Barcelona Metropolis

The hegemony of ownership

As regards the political issue, there has certainly been no more successful social government initiative in the last century than that of home ownership. The decades-long attempt of political elites virtually across the world to prioritise it as the sole means of accessing housing does not correspond to scientific criteria. Nor does the fact that they have devoted themselves to stigmatising renting, turning it into a volatile and uncertain form of tenure. And even less that they have fabricated national myths, such as that property is the moral foundation of the family or of security. It is a political decision, which involves aligning the interests of the elite with the middle classes, and is aimed at protecting the system of fairer policies more oriented towards redistribution. It is based on the premise that, if people access a tiny slice of the pie, they will be much less likely to rebel and attack the larger slice.

After all, the goal of extending home ownership is as old as contemporary cities, which emerge with industrialisation. Already in the second half of the 19^th century, the reformist bourgeoisie presented it as a means to domesticate those below them: the new urban proletariat who, faced with no alternative, was forced to live in neighbourhoods of shacks. However, almost a hundred years had to pass before some countries managed to extend home ownership (through all kinds of government aid) to broad swathes of the population. The Franco regime, in this respect, was a pioneer. There are few successful propertisation initiatives like the one initiated in the late 1950s, and carried on by the governments of the PSOE [the Spanish Socialist Workers’ Party] and the PP [People’s Party] until the 2008 crisis.

In that sense, it’s also important to debunk the myth according to which the supply of rental properties would dwindle on account of the open-ended contracts established by the 1964 law. The truth is that the rental market share continued to drop after the Boyer Decree of 1985, which stripped guarantees from tenants under the pretext of doing the opposite. And the explanation is simple: the stark policy, since the 1960s, to make buying the only means of accessing housing. From the “we do not want a country of proletarians but of owners”, asserted by Minister Arrese in 1957, to deductions on purchasing and easy borrowing in the last bubble.

It doesn’t take much thinking to imagine the socio-political effects of the access model to housing through purchasing. From the outset, it helps individualise the problem of access to housing, reducing it to an every man for himself approach. It has adverse effects, like small owners who tend to share the interest of maintaining high prices with the elite so that their equity does not lose value, at the expense of making housing unaffordable for society as a whole; or their support for regressive policies, such as the elimination of inheritance tax, which currently applies in various autonomous communities.

The colonisation of finances

Beyond its political side, housing has become an increasingly important element for global capitalism. And differently to before. Although rent extraction – the appropriation of wealth without the production of added value – has always been a feature of the economic system, it has taken on an almost pivotal role in recent years. Hence, the processes of dispossession that we suffer in the living space, in the home, are today often as relentless as those we endure in the workplace.

This change began to take shape in the 1980s as a result of states’ decisive action to make housing a major asset, increasingly linked to the goals of finance, which have since accumulated a great deal of power. We witnessed the first phase of this process during the mortgage bubbles of the past (1986-1992 and 1997-2007). Securitisation was introduced, which allowed banks to trade a large volume of mortgages on financial markets, selling them to third parties and generally behind borrowers’ backs. A predatory business, with practices close to looting, which gained popularity with the subprime mortgage crisis in the United States, sending it into a tailspin when the bubble burst.

However, some gave up on finance prematurely. In recent years, housing has continued to be an overriding goal for major investment funds and banks. Some estimates suggest that 30% of global money is channelled into real estate investment. In other words, the reproduction of a very significant share of world capital hinges on growth in housing and land prices. And again, this made a state intervention tailored to these actors necessary.

In Spain, this change occurred during the last term of the PP [People’s Party]. In view of the fact that a growing sector of the population chose to rent, the government did its utmost to transfer the real estate business to this terrain. The main task of the Rajoy Executive was to adapt the living conditions of millions of homes with tenants, many of them new, to the objectives of the funds. It was a fast and decisive operation. In 2012, it created a special tax regime under which real estate investment companies (SOCIMI) stopped paying corporate tax and enjoyed other tax benefits. And in 2013, the leasing law was amended and rental agreements were shortened to a three-year term, making them coincide with the mandatory minimum period during which a company must have a property rented. In other words, it generated losses for the treasury and made the lives of countless households precarious, making everything dependent on the interests of the shareholders’ business.

Today there are many investment funds and consultancies that recognise that the real estate market recovered (a fine euphemism to refer to the growing prices and evictions) thanks to the role of major funds. What they do not say is that finance is completely altering the housing systems of big cities and their social ecosystems. Buying houses at prices bearing no relation to local income, often in highly speculative transactions, drives the real estate market away from residents’ needs. SOCIMIs are the paradigm of this logic: companies that acquire thousands of homes so that remote investors can make a profit, investing in them in the short term, reaping profits that come out of the pockets of tenants renting homes and violating human rights, as condemned by the United Nations.