Housing is a very special type of good. It is essential for society since everybody needs a place to live and it consists of buildings that will stand for a very long time, often hundreds of years. This means that from the perspective of society, housing is an important long-term asset that will affect and define communities and their character for many years into the future.
At the same time, in today’s capitalist economies, housing is often a lucrative investment for real-estate investors and speculators but also for individual homeowners, with the result that house prices in many areas reach levels that a majority of the population cannot afford. Housing today is a major source of upward distribution of wealth and income to landowners through economic rent and land inflation.
For many consumers today, the purchase of a home is the most expensive and important transaction that they will make in their lives and the development of real-estate prices has a huge effect on the economic situation and quality of life for individuals, both for existing owners and aspiring buyers. For tenants that rent a house or a flat, housing is purely a consumption good, though a very important one.
How might housing be organised instead in a Participatory Economy? Below I explore one possibility.
Social ownership of land and housing
Housing cannot be allowed to be a source of unearned income and profit for speculators and landlords as is the case today. In a Participatory Economy, land and buildings are owned by everyone in society, under the commons, and while various entities (including individuals) will be stewards of the land and housing buildings, as will be explained below, residents will not be able to buy and own their homes in the same way as today and make a profit (or loss) when selling due to price changes. Instead, residents will pay a fee to get access to housing.
Housing will still be an important long-term asset from the perspective of society. Society, through its consumer councils, federations and political institutions, should therefore have a big say in the planning and construction of housing.
Democratic long-term housing planning
Consumers and citizens, in their councils, federations and political institutions, will play an important role in long-term city planning and urban development and in defining what buildings to build. The overall objective in society should be that residents as a collective should have the opportunity to choose between different housing arrangements, such as co-housing, communal housing, apartments and detached houses, and different levels of standards, depending on preferences and where in life one is.
Society’s role would include zoning (dividing land into zones for specific uses such as residential, commercial or industrial use), controlling building permits, deciding on building regulations, environmental standards, providing information about consumer preferences, demographic trends and internal migration, and participating in the organisation and handling of public facilities and services, such as garbage collection, electricity grids, water and sewage, public transport systems, libraries, playgrounds, parks, museums, sports facilities, public swimming pools, etc. And it is the citizens through their institutions that, in the end, decide which plots of land become available for the development of new housing and other premises, by granting permissions for land development.
Producing New Housing
I would like to introduce two entities that are important in housing in a Participatory Economy: 1) Housing Providers, who manage and maintain housing, and 2) Housing Developers, who construct the buildings.
1) Housing Providers
Buildings, for the purpose of housing, to be produced are demanded by “housing providers”.
A housing provider is an individual, entity, or association that is responsible for management, maintenance and upkeep of a building or group of buildings, and for supplying housing in the annual planning iterations.
In a Participatory Economy, a housing provider could be any number of entities:
- A (future) individual resident may very well assume the role of a housing provider.
- If a group of residents share a building or buildings for housing, they can collectively form housing provider associations.
- Neighbourhood consumer councils may, temporarily or for longer periods, act as housing providers, especially in an urban setting.
- And finally, locally based housing or property managing worker councils, which may or may not coincide with the contractor or developer who built the housing, can assume the role of housing providers if residents prefer not to assume the responsibility for management, maintenance and upkeep themselves.
2) Housing Developers
New housing is built by housing developers.
The producer of buildings for housing is a contractor or developer, which constitutes a worker council that controls the production process just like any other producer of goods.
Future and present housing providers that request construction of new housing will usually be responsible for defining important parts of the designs of the requested housing. They will prepare more or less detailed blueprints well in advance of the annual planning, though they may need to consult the producers in this process.
Contractors and developers will organise the lists of blueprints prepared by housing providers into separate construction projects and output categories for planning purposes based on resource consumption and production processes. In the construction industry output categories in the annual planning will correspond to different types of defined building components and labour hours for construction tasks. These main categories will generally be less coarse with perhaps only a few subcategories indicating different qualities of material and different work tasks.
When the construction of a housing building is complete, the housing provider that requested the construction of the building gets access to it.
Importantly, as a consequence, when a housing provider is also the resident, she will assume both the role of a housing provider with the responsibility of management, maintenance and upkeep, and at the same time the role of a resident requesting access to housing.
She will thus control two separate accounts simultaneously, a housing provider account and her ordinary personal expense account. In this case, when a resident decides to move, she will transfer the housing provider role as well as the access to the housing as a resident.
A housing provider’s account will be charged with costs for making housing available. In sum, these costs are:
- The user-right fee for access to the building, in practice the annual depreciation of the historic acquisition cost,
- Costs for management, maintenance, upkeep, and repairs, and
- The user-right fee for the land on which the buildings sit.
Of course, a housing provider can choose whether to internalise maintenance costs or request services externally.
The current housing fee for residents’ access to housing decided in the annual planning will be credited to the housing provider account and simultaneously charged to the resident’s expense account.
The allocation of housing
When the annual planning procedure starts the supply of housing is given and, in theory, housing is then allocated to residents and their housing fees for access decided in the annual planning. The problem is that from the perspective of aspiring future residents every housing opportunity is unique with its own unique characteristics, which need to be assessed and considered individually before entering into an agreement and taking up residency. But in the annual planning there are no face-to-face negotiations between potential individual future residents and housing suppliers and there will be no binding individual lease agreements signed during planning.
Instead, before annual planning starts, consumers in their councils and federations need to categorise the existing supply of housing in coarse categories based on differences in standard and age, which will affect costs for maintenance and upkeep, and location, which will affect desirability, with each individual housing opportunity constituting a separate subcategory. Some housing will be situated in more desirable locations, have better access to nice beaches, amenities, transport links or have a coveted view and so on, which should be considered in the definitions of categories for existing housing.
In the annual planning, both aspiring and existing residents apply for access to a particular coarse category of housing in exchange for a commitment to paying a recurring housing fee. The tentative allocation of coarse categories of housing and housing fees are then determined by supply and demand in the same way as for other goods and services.
The actual distribution of individual housing to residents and the signing of leasing agreements during the year will be facilitated by Estate-Agent workers working for the neighbourhood consumer council or a consumer federation, which will mediate vacant housing to housing applicants, at which time each individual housing will have a derived separate housing fee.
Since a consumer’s request for a housing category in the annual planning is not a binding contract but simply an indication of intent to stay or to move to a preferred address and the supply of existing housing is fixed, there is a risk of tactical considerations when expressing one’s preferences in the consumption plan. By expressing demand for a category of housing other than the one you presently live in without having a serious intention of moving, you could potentially lower your housing fee if enough people in your neighbourhood did the same. To address this issue, there could be a limit to how many times you can express an intention to change address without acting on it.