The United Nations housing envoy, Leilani Farha, is in the marketing suite next to the Canaletto building. It’s an unlovely, bulked-up, look-at-me 31-storey luxury apartment block towering over a canal basin on the once down-at-heel border of Islington and Shoreditch in east London. How much does it cost to buy a home here, asks Farha. The sales assistant replies that a three-bed flat would set her back over £3m.

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It’s not the most extreme example, but Canaletto typifies what Farha calls the “financialisation” of housing, a phenomenon common to cities like London, Sydney and Vancouver, which have seen the construction of swaths of hyper-expensive real estate, often in “regenerated” neighbourhoods. It is housing disconnected from its social function, she says; housing as a commodity. “I look up [at these developments] and I see gleaming towers of glass and steel, I see architects in their machismo building the best, funkiest, coolest buildings. I believe in good design, but I see this and I see huge, huge sums of money, for me staggering sums of money, being poured into these places not as homes but as investment,” says Farha.

“How does it make me feel? One, too much inequality. People talk about income inequality: where it manifests so clearly is housing inequality ... I see a society that doesn’t care about the most vulnerable. It’s mind-boggling to me that people could spend so much money and know that at the same time none of that money is assisting the poorest people in terms of housing. It’s a pretty bleak picture.”

Today, Farha, the UN’s special rapporteur for housing, presents a paper on housing commoditisation to the UN human rights council in Geneva. It sets out how unregulated global capital has in recent years not only distorted housing markets all over the world – turbo-boosting prices and rents to a level that excludes and expels poor and middle-income families from so-called prime locations – but has also created housing precariousness on an unprecedented scale.

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There are hundreds of trillions of dollars invested in residential property worldwide, the paper estimates. The effect has been to accentuate housing need: displacing poor residents (often through forced eviction), driving up wealth inequality, and creating social dead zones in the once-beating hearts of cities.

In Melbourne, Australia, one in five investor-owned units lie empty, the report says; in Kensington, London, a prime location for rich investors, numbers of vacant homes rose by 40% between 2013 and 2014 alone. “In such markets the value of housing is no longer based on its social use,” the report says. “The housing is as valuable whether it is vacant or occupied, lived in or devoid of life. Homes sit empty while homeless populations burgeon.”

Farha uses the phrase “residential alienation”, borrowed from a book In Defence of Housing, by David Madden and Peter Marcuse, to describe this process: “In Vancouver, people were telling me they live in neighbourhoods where this house is empty because it’s been bought as an asset, this is occupied, this one’s empty and this one’s empty. So you have no neighbours, you have schools closing down because there aren’t enough students to go to the school; so your children, if you live in one of these vacated neighbourhoods, are not going to school in your community any more. Shops are closing, restaurants are closing. You see immediately a loss of vibrancy.” There have been some positive examples where politicians have sought to curtail the power of global credit markets: Andalucía and Catalonia in Spain introduced laws to temporarily expropriate vacant housing, while several countries have imposed taxes on foreign homeowners to discourage speculation in luxury property, with the revenues used to subsidise affordable homes.

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But on the whole, governments have been “too deferential” in the rise of financialised housing, she says. Many subsidise it through tax breaks and bank bailouts, while simultaneously slashing public spending on social housing programmes. Others openly encourage it, offering rich individual foreign investors citizenship (“golden visas”) in return for property investment. It is symbolic, Farha notes, that the world’s most powerful politician, US president Donald Trump, is a billionaire property developer.

Farha, 48, by background a human rights lawyer and anti-poverty activist, calls for a “paradigm shift” whereby housing is “once again seen as a human right rather than a commodity”. It is clear, she suggests, that the UN’s sustainable development goal of ensuring adequate housing for all by 2030 is not only receding, but without regulatory intervention to re-establish the primacy of housing as a social good, laughably optimistic.

International human rights activists are yet to recognise the scale of the problem, she says. “Human rights was the first framework to recognise issues like homelessness, forced eviction, displacement, housing issues for refugees ... and yet human rights has not caught up with this rapid financialisation of housing – and I think we really need to.”

Might the social inequalities and displacement caused by housing financialisation – the tensions flicker almost permanently in cities like London – erupt politically? Farha is not sure. The middle class, she notes, have so far been generally complicit, benefiting from rising house prices. Reform could be a “hard sell”. And yet, she agrees, things cannot carry on as they are when not just the very poor, but key workers like teachers, firefighters and police officers can’t afford to live in the city. “Are we going to have cities devoid of low-income people? I can’t figure out what the breaking point is. But it is not sustainable ... I don’t know what the future holds but it is looking pretty bleak to me.”

CV

Age: 48.

Family: Married , two children.

Lives: Ottawa, Canada.

Education: Elmwood high school, Ottawa; University of Toronto: law degree, MA in social work, BA English literature.

Career: 2012-present: executive director, Canada Without Poverty, Ottawa; 2001-2012: executive director and staff lawyer, Centre for Equality Rights in Accommodation, Toronto; 1997-2001: women’s programme director, Centre on Housing Rights and Evictions, Geneva.

Public Life: 2014-present: UN Special Rapporteur on the right to housing for the UN Human Rights Council.

Interests: The big picture, politics and people, reading and running.

• This article was amended on 1 March 2017 to include Leilani Farha’s attribution of the phrase “residential alienation”.