Photo credit: Ethical Property Company
Jamie Hartzell is a director of the Ethical Property Company, whose shares are traded on Ethex, and is himself an active positive investor.
The right to shelter is surely one of the most fundamental of human rights. The United Nations Declaration of Human Rights states that ‘everyone has the right to food, clothing, housing and medical care’. But it also states that ‘everyone has the right to own property.’ Can these two claims be reconciled?
Today, property is regarded as a speculatively traded asset rather than a way to meet our needs. Since the financial crisis of 2008, the injection of billions of pounds into the UK economy through Quantitative Easing has led to a wall of cash looking for a home, forcing up property and share prices. And it is not only the Bank of England that is to blame. Private banks, who themselves have the power to create money, see a loan secured on property as one of the safest they can make. And the easier it is to get a property loan, the higher prices rise.
This economic shift is dividing society, to the point where ownership of assets is now a better determinant of personal wealth than income. The older property owning class have a secure asset base in large, often under-occupied houses that will see them through their retirement. While the younger generation find that over half their earnings are soaked up in rent and have little chance of securing the large deposit needed to buy. Government schemes such as ‘Help to Buy’ tend to act as a subsidy to property developers, only serving to push prices higher. And the more prices rise, the more concentrated property ownership becomes, and the more money passes from the asset poor to the asset rich.
Nor is the problem limited to residential property. High rents for shops are pushing retailers out of business. And office rents rise as these premises are converted to housing. In London, the workspace crisis has reached such extreme levels that local councils are now forcing developers to provide Affordable Workspace alongside Affordable Housing as part of large, highly profitable developments.
As investors, property needs to be part of our portfolios. Traditional wisdom says a diversified portfolio should be one third property, one third shares and one third cash-based products. Property investment can offer us security and a lower risk profile. So what ethical options are out there? As property investors, how can we be part of the solution and not the problem?
One exciting opportunity to hit the positive investment market in recent years is the Community Land Trust. It’s still early days, but the movement is growing rapidly. Every Trust needs some form of initial subsidy to be able to deliver affordable housing, but, once established, ownership by the not for profit Trust keeps the property free from speculation, and rents affordable in perpetuity. Investors should expect steady, long-term returns, and high social impact.