Parasitic Landlordism Has To Be Checked
The democratisation of real estate ownership was never meant to result in the formation of a new land-owner class whose financial interests undermine that of the broader economy.
Right now, if nothing is done to check the self-sabotaging demands of landlords on small businesses, our great inner city suburbs could be dead for years after this crisis period abates.
Landlords personally cannot be wholly blamed when the system incentivises the kind of parasiticism we see in the real estate sector, and when every socio-economic norm celebrates an Ebenezer Scrooge-like philosophy on life.
But landlords have got to step up now, and if they don’t, the government has to step in.
The image of once-abundant, derelict inner city areas littered with “For Lease” signs, a McDonald’s on one corner, a corporate retailer on the other, lifeless and without hope of revival barring drastic action — this already somewhat common feature of some cities in some Western countries may become all too common.
Landlords can play a role in mitigating this, and I’ve heard first-hand from people in real estate and insurance that many landlords are responding to this crisis with a long-term view, but we’re also hearing far too many stories of the opposite.
In the absence of the economically responsible decision by landlords to freeze rents where needed, the government has to step in, and the sooner the better.
This is not just about compassion, or empathy, this is about good economics, it’s about having a small-business sector that can re-establish themselves quickly once this crisis is over.
It has been reported that a bar in Fitzroy, Melbourne, was fined $10,000 for breaching closure conditions. This is a travesty. If rents aren’t being frozen, and businesses aren’t allowed to operate, what are they supposed to do? Allow their finances to be utterly destroyed by the short-sighted whims of landlords and bad government policy?
Of course the small risk of contracting coronavirus and getting sick is a risk worth taking for people whose livelihoods are on the line. Millions of people work in high risk, dangerous jobs that compromise their health and safety everyday for a paycheck, and struggling workers will see coronavirus as no different. So before self-righteous pundits pass judgement on what they see as irresponsible behaviour from workers and businesses, they should reflect on what life is like for low and middle income working people.
Absolutely this is dangerous because the virus can spiral out of control as in Spain and Italy. And that is precisely why government has to step up and not give people good cause to breach quarantine rules by not adequately legislating to protect workers and small businesses from financial devastation. The government’s inaction on this front is increasing the likelihood of coronavirus getting out of control.
A rent freeze has to be imposed, in the minority of cases where a single or couple of properties are the sole source of income for usually retired persons, provisions should be made through Social Security or otherwise for their living.
Crucially, we shouldn’t be couching this issue in terms like “fairness” or “compassion” which is more likely to prompt some landlords to increase rents and governments to dish out more fines.
This is not about landlords doing any favours for their tenants, this is about economic realities, the health of the national economy in the aftermath of this crisis period, and whether there will be any pieces left to pick up.
