What if…landlords were abolished?
25 March. It’s the date that this year, based on my income and rent costs, I stopped working for my landlord and started working for myself – my ‘freedom from rent day’. I earn an average UK salary, live in a house-share and enjoy below market-rate rent for my city. For many of my friends and neighbours it will be June at least before their earnings are their own.
That people with more capital can build wealth off the back of the basic needs of those with less is one of the key features of most of the world’s economies and shelter is no exception. But is there a way we could do away with landlords?
Being a landlord can seem like the perfect business opportunity, providing supplementary income or an alternative pension for anyone who is able to buy a house that they don’t need to live in. Landlords, whether they are big private equity firms or individuals, can charge for the use of their asset and hold onto it until it increases in value or the mortgage has been paid off – thanks to the rent paid by the tenants. Globally, residential real estate makes up $163 trillion of assets – more than twice the world’s total GDP.
On a month-by-month basis it is often more expensive to rent than pay a mortgage. But, if you’re not able to save for a deposit, buying is not an option. Instead, you end up further from that goal as you hand over more money to your landlord. Mortgage holders in England spend, on average, 18 per cent of their household income on their mortgage, whereas renters hand over one third of their income in rent – rising to 40 per cent in London. In 2016, one third of US households paid more than 30 per cent of their income on housing; for tenants living alone, that percentage was 47 per cent.
Legal protections vary from country to country but renters are vulnerable to eviction. They can also be pushed out of neighbourhoods because they can no longer afford to live there. If you buy a house in an area that becomes more ‘desirable’ you can make money on your investment; if you’re renting, it becomes harder to stay.
Legislating against people owning more than one home, or homes that they don’t live in, could be a first step in getting rid of landlords. Surplus housing could then be transferred to tenants, if they want it. As Tom Lavin, from the UK’s Greater Manchester Housing Action, writes: ‘It does not seem unreasonable to suggest, as a basic point of fairness, that ownership of the assets are transferred to the ones doing the actual paying in exchange.’
Limitations could be put on how long people could ‘own houses’. This could help tackle the inequality that is passed down from generation to generation, partly fuelled by property wealth and inheritance, and reduce the motivation for those landlords who sit on extra housing as ‘something for the kids’.
Lavin argues that a post-Covid-19 global recession should be used as an opportunity to transfer housing out of private ownership and that limited pay-offs could be offered to owners, ‘compensating profiteers in order to break free from their control.’
A radical programme to transfer land and housing into community or state ownership, to be managed at low rents, would provide for people who cannot afford, or don’t want, to own their own home. Much more housing could be run by democratically elected local governments, with financial support from central government.
Another option, which could run alongside a boost to state housing stocks, is more community ownership and control, with housing owned collectively through an entity such as a community land trust or co-operative. This could involve no individual private ownership and direct democracy from residents.
There would need to be a supportive regulatory environment, but a boost in housing co-operative numbers could be a useful tool against gentrification, with rents kept low and organizations accessible to local people. Research has shown high rates of resident satisfaction in co-operatives across the world.
The right to secure housing is recognized under international human rights law but it is far from universally recognized. With political will, we could make that overdue shift away from treating housing as an individualized commodity, and make it instead something that everyone can access and no-one can hoard.