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Adequate Housing: Global Financial Institutions Hold the World to Ransom

The commodification of housing has had an enormous impact on communities around the world.

The housing crisis has rewarded the wealthiest while those who have lost their homes are often blamed for taking on too much debt. (Photo: Pixabay)

In corporate finance, the world resembles the classic board game Monopoly, where players trade in and develop properties, demand rents and aim to bankrupt others. The players in this game are a global political and financial elite that include US President Donald Trump.

Global real estate is valued at around USD 217 trillion, representing 60% of all global assets. At a recent press conference, the UN Special Rapporteur on the Right to Adequate Housing, Leilani Farha, stated that “Residential real estate is valued at $USD 163 trillion or more than twice the world’s total GDP.” She added, “Imagine if that capacity was harnessed for the realization of the right to housing instead of speculation and profit.”

In presenting a new hard-hitting report on 1 March, which “focuses on the “financialization of housing” and its impact on human rights”, Farha stated that “Housing has lost its currency as a human right” and “has been financialized: valued as a commodity rather than a human dwelling.”

The right to adequate housing is recognised as a part of the right to an adequate standard of living in Article 25 of the 1948 Universal Declaration of Human Rights and Article 11(1) of the 1966 International Covenant on Economic, Social and Cultural Rights. The UN defines the human right to adequate housing as “more than just four walls and a roof. It is the right of every woman, man, youth and child to gain and sustain a safe and secure home and community in which to live in peace and dignity”.

In 2015, states signed up to UN Sustainable Development Goals to be achieved by 2030, number 11 of which is the goal of sustainable cities, which includes “access for all to adequate, safe and affordable housing and basic services and upgrade slums.” From street level, the view is very different. The housing crisis, which “has not often been considered from the standpoint of human rights”, is global.

Many Western governments have adopted a “let them eat cake” response to the crisis. Rather than address the question of affordable and adequate housing, governments have acquiesced to market forces, with the governments of the UK and Ireland, for example, seeing a solution in building more private homes, to the benefit of developers, even though many properties lie empty in both states. The Australian government continues to grant tax concessions to developers.

The commodification of housing has had an enormous impact on communities around the world. According to the report, “Financialized housing markets have caused displacement and evictions at an unparalleled scale”: in the USA, over 5 years, over 13 million foreclosures have seen more than 9 million households evicted, resulting in communities and families being torn apart. Broken social housing policies in various states also see families forced to move away from their communities to cheaper areas or to appease gentrification.

With millions of foreclosures in Europe too over the past decade, the housing crisis is surely as great a cause of dispossession and displacement as natural disasters, international sports events and the refugee crisis. They are also entry points to local property markets for international corporations. Ironically, while the media decries the risk of damage to property by protesters, the damage done to human lives by these various forms of internal and cross-border dispossession and deprivation of homes is seldom newsworthy.

The financialization of housing and the housing crisis it has created is identified as the result of neoliberalism, the deregulation of housing markets and international trade agreements. The housing crisis has rewarded the wealthiest while who have lost their homes are “often blamed for taking on too much debt”. A common tactic to avoid human rights accountability is to shift the blame to the victim.

Closely tied to the global debt crisis, the global economic system lies at the heart of the matter. The report singles out international financial institutions such as the International Monetary Fund (IMF) and the World Bank as actively promoting “the financialization of housing as the dominant strategy for addressing the critical need for housing.” For example, Mexico and South Korea saw rapid financialization of their housing sectors as part of the conditions of IMF and World Bank assistance.

European states have imposed strict austerity measures on their citizens, cutting public services such as social housing while implementing policies to entice foreign investors who are granted permanent residence or citizenship for investments of large amounts in properties. Such measures were often negotiated in the bailout packages offered by the IMF and the European Central Bank (ECB). Farha reminds states that they are “first and foremost accountable to international human rights obligations — not investment portfolios.”

Internationally, around 2500 bilateral investment treaties include provisions that “generally provide protection for investors from actions by States without imposing obligations on them to uphold human rights.” While it is almost impossible for individuals and communities facing the loss of their homes and communities to take action against the might of the state or developers, developers have greater rights and access to sue states, often secretly through commercial arbitration proceedings, at the public expense.

With skyscrapers rising commensurate with the numbers of unsheltered people sleeping in the streets below, the message is clear: the public gets austerity measures, homelessness and instability whereas wealthy investors, often faceless corporate entities, get concessions and greater legal rights than taxpayers. Criminal behaviour by investors is ignored.

In cities like London and Sydney, house prices have risen over 50% since 2011. While the number of rough sleepers increases in almost all major cities, many foreign investor-owned properties — safe deposit boxes in the sky — sit empty. In one prestigious London borough, between 2013 and 2014, “the number of vacant units increased by 40 per cent.”

The report states, “Accountability to global finance rather than to human rights has been rigorously imposed by the International Monetary Fund and other creditors when Governments have faced foreign debt crises.” Nonetheless, governments cannot hide behind the global economy, which they help to perpetuate, and then lay the blame at the feet of the ordinary citizen.

Governments use the housing crisis to perpetuate other forms of human rights abuses: discrimination against inadequately housed disabled people who find themselves trapped indoors, inadequate provision for rough sleepers, domestic violence sufferers trapped by poverty, not to mention the knock-on effect precarious housing has on education, health and mental health inequalities.

It has long been assumed that markets are a private space safe from government regulation and interference. Nonetheless, international financial institutions do not operate alone. They are reliant on governments for treaties and property law. However, “Government accountability to international human rights obligations has been replaced with accountability to markets and investors.” Following the 2008 financial crisis, governments spent more on bank bailouts than supporting those who had lost everything. Books and Hollywood films have been produced about banks and bankers while the voices of the victims remain unheard.

According to Farha, the greatest threats the financialization of housing poses are that it undermines democratic governments and accountability whereby decisions on policy are made remotely by unseen forces, it is the greatest accelerator of inequality and social exclusion in the world — residents of informal settlements, women, migrants and people with disabilities are particularly affected — and it detaches housing from its social function within the community, and the right to a place to live in dignity and security.

Positive action has been taken by some states in the form of taxes on foreign ownership of residential property, which is sometimes allocated to the provision of social housing, and taxes on luxury properties. These measures do not go far enough. The special rapporteur calls for a “need to shift the paradigm from housing as a commodity to retrieve what housing means in terms of human dignity and security.” As stated in the conclusion of the report, “That requires a transformation of the relationship between the State and the financial sector, whereby human rights implementation becomes the overriding goal, not a subsidiary or neglected obligation.”

Global crises need global solutions and solidarity. Top-down solutions can only be driven by bottom-up suggestions and pressure. Human rights struggles are exactly about the David vs Goliath struggle between the individual and the state, or corporate entities implicated in the state. The human right to adequate housing belongs to everyone and it is time to refocus all human rights as being based on the protection of human beings.

Further reporting taken from a meeting at the London School of Economics on Monday 6 March 2017 where Leilani Farha spoke alongside report co-author Bruce Porter, and Dr David Madden.

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