Affordable Housing by Removing Rentier Behaviour

Rentier capitalism is a term currently used to describe the belief in economic practices of monopolisation of access to any kind of property (physical, financial, intellectual, etc.) and gaining significant amounts of profit without contribution to society. Wikipedia

Public Capital gives all Australians a home they can afford without dropping house prices and sustainable indexed investment opportunities. New entrants to the housing market will not require a deposit. All occupants will pay a minimum of 25% of their income to the Public Capital pool. When an occupant has paid for their home their 25% of income is invested and earns a 7% indexed annuity for 30 years.

Occupants look after and maintain their homes in the same way homeowners do. They have the added support of other local community members in dealing with the government, tradespersons, and other suppliers.

Private Capital and Rentier Behaviour

When a person goes into debt to purchase a house, they rent money. With debt, the lender receives their money plus interest and profit without contributing to society. They take a risk with their money and want a return on their money.

When a person buys a house with Public Capital, they buy the money they need, and the supplier of funds takes no risk of losing their money.

Public Capital solves the debt rentier problem by not renting money. Instead of debt, a community buys money to buy a dwelling and agrees to repay the money in fixed indexed instalments.

Selling money rather than renting changes the behaviour of the buyer and seller. Buyers make higher profits by using less money to produce more goods, while the seller reduces risk by selling at a lower price. With debt, both parties make higher profits with higher prices. Renting money leads to stagflation, whereas selling money leads to increased Capital productivity.

Selling money rather than renting reduces the incentive to monetise assets. Instead of selling, communities find ways to share with less money. For example, collective ownership with individual custodianship removes the need to rent money to change ownership within the community.

Changing the incentives from gaining more money to reducing the amount of money stabilises the economic system. It changes behaviour from acquiring money to saving money, which encourages cooperation rather than competition.

Affordable Housing by Buying Money, not Debt

During the Covid19 pandemic, Australia’s population dropped, yet house prices increased by more than 30%. In 2016 Australia, each dwelling accommodated 2.55 people, whereas, in 1911, each residence accommodated 4.5 people in smaller homes. In 2016 10.5% of all homes were unoccupied.

Australia has enough housing, and it should be affordable. The problem is not supply, not price, but the use of debt by individuals to allocate housing.

While individual wealth is always an important factor in allocating housing, communities should use other factors to achieve fairer outcomes. Using Public Capital rather than Private Capital reduces the cost to purchase a house. However, it changes the rules on who buys a house. With Private Capital, the government and the lenders set the lending rules. They are extensive and complex to reduce the risk to the lender. The buyer with the most money will typically purchase the dwelling. With Public Capital, local communities set the allocation rules designed to ensure everyone has a roof they can afford over their head.

The following rules for Public Capital will make housing affordable for those who join a Public Capital local housing community.

  1. Agree that the Community will hold the title to all the dwellings, and individuals will hold custodianship to the home in which they reside.
  2. Only occupiers can have custodianship. Several people can jointly have custodianship.
  3. Custodians must pay at least 25% of their income each year to retain their custodianship.
  4. 50% of each custodian payment becomes Public Capital equity in the custodial property.
  5. Investors don’t purchase individual houses but get partial ownership of all properties in the community.
  6. Custodians get equity in the dwelling they occupy.
  7. People who want to invest in property purchase Public Capital in the Community of houses.
  8. When two or more people want to occupy a property, a lottery determines the occupier.
  9. Individual personal characteristics determine the number of entries a buyer has in the lottery.
  10. Community members with Public Capital equity determine the factors and weighting of personal characteristics.
  11. If custodians hold all Public Capital equity for a given property, they can take the property out of the Community.

Some possible factors to increase the number of entries in the lottery are:

The less wealth, the greater the entries; the more occupants, the greater the entries; the closer the occupants' work or study to their home, the more entries; the longer the occupants have lived in the area, the greater the entries. The community sets these rules.

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Kevin Cox

Kevin works on giving individuals control over their online information - particularly their financial information with local communities.