The UN special rapporteur for housing, Leilani Farha, will highlight the devastating human rights impact of society’s tendency to view houses as financial commodities rather than homes for people, in her report to the UN this week.
Farha, who has been UN special rapporteur for housing and human rights since May 2014, has published a hard-hitting report [pdf], which she presents to the UN in Geneva on 1 March. It details the shift in recent years that has seen massive amounts of global capital invested in housing as a commodity, particularly as security for financial instruments that are traded on global markets and as a means of accumulating wealth. As a result, she says, homes are often left empty – even in areas where housing is scarce.
“Shops are closing, restaurants are closing,” Farha has told the Guardian, in an exclusive interview. “You see immediately a loss of vibrancy.”
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Farha wants governments around the world to act. She is calling for them to redefine their relationship with private investors and international financial institutions, and reform the governance of financial markets, in order to reclaim housing as a social good, “and thus ensure the human right to a place to live in security and dignity”. Here are some of the report’s key findings.
Building homes to lie empty
The report warns about a rise in “dehumanised housing”: housing built as a high-yield commodity rather than for social use. A significant portion of investor-owned homes are simply left empty. In Melbourne, Australia, for example, 82,000 (or one fifth) of investor-owned units are unoccupied. In prime locations for wealthy foreign investors, such as the affluent boroughs of Chelsea and Kensington in the city of London, the number of vacant units increased by 40% between 2013 and 2014.
In such markets, the value of housing is no longer based on its social use. Properties are equally valuable regardless of whether they are vacant or occupied, so there is no pressure to ensure properties are lived in. They are built with the intention of lying empty and accumulating value, while at the same time, homelessness remains a persistent problem.
People’s homes are not commodities: cities need to rethink housing
The average income of local residents or kinds of housing they would like to inhabit is of little concern to financial investors, who cater to the desires of speculative markets. These are likely to replace affordable housing that is needed locally with luxury housing that sits vacant because that is how best to turn a profit quickly.
For instance, Kensington & Chelsea is a hotspot for building luxury housing, and yet the borough also has the fourth highest number of households in temporary accommodation in UK, as well as the highest rate of out-of-borough placements (meaning when people become homeless, they are moved to different boroughs entirely).
Farha’s report says escalating house prices have become key factors in the increase in wealth inequality. Those who own property in prime urban locations have become richer, while lower-income households become poorer. Surveys of ultra-high net-worth individuals show that over 50% have increased the proportion of their investments allocated to housing. The most common reasons are in order to sell at a later date and provide a safe return on investment, thus protecting wealth. The “economics of inequality” may be explained in large part by the inequalities of wealth generated by housing investments.
The impact of private investment has also contributed to spatial segregation and inequality within cities, Farha points out. In South Africa, private investment in cities has sustained many of the discriminatory patterns of the apartheid area, with wealthier, predominantly white households occupying areas close to the centre and poorer black South Africans living on the peripheries. That “spatial mismatch”, relegating poor black households to areas where employment opportunities are scarce, has entrenched poverty and cemented inequality.
Similar patterns of racial displacement from urban centres and segregation can be found in large cities in the US.
This also creates gender segregation: in Australia, analysis has shown that average-income single female workers can afford to live in only one suburb of Melbourne, and cannot afford to live anywhere in Sydney.
Farha’s report calls for action. She wants governments to provide housing for people affected by economic downturns and unemployment, but many have been hampered by austerity measures imposed by creditors. As a result, they have agreed to dramatically reduce or eliminate affordable housing programmes, privatise social housing and sell off real estate assets to private equity funds.
The report argues that many governments are too deferential to unregulated markets and have failed to protect the right to adequate housing. Tax subsidies for homeownership, tax breaks for investors, and bailouts for financial institutions have subsidised and encouraged the excessive financialisation of housing.
Farha concludes that all laws and policies related to foreclosure, indebtedness and housing should be examined to ensure the right to adequate housing is paramount, including the obligation to prevent any eviction resulting in homelessness.”