Financialization of housing
Housing is a RIGHT, not a commodity
Housing and real estate markets worldwide have been transformed by global capital markets and financial excess. Known as the financialization of housing, the phenomenon occurs when housing is treated as a commodity – a vehicle for wealth and investment rather than a social good.
In a report to the UN Human Rights Council, the Special Rapporteur explores the financialization of housing and its detrimental impact on human rights, in particular, the right to housing. From mass forced evictions to make way for luxury developments, to nameless corporations purchasing real estate from remote boardrooms, to empty homes and people pushed out of their communities because they simply could not afford to live there, the repercussions have been felt across the globe.
With roots in the 2008 financial crisis, the impact of the shift from housing as a place to build a home, to housing as an investment has been devastating including millions of evictions as a result of foreclosures in countries most affected by the Global Economic Crisis.
In developing economies, often informal settlements or long existing neighborhoods located in ‘prime land’ are subject to evictions and displacement to make way for speculative investment. Residents are often rendered homeless, replaced by luxury housing that often stands vacant.
The vast amount of wealth has left governments accountable to investors rather than their international human rights obligations.
Global real estate represents nearly 60 per cent of the value of all global assets or $USD 217 trillion – with residential real estate comprising $USD 163 trillion or 75 per cent. This represents more than twice the world’s total GDP.
The Special Rapporteur calls for governments to ensure markets serve housing need rather then investment priorities, and reminds states that they are first and foremost accountable to human rights.
On 22 March 2019 the Special Rapporteur on the right to adequate housing sent jointly with the Working Group on Business and Human Rights a series of letters to six countries and one of the largest real estate equity firms, Blackstone Group.
In a joint
media statement the two UN human rights mechanism condemned the “egregious” business practices of giant private equity and investment firms which are scooping up low income and affordable homes around the world, upgrading them, and substantially raising rents, forcing tenants out of their own homes. They also underlined that real estate equity firms have an independent responsibility to respect human rights, which means that they need to conduct human rights due diligence in order to identify, prevent, mitigate and account for how they address adverse impacts on the right to housing.
The experts also reminded States of their human rights obligations to regulate investment in residential real estate so that it supports the right to adequate housing and in no way undermines it.
The letters sent and replies received are available here: