How The Obsessive Greed Of The Wealthy Is Actually Making Homes Unaffordable For Renters And Genuine Buyers
Billboards promoting investment in rental properties and urban studios, reflecting the growing real estate market amid rising rents.
Notice in the above image how the billboard targets the investors who will buy and rent this property instead of home owners who will buy and stay in it. It promises assured returns more than what banks offer for your savings. The targets are not home-owners and families who would stay in it, but those who would buy and rent it out as an investment; it is sold as an opportunity to make money. This was not always like this.
In past, renting a house was never a business someone was in. You just ended up with extra property by virtue of your moving due to work or other reasons, and so you rented it out to someone in need. Due to this, the prices were always reasonable. The amount was not enough to make you rich, nor did the owner see it as a money-making enterprise. It was just some extra money they received, and someone made use of what was otherwise going to be an unused property. The one who stayed on rent never felt the looming existential crisis that arbitrary rent increases pose, wherein year after year, rents keep on rising, and you easily anticipate how, in just a couple of years, it would become impossible for you to continue paying this way. The path invariably leads to making you homeless. That appears to be the intent of such a system.
The usual year-on-year rent increase for a property today is standard 10 per cent in most Indian cities and towns. That is, the owner of the property wants to make 10 per cent on his rent income per year. Even the best of banks do not offer you such steep interest on your deposits. Even the usual funds in the share market don't. That sort of increase in wealth in the share market is only possible with reckless or, more politely, well-planned investment in select stocks. And as every policy brochure will advise you that such investments come with massive risks. But in the rental business, there is no such risk. The 10 per cent is coded in agreement. Pay or vacate because there's the next person in line who otherwise would. It is not even the case that there is a deficit of housing. Many of the buildings actually are full of empty units. And they remain so because the owners have purely purchased them to rent out, as a shortcut to make money. People are no more buying houses with the intention of staying, but simply because they happen to have extra capital, unlike others, and so they have decided to exploit the needs of so many. It is pure greed that is driving rents, and what we call the housing crisis or shortage is but an orchestrated casualty to increase the wealth of already wealthy people 10 per cent at a time. At a few places, I even saw 20 per cent in agreements. It is outrageous that people are even thinking that they can ask for it.
Those who already have a house and don't need another are continuing to buy an extra house simply because they can; they happen to hold that extra wealth, and so they are making it unaffordable to those who really need the house to live in it.
And so we have people living on the streets, the scourge of homelessness is created by people who buy houses with the intention of renting and making money. It's not different from a war economy, where you create business for yourself by creating the conditions for such business to exist in the first place. If you happen to be around an apartment in the evening, then try to look at it, and you will see many empty units where no one is currently staying. In fact, there are apartments in select areas with such inflated prices that, in the 30-plus floors that each building has, almost all floors are empty. I was once out on dinner with a friend in Kharadi, Pune, where many IT companies are, and while walking post-meal, we saw these towers full of darkness and wondered if electricity had gone away, but no, that wasn't the case. In a conversation at a tea place later, which I confirmed further from a friend familiar with real estate, the flats in that gated society are way expensive than the surrounding buildings and only a few people, comprising foreigners and NRIs, stay there. And so the large number of units close to the entire tower, in some cases, are mostly unoccupied.
I understand how the whole point of luxury is to make anything exclusive to the select few, make it so expensive that it becomes inaccessible to others except the select few that you want to have access to. But many who buy these apartments to rent out and make money refuse to lend for a few thousand less and instead choose to wait forever. Last month, I was chatting with an owner of a flat who had not lent out this unit ever since the building came into existence some five-plus years ago. She is charging a 20 per cent rent increase. The amount of money she has lost for refusing to lend for few thousand less is humongous, but greed is such. She just thought the next inquirer would agree on her steep rent price.
Many might feel this is expected and give the flat-out supply-and-demand argument, but it is as clear as the “aim of capitalism is to get rid of poverty” lie that the wealthy are refusing to cede to demand simply because they can do so owing to the comfortable extra wealth they hold. By not renting out, they are not going to descend a class. They are just holding the homeless and poor by their necks and squeezing as much sweat and blood from them as they can, but also ensuring that just enough life remains in them so that they will appear to work tomorrow and do not miss out on rent payments. Just as Marx had predicted ages ago: “Wages are determined through the antagonistic struggle between capitalist and worker. Victory goes necessarily to the capitalist... The average price of wage-labour is the minimum wage, i.e., that quantum of the means of subsistence, which is absolutely requisite to keep the labourer in bare existence as a labourer... The capitalist can live longer without the worker than can the worker without the capitalist... And this is the economic constitution of our entire modern society: the working class alone produces all values. For value is only another expression for labour... But these values produced by the workers do not belong to the workers. They belong to the owners of the raw materials, machines, tools, and money, which enable them to buy the labour-power of the working class. Hence, the working class gets back only a part of the entire mass of products produced by it. And, as we have just seen, the other portion, which the capitalist class retains, and which it has to share, at most, only with the landlord class, is increasing with every new discovery and invention, while the share which falls to the working class (per capita) rises but little and very slowly, or not at all, and under certain conditions it may even fall.”