This post is a tale of two viewpoints. From the bastions of free enterprise? Confirmation that there is literally nothing on earth that cannot, with good conscience, be turned into a profitable investment.
And from the ‘Red Under The Bed’ crowd who believe the principal purpose of government is to serve the needs of all the people? Shock and horror at yet another escalation of profiteering from the poorest who cling to life in modern societies, to be paid for by the taxpayer.
Real Estate Investment Trusts (REITs)1 follow a time-honoured footpath towards financial profit to be gained from the poor. From the landed gentry and their serfs of the middle ages through Victorian middle and upper class slum-holders renting accommodation to the underclass, few exceptions mar the honourable tradition of profit-taking from those least able to afford it.2 Such behaviour is to be anticipated from, and fulfilled by, the landlord classes.
Now, as exemplified by Home REIT, based in the UK, the honour of housing the poorest can be shared not only by landlord classes, but by investor classes. They will be encouraged to learn that the lowliest of all, the people who are homeless, can be serviced with a form of shelter, to be paid for by local government and with an expected profitability of 7.5 percent.
‘A form of shelter’ sounds a little mealy-mouthed, doesn’t it. So let’s try to define it. What is ‘a form of shelter?’
The single greatest adventure in providing non-profit housing for low and no-income citizens has been the mixed successes of social housing in various countries. Early attempts to do so a century or so ago often focused on a well-built housing — a very solid form of shelter. Indeed, some of this century-old housing was so well-built that it survives to this day, even in countries where social housing is currently disparaged. Some of this well-built shelter is either still in service as social housing in the UK,3 or increasingly more likely to be found now in private hands under the UK’s Right to Buy program, which has eviscerated its social housing stock.4
In the US, a similar form of well-built shelter still exists, though in a state of sad neglect, mainly in housing tower estates in major cities.5
For the last half-century in the UK, the quality of shelter built for social housing substantially deteriorated, with shrunken lifespans as low as twenty or thirty years.6
So what ‘form of shelter’ might REIT’s construct for the homeless, leasing their product for some 20 or 30 years to a local council to house a particular locality’s growing numbers of homeless?
The answer is already perfectly evident. The UK, interested in promoting worthless and contaminated ‘brownfield’ land for a variety of uses,7 recently established them as ‘regulation free zones,’ which enterprising developers could use to advantage to build whatever.
‘Whatever,’ has increasingly produced brand new ‘out of the box’ cramped and squalid temporary housing,8 which in turn is being increasingly used by councils to deal with a growing housing crisis pre-COVID and only exacerbated by current pandemic conditions.
And now the current UK government, intent on finding ways to build the economy out of the coronavirus process, is engineering a much broader relaxation of building standards.9
Back to the the question, then: what form of shelter will REITs build so profitably for the homeless? In other words, what might the public expect from a free-enterprise business-oriented government using so-called regulation reform to help the building industry dip their hands ever-deeper into the pockets of taxpayers?
The answer, based on Britain’s brownfield relaxation of standards, is incredibly shoddy overcrowded sardine tin towers that will be barely inhabitable when new, let alone after 30 years of taxpayer funded life.
But hey, even the little guy may be able to join the investor class. Read how you too might be able to convince yourself you’re an honourable free-enterpriser and get in on this kind of racket, at Reuters: REIT Focused On Accommodation For The Homeless Okays London IPO
- For more on REITs, try: COVID 19 Recovery — Financing Prospects For New Social Housing
- Here’s one exception: Evidence Public Housing Can Be Done Better, The Next Time Around
- Try: America, Too, Please Note: London UK Mayor On the Value of Public Housing
- For more, try: Right-To-Buy Program At Risk. Well Duh! What Would You Expect, If Only 1/3 Selling Price Stays in Housing.
- For more, try: Can A Public Trust Help Solve NYCHA’s Multi-Billion Dollar Repair Woes?
- Try:UK Council Housing: Beginning Of The End? Or End Of The Beginning?
- Try: Brownfields: What Are They? What Can They Offer Affordable Housing?
- See more here: Even As Temporary Housing, Shipping Containers Can Fail To Do The Job
- Do UK Planning Changes Spell The End Of Social Housing?