Before the election Labour was clear about its aim of boosting investment – particularly in ‘infrastructure’ such as housing – while restricting day-to-day public spending. The manifesto emphasised ‘derisking’ private investment, ensuring profits for big capital, with public money used to subsidise institutional investors. Britain’s long-term low-level of investment was blamed on government not being helpful enough to business. House building was to increase to levels not seen since the 1970s, but unlike then not through state investment in secure low-rent council homes.
From the standpoint of Labour’s leadership, the ‘investment summit’ in October – which featured the ‘triumph’ of attracting Larry Fink, boss of financial giant BlackRock, the world’s largest ‘asset manager’ to attend – was a high point of their economic initiatives since the election. The event was well encapsulated in the widely circulated picture of Deputy Prime Minister Angela Rayner clutching Larry Finks arm, smiling and whispering in his ear. Workers and tenants have less reason to be pleased.
Since the great financial crash, the likes of BlackRock have moved to invest in housing as yet another internationally tradable ‘asset class’. Along with other corporations they have successfully pressed governments around the world to adopt policies that help them.
These huge financial corporations have developed massive holdings in landlords around the world, often in former social housing organisations or ‘affordable housing’ providers. Historic institutional structures and ownership patterns vary around the world but there are clear common features: the same financial corporations, similar complaints about poor repairs, rents going up, and so on.
Much of the pressure on governments is behind closed doors but not all. In June, Fink spoke at the G7 meeting of world leaders, lecturing them on the importance of growth. The message was that public debt is too high, but trillions are available from asset managers (BlackRock alone manages over $11trn). In order to ‘unlock’ these funds, investment must be ‘derisked’ and public infrastructure must be available as tradable investment assets. This translates as a call for the state to bear risks while profits are made easy.
The Labour London Mayor, Sadiq Khan, has spoken of a new golden age of council housing, but there is absolutely no sign of that from the new government. The Labour manifesto sets out a total target of 1.5 million new homes over the life of this parliament. The budget committed an extra £500m to the Affordable Homes Programme, amounting to an additional 5,000 homes. This is less than the £1bn widely expected and significantly smaller than the £3bn committed in the budget for additional guarantees for small house developers and build-to-rent developers. Along with relaxing planning restrictions, the strategy is fundamentally designed to boost profit.
In his new book, Against Landlords, housing barrister Nick Bano, while giving elements of a Marxist analysis of landlordism, argues that Britain avoided the effects of financialisation in rented housing, and presents small landlords as the key problem rather than corporate landlordism.
This goes alongside very limited demands around legal changes to the status of tenants. Writing on Novara Media, he emphasises the nearly three million landlords as a powerful interest group and welcomes tax changes in the budget that have an adverse effect on small landlords, along with the very limited changes proposed for the imminent Renters’ Rights legislation, as meaning that the government is now treating landlords as the ‘spoiled children’ they are.
Many tenants will welcome any move to call out landlordism, but Bano is quite wrong to downplay the growth of corporate landlordism in the UK. Housing policy is driven by the interests of capital and international financial institutions, not just a small landlord lobby, significant though that is.
Large private landlords are in fact growing in Britain, as Bano does acknowledge, and will be boosted by Labour’s budget. Grainger, for example, now manages over 9,100 rental properties in the UK. And BlackRock is one of Grainger’s biggest shareholders.
The claim that Britain lacks corporate landlords only carries any weight if you ignore housing associations, or Private Registered Providers as they are known in the legislation. The total borrowing of housing associations is expected to increase to £120 billion by 2026, according to S&P. That would be a 40% increase from 2019. They manage the majority of the UK’s ‘social housing’ and are actively developing homes through a range of public-private partnerships. Around six million people live in a housing association home. They also employ a significant number of workers. Sanctuary Housing Association, for example, employs 14,000 workers. Viewed from the boardrooms of the financial corporations, this represents an asset class that they have access to and can profit from.
It is true that housing has always been a financial asset under capitalism. Marx showed that housing profits were generated not by producing new homes but by creating the conditions in which rental yields will rise, as Nick Bano says. But it is wrong to think that nothing has changed since Marx’s day. The role of the financial system has changed massively and has continued to do so in the period since the great financial crash. There has been a huge growth in the finance sector over the last four decades. Banks trade on open markets in a way that they did not in the past, and huge international financial flows are facilitated by deregulation and markets specifically created by states.
It is also true that most housing associations are ‘not for profit’ in the sense that they do not distribute profits to their shareholders, but there is enormous pressure on CEOs and boards of housing associations to deliver for their investors – the big financial corporations that definitely do want to see a profit.
The success of a housing association CEO is in large part measured by their ability to please the lenders. A feature of the current period of financialised capitalism is that the priorities and methods of financial capital find their way into non-financial organisations.
However, not all housing associations are ‘not for profit’ and the directly ‘for-profit’ part of the sector is the fastest growing part. It is expected to triple in size by 2028 to over 86,000 homes. Heylo housing is effectively a subsidiary of BlackRock, and Sage housing is a subsidiary of another US-based finance corporation, Blackstone. There are numerous interlinking partnership arrangements with traditional housing associations. Hyde housing, for example, a traditional association, has a ‘for profit’ subsidiary.
Across Europe, institutional landlords manage portfolios of residential housing, generating both rental income and capital gains as the market value of houses in ownership increases, and this is the logic of investing in UK housing associations. Both in Britain and across the EU rents are rising faster than inflation and mergers are being pushed through. There is no evidence that this produces a better service for tenants, but it is driven by financial imperatives.
Public spending linked to private investment is presented as the only way to solve the housing crisis, but rising rents and poor housing management feel a lot like austerity for workers and tenants. The UK government is moving to guarantee rent increases on social tenancies in excess of inflation for years ahead, and Angela Rayner has assured this year’s Social Housing Annual Conference that she is pushing cabinet colleagues to support ‘rent convergence’, by which lower social rents are increased to converge with higher social rents.
In Berlin, campaigners won a vote for the expropriation of Deutsche Wohnen, a large corporate landlord, now swallowed up in the even larger Vonovia. In Britain, Peter Lamb, a maverick Labour MP, has called for nationalising housing associations, a demand that makes sense from the point of view of tenants infuriated by high rents, poor service and a realisation that they are not the priority of their landlord.
Every small victory is important, and housing association residents – often organised in the campaign group SHAC – have achieved significant victories opposing extortionate changes, by withholding rent, for example. But in order to make real progress in housing it will be necessary to fight for a wider programme that nationalises the finance sector and puts it to work for social need.
Paul Kershaw