The market will not solve the housing shortage

Last updated: February 15, 2016 – 9:33 AM

Screen Shot 2016-02-15 at 11.13.54 AMThere is a strong consensus that we need more inclusive and stronger democratic societies. We all acknowledge that access to decent affordable housing in integrated societies where everyone can feel ‘at home’, is one of the fundamental pillars in well- functioning democratic societies. Exclusion, poverty and insecurity foster fear and hostile environments.

With the recent terrorist attacks in Paris, in Beirut, in Sharm el-Sheikh and so many more in the towns and cities of the Middle East, it is hard not to link these atrocities to the social situation in many of our communities. As I see it, poverty, alienation and a desperate lack of any positive signs for a better future are some of the main causes for this development.

So do our societies provide for this human right to a decent home? Yes, for many of us who have a steady job and can rely on the market to provide us with good and, for us, affordable homes. But for all others? The simple answer is ‘no’. Neither society, nor the market, has been capable of providing enough decent affordable homes in a safe environment to low income citizens. Throughout the years the Market has lobbied for more deregulated housing markets, and to leave any housing deficits for them to fix. Has this happened, anywhere? The simple answer is again ‘no’.

And honestly, does anyone really believe that the market is interested in providing homes to low-income households? It’s simply not their job, their task. The market does not have this social responsibility. Every time when I hear this mantra ‘we need more market solutions, or ‘let the market deal with any deficiency of housing’ – I say: “don’t believe in them”. The market alone does not deliver affordable housing for low income households. Because the concept of supply and demand simply does not work in housing, like it does for cars and dishwashers. 

Magnus Hammar, Secretary General IUT
Magnus Hammar, Secretary General IUT

How then can we supply the housing market with more affordable housing? As a person with a low income cannot step right into a bank and ask for a loan…we basically talk about ‘affordable rental housing’!

We need more tenure neutral housing policies. Today, homeownership is often promoted by governments, and financially sponsored in various ways. Tax deductible interest rates on mortgages are still a possibility in many countries. Why sponsor those households which are already in a fairly good housing position? Yes, maybe during election times.

Cities, local authorities, should retain ownership of their land, and not sell it to investors. And they should also buy up land when available, like in Vienna. Local authorities can then more easily plan their communities, and do not have to sell to the highest bidder – which often makes housing expensive already from the start.

Avoid the Right-to-Buy, and privatisation of social/public housing. Why transfer common assets, tax payers’ money, to private individuals?

We need mechanisms that control rents, also in the private rental sector, as long as there is an acute shortage of homes. E.g. linked to the Consumer Price Index, or tied to inflation, or mechanisms to compare rents (Mietspiegel in Germany), and rent caps like in Berlin, and now also in Paris. Need for housing subsidies, and allowances, either object (building-) oriented, or subject oriented, to primarily tenants – public and private tenants. But also provide allowances to homeowners, to make it possible to stay in the home during a period of economic difficulties. All in all…

The state, the governments, local authorities, etc, should reclaim the initiative and undertake the task of supplying all citizens with good affordable homes. There is no way around it!

  • The world needs more publicly owned homes – not less!
  • We need more political involvement in housing – not less!

We must understand affordable rental housing as a key community infrastructure. We need more construction, administration and ownership of social/public housing by governments and local authorities, or by the non-profit sector. The private sector is of course welcome to contribute – but then always with a requirement of permanent affordability. And, rents can be totally deregulated, free and market based – when we have a balanced housing sector. When that wonderful principle of supply and demand is achieved. That will be the day! 

This article was originally published in Global Tenant: International Union of Tenants’ Quarterly Magazine.

Leave a Reply

Your email address will not be published.