Scot Adam Smith wrote about the free market economy in the 18th century. He might be delighted with our suggestion for few fetters on the housing market. But would landlords???
Those of you who follow Scottish politics will have noted the departure of First Minister Nicola Sturgeon from the political stage. The reason for her departure is largely due to bizarre circumstances caught up in the issue of ‘trans rights,’ which need no understanding for the purposes of this post.
Our interest kicks off with an article in the decidedly right-wing United Kingdom media outlet, The Telegraph, which rubbed its hands with glee as it came up with this headline: “How Nicola Sturgeon destroyed the Scottish buy-to-let market.”
For those concerned with the financialization of housing, you’re probably aware that there are two major components to a housing menace to human health and well-being. One is house-flipping — buying and selling housing for profit. The other, as described in the UK, is ‘buy-to-let’ — an exercise in profitable land-lording.
Now, there’s no point in heading to the Telegraph to find out how Sturgeon has irked that harrumphing media outlet. It is firmly paywalled. But the ‘destroyed buy-to-let market’ headline is all we need. Details of Sturgeon’s lefty savagery can be summed up as ‘instituting rent controls in Scotland’ and are discussed in more detail later in this post.
So we’re going to propose what for us is an uncharacteristic approach to renters, landlords and rent controls. Instead of cheering on a government freezing rents (and evictions as well) we’re prepared to label rent-controls Sturgeon-the-Landlord-Destroyer wrong, and The Telegraph right in its championship of capitalism in an unfettered free market
What is indeed needed is fewer controls on the profit-making zeal of buy-to-let landlords. Yes, fewer controls. Landlords may, indeed must, support ‘pure’ free trade. Landlords may charge whatever they want to whomever will pay their asking rent (though no class, race, etc. discrimination allowed).
But . . . in recognition that housing is shelter as well as a profit centre, any landlord will allow a minimum (say two-year) lease that will bind both parties, reflecting the costs to a tenant of moving.
Most importantly, all housing must otherwise remain on offer in a completely free, un-manipulated marketplace (if not already leased and occupied) reflecting an absolute human right to adequate housing.
Failure to keep the housing on the market and unoccupied would be punished (say on a monthly basis) by forfeiting to the government a twelfth of the value of the house. That’s a considerable incentive for the get-rich-by-renting landlords to test their housing speculation mettle against one other while at the same respecting the importance of housing as a human right.
A landlord, failing to keep a house either on the market and/or occupied would generate a whacking great penalty bill — let’s say perhaps a 12th of the value of the house for each month gone by with the home on the market and empty. It might be paid into a government scheme, perhaps one for the development and construction of new social housing.
This would render a housing free market as a ‘perishable’ one. More like the buying and selling of a commodity such as wholesaling strawberries. Compete hard with fellow gamblers while the strawberries are fresh. Price them badly and expect to lose badly, perhaps an entire shipment of rotting fruit.
So. Fix the housing crisis by forcing landlords to directly compete with each other by making housing a ‘perishable’ commodity — reflecting its continued availability to be of profound importance for human consumption.
Or. . . would it be better to stand by wringing our hands as landlords press for legislation that allows them to to keep their thumb (rather than the nation’s thumb) on their precious free-market scales? For such a heavy-thumbed example, read more about this Scottish initiative in The National: Landlords to push legal challenge over Scotland’s rent freeze