The Irish Independent leads with the following headline:

‘Rent-trap’ tenants pay out €2,400 more than homebuyers Shortage of homes for sale means it’s cheaper to buy than to rent

Although, it is an article from an Irish newspaper, it highlights the issues faced within the UK as well.

If you think the headline for a moment it gives you some clarity around the driving forces behind the shortage of housing:

People earning enough to get a mortgage from the Bank are effectively driving money creation to the value of the house they purchase. That money will likely circulate among home-owners and remain in the housing market. It is highly unlikely that the renting class will benefit from this example of money creation. Perhaps another example of trickle-down economics being a load of nonsense! This creates a similar result to traditional quantitative easing where the additional money created does not trickle down.

Cost of Having a Roof Over Your Head

In simple terms, people with less money have to pay more to have a roof over their heads. The logical consequence being a shift of wealth from the home renters to home owners, thus increasing inequality in society. Sound familiar? It should because it is the environment that has been created by the Tories and New Labour since the Thatcher era.

The “quadrillion” dollar derivatives market plays roulette using the value of the mortgages which is intended to reduce risk but is also highly profitable for those that can afford to play the game – again an increase in wealth for the already wealthy and zero benefit for anyone else.

The banks charge interest on loans and mortgages to provide for risk of default but when a bank defaults they get bailed out by the taxpayer and the taxpayer gets nailed with the cost of the default. What would happen if everyone in the world defaulted on their mortgages at once? Yes it would crash the financial system but you can bet your bottom dollar that Governments would step in and take the private bank debt out of the banks and onto the Government’s Balance Sheet. Effectively, banking is a risk free business. When it all goes pear-shaped, it triggers a shift in wealth from the State to the Private Sector – neo-liberalism at its finest!

Social Housing

You would think a natural consequence of a housing crisis and soaring rent in the private sector would be to invest in social housing so that people have a safe and secure roof over the heads and can use the money they save by not paying exorbitant private rent prices to spend in the real economy. Makes sense right? Apparently not! This will never happen with a Tory-led Government. In fact selling off existing social housing was part of their election manifesto. Increasing the money people have to spend in the real economy is not a priority, increasing the wealth of the wealthy is the priority. The result being a widening inequality gap.

You can take the causes / consequences of the soaring private rent prices and apply it to many aspects of Tory policy. The Tories are still clinging onto their “Trickle-down Economics” ideology on the basis that increasing the wealth of the wealthy will eventually result in increasing the wealth of the less well off. As a result, all you will see between now and 2020 is a widening inequality gap and the blame likely residing with people on benefits and immigrants, while playing the people on benefits and immigrants against each-other to avoid there ever being a unified voice against the Tories.

We need to work together to stop this blatant attack on the majority of society. The housing crisis is just one of the many battles we face…

Like this: Like Loading...