issue of economic construction. Housing has been fetishised as a commodity at the expense of labour’s value, and affordable living standards. Restoring balance to this situation, therefore, even if it will anger some, requires bold and decisive action that is unafraid to challenge reality.