Starmer versus the logic of the market
Sir Keir Starmer has announced that the Labour Party (looking increasingly likely to form the next government) will set a target rate of 70 percent of all UK households being in owner- occupied homes. This sounds ambitious, but the current rate of 68 percent means that in fact only half a million new owner occupiers would be needed to meet this target.
What it does though, is send a signal about the priorities of Sir Keir and his party, that they will be on the side of property owners. It is as much an ideological expression as it is a practical policy. As Sir Keir said in a tweet: ‘Owning your home is not just about having a place to live, it’s about having pride and security’. Presumably renters cannot have pride and security.
This is balanced by the claim that ‘Labour will introduce a Renters’ Charter to give new rights and protections for renters. We will build more high-quality, affordable homes and restore the dream of home ownership’. Quite why having a place to live should be a dream is a strange thing: it’s only a ‘dream’ because it is so unobtainable at present.
As the Office for National Statistics notes: ‘Over the last 25 years, housing affordability has worsened in every [Local Authority area], especially in London or surrounding areas’ and ‘In 1997, 89% of LAs had an affordability ratio of less than five times workers’ earnings, whereas only 7% had this level of affordability in 2022’ (tinyurl.com/bdfbmmjw).
Part of the problem is that whilst everyone could be housed by simply building more houses, the financial model of home ownership requires constantly rising house prices. To make buying worthwhile, prices need to rise by more than inflation and interest rates, else effectively, the owner is just renting from the bank (alongside shouldering all the liabilities for maintenance and structure). For many people, their house is a financial instrument for when they plan to downsize and retire on part of the difference between house prices (or rent the house out, as a form of pension income).
So, Labour’s plans to increase home ownership cannot come at the price of threatening the asset value of those who already own a home, much less those who make their income from letting out houses (which includes a great number of MPs of both parties).
Further to that, any widespread house-building programme will almost inevitably be met with fierce opposition from local home owners who will see a threat to their amenities (as well as the value of their properties from the increase of supply). Even in such cities as Bristol, where the house prices are overheated and there is massive demand for new housing, every option to build new is met with a storm of protest from NIMBYs.
Even then, widening the pool of home owners doesn’t change the effect of private property in land on the general economy. As Marx notes in Volume 3 of Capital:
‘Wherever natural forces can be monopolised and guarantee a surplus-profit to the industrial capitalist using them, be it waterfalls, rich mines, waters teeming with fish, or a favourably located building site, there the person who by virtue of title to a portion of the globe has become the proprietor of these natural objects will wrest this surplus-profit from functioning capital in the form of rent’ (Chapter 46, tinyurl.com/4fnpkk4j).
The value of houses derives, in large part, from the general growth of the economy, and the expansion of demand of land:
‘One part of society thus exacts tribute from another for the permission to inhabit the earth, as landed property in general assigns the landlord the privilege of exploiting the terrestrial body, the bowels of the earth, the air, and thereby the maintenance and development of life. Not only the population increase and with it the growing demand for shelter, but also the development of fixed capital, which is either incorporated in land, or takes root in it and is based upon it, such as all industrial buildings, railways, warehouses, factory buildings, docks, etc., necessarily increase the building rent.’
Merely by holding onto land in the form of property draws a share of the surplus value generated (either through rent on homes or through windfall sales, both of which feed into raising the cost of wages to the industrial capitalist, without increasing the mass of use values the workers can purchase).
‘The mere legal ownership of land does not create any ground-rent for the owner. But it does, indeed, give him the power to withdraw his land from exploitation until economic conditions permit him to utilise it in such a manner as to yield him a surplus, be it used for actual agricultural or other production purposes, such as buildings, etc’ (Chapter 45, tinyurl.com/5b8jsz96 ).
This means that any attempt to regulate landowners could be met with stock being withdrawn from the market to protect their margins: it is the right of ownership that gives them the ability to extract tribute, nothing inherent in the land or the house itself. It’s worth noting that in 2021/22 the UK government paid tribute of £30 billion, about 2.5 percent of government expenditure (tinyurl.com/6wj5hh9h). This was in part reduced by the government pressuring social landlords to hold their rent down, which might explain why Sir Keir’s plans do include an element of expanding social housing as well.
His plans, though, also run up against another part of the logic of a market society. As empirical research by Warwick University showed, back in the 90s, ‘every additional 10 percentage points on home ownership puts 2 percentage points on the unemployment rate’ (tinyurl.com/yc76fj8m). Reducing the mobility of labour seems to cause more rigidity in labour markets.
Sir Keir may think he has come up with a low-cost way to win over natural Tory voters, but it is not without risks. The problems do not stem from any technical difficulty in providing suitable housing for all households, but from the nature of property.