Cities around the world, from Vancouver, Sydney, New York, London, and Berlin have experienced housing crises over the last decade. While the local details may differ, the root cause is the same – rampant profiteering from homes.
In Los Angeles, where laws prohibited rent controls and the homeless population climbed to nearly 60,000, there was a wave of high-profile rent strikes last year. The movement culminated in the largest rent strike in the city’s history with 200 families in three apartment buildings striking against unliveable conditions and sharp rent increases.
This year the California state legislature changed course and limited increases on some rentals to 5% plus inflation.
In 2018, Seattle produced a movement of tenants and workers led by Councillor Kshama Sawant from the Socialist Party’s sister organisation in the US. Sawant pushed the council’s approval of the Amazon Tax, which would have taxed a handful of the city’s largest corporations, raising $47 million a year to build housing.
Only one month later the rest of the city council capitulated to pressure from Amazon and repealed the tax. Average rents for a one-bedroom apartment in Seattle have more than doubled in eight years. Now there is a powerful and growing campaign for rent controls in the city.
In Berlin, where rents have more than doubled in ten years, profit-dreamers blame the crisis on immigration and government regulation. Renters are demanding instead that the big landlords, beneficiaries of mass selloffs, beginning fifteen years ago, of public housing built by the former East German state, be expropriated by the city and returned to public ownership.
Deutsche Wohnen, a corporate firm that owns over 100,000 apartments in Berlin, is naturally opposed to this proposal. In an attempted compromise, the city has recently passed a five-year rent freeze.
In Dublin, which saw homelessness increase 95% for adults and 227% for children between 2015 and 2018, and where a mortgage crisis looms, 10,000 people marched in May under the banner “Raise the Roof,” which pushed the Irish parliament into passing an opposition motion that will dramatically increase funding for social housing while restricting the ability of landlords and banks to evict tenants into homelessness.
Tenants in New York gained momentum with the election of several high-profile progressive candidates in 2018, many of whom endorsed and campaigned on the idea of universal rent control. On June 14, this movement pushed through new legislation that strengthens tenants’ protections and closes several loopholes that landlords had used to remove units from rent stabilization.
The rental problem stems from decades of cuts to funding and the building of public housing. It is made worse by speculation in both the housing market and, increasingly on homes for rent. Waves of footloose capital have moved into rental properties, seeking profits from human misery. Large corporations are buying up significant amounts of rental stock.
One example is the giant corporation Blackstone that has bought rental properties around the world, including in the US, Spain, Ireland, Canada and Sweden. These include formerly publicly-owned homes.
The common strategy is to push up rents, cut maintenance provision, ruthlessly evict tenants and make a pile of cash. It bought 1,800 social housing units from the city of Madrid, paying €202 million in 2013 in a dodgy deal arranged by the son of disgraced former Spanish prime minister Aznar.
The homes are now valued at €660 million – a 227% return in just five years! Rents have been hiked by 49%, with those who cannot afford it evicted. In 2018 Blackstone invested $5.6 million to successfully defeat Proposition 10 that would have allowed stronger rent control in California.
Socialists campaign for taxes on the rich and developers to raise the funds we need to build public housing with unionised workers. We campaign for high-quality, well-maintained housing, run democratically by the tenants themselves.
Solutions that rely on market incentives cannot fix the problem. Only by limiting the scope of the market and ultimately removing housing from its grip altogether, by building for need rather than profit, can we provide long-term, high-quality stable housing for all.
Since landlords and developers are unable to voluntarily curb their behaviour, the solution is to legislate and tax them. Rent control, corporate taxes, expropriation, and building public housing would constrain the market and provide some semblance of stability for renters.
We need to change housing from being a commodity for the rich to homes for people.
By Simon Schweitzer