Michael Marshall: The dynamics of conflict and distance in financialised affordable housing

Speculation in low-income housing by an opaque investment community has produced new housing conflicts, but also new tactics among activists.

Michael Marshall is a Doctoral Researcher in the Department of Urban Studies & Planning at the University of Sheffield.

Cross-posted from the University of Sheffield’s SPERI blog

Evelyn Court, Hackney, London. Picture by Fin Fahey

Following the great financial crash (GFC), affordable housing – either rented or low-cost homeownership – has become an increasingly important asset class for global investors. This has been characterised as the financialisation of affordable housing. Running parallel to financialisation has been the ongoing efforts of housing activists across a diversity of settings to contest poor housing conditions, deteriorating affordability, and the continuous threat of eviction. The extractive practices of global private finance have produced new housing conflicts, while the challenges posed by its opacity have catalysed new trends in housing activism.

Financialisation of affordable housing has exacerbated and transformed a longstanding conflict between the extractive practices of some investors and the right to decent housing. Although investment strategies are varied, profit maximisation is often premised upon different mixes of lower housing quality, higher prices, and resident displacement. Despite the consequences of financialisation and efforts of activists, an inherent difficulty in holding global investors to account is their ability to put legal, administrative and physical distance between themselves and their assets. Financialisation has resulted in a more diffuse and transnational network of affordable housing governance. In this network, housing conflict is often between actors who are proximate to one another – landlords and tenants – whereas investors are at times conspicuously absent. And even where investors are in effect the landlord, the homes are often owned via a labyrinthine network of subsidiary shell organisations that can create a vacuum of accountability.

Consider Evelyn Court in Hackney, where in February 2022 tenants staged a protest outside the office of their housing association landlord – the Industrial Dwellings Society (IDS). The protestors had mobilised, with the support of the London Renter’s Union, to demand a response to pervasive damp, mould and flooding. Their campaign resulted in an intervention from the Regulator of Social Housing, who found IDS had known of the issues for years but only implemented temporary fixes. IDS responded by promising to address the disrepair and visit each tenant. Yet, one of the underlying drivers of disrepair was that IDS’s lenders were extracting such significant sums from the association via interest payments that very little money was left for maintenance. IDS is prototypical of a range of indebted housing associations incentivised to withhold maintenance expenditure to ensure they can cover their loan obligations. The indebtedness of IDS does not absolve them of their poor management, but it does highlight that their lenders profited from the situation with relative impunity.

Affordable housing investment can be broadly split into two types: the lending of money to existing landlords and homeowners, or purchasing a stake in affordable housing ownership – known as equity investment. The private debt of England’s affordable housing landlords has risen dramatically post-global financial crisis (GFC), and the flow of capital into the sector has necessitated rising rent prices to ensure landlords can repay their debts. But Evelyn Court is one of several recent disrepair cases that indicates increased investment has not been accompanied by improved standards. Moreover, as landlords have become more indebted in England and started to hit the ceiling of their borrowing capacity, capital has switched its strategy. Equity is on the rise, with Blackstone – the world’s largest commercial landlord – establishing a subsidiary in England to provide affordable housing. This has raised concerns among some stakeholders due to the legacy of equity investment elsewhere. 

Following the GFC, a set of equity backed ‘global corporate landlords’ emerged in cities hit hard by the crash, cities that provided cheap access to housing via depreciated and lightly regulated markets. Equity demands a higher return than lending to landlords, and so can transfer greater risk to residents. Households in equity owned rental accommodation in New York were subject to aggressive campaigns of targeted evictions and threats to call immigration authorities, with the aim of replacing residents with a more affluent clientele to meet investor profit targets. Similarly, in post-crisis Madrid, Blackstone capitalised on deregulation in the rented sector to selectively evict tenants engaged in collective action, reduce standards of maintenance, and raise rents when tenant contracts ended. As with the case of IDS, residents are rarely passive in response. Activists in Spainstaged successful reoccupations of empty bank-owned homes for homeless families.

Yet one of the notable trends under financialisation is how affected communities are adopting new tactics to reduce the distance between themselves and finance. Increasingly activists are using digital technology to link individual cases of conflict into a broader campaign, and conduct proactive research into speculative investors. This is not a trend exclusive to the US, but this remains the context where this shift is most well documented. Community organisers in New York used public data to develop a database of overly indebted buildings in poor condition. And used the data in a campaign to identify the bank primarily responsible for financing the purchase of these homes, with the bank subsequently receiving a regulatory downgrade. In Detroit, anti-eviction activists worked alongside academics and web developers to map the owners of shell companies speculating on the city’s housing, and identify households at risk of eviction. This data was used to coordinate localised resistance, lobby government, and support a campaign of legal action. 

Digital technology has not resolved the inherent challenges of contesting the conversion of housing from a right to an asset. The liquid nature of global capital means it is adept at taking flight from areas of resistance and reappearing in new spaces, increasingly in the Global South. However, the examples above show how the nature of housing conflict has shifted with the financialisation of affordable housing. Activism has combined localised protest with digital campaigning and research to transcend distance, “make finance knowable“, and disrupt the speculative investments being made through their homes.

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