I wrote part one (Profits are theft) in response to a meme post that had almost all it's comments removed because people didn't seem to understand what it was saying without an explanation, so here is that explanation.
Landlords: people or companies making money (profit) off of an essential human need – housing – without doing any work/labor to earn that money are another form of the owner class stealing money from you (the working class). Before you jump in with “but landlords provide a service! They allow people without a down payment to have housing, and some of them even do their own maintenance on the property! They take all the risk of ownership!!!” please read my whole post through, I will be addressing those points.
The problems:
- Being a landlord is profitable. If it wasn't, they wouldn't do it (or would find a way to make it profitable, as the entire point is to make money for them using their existing money/assets/credit). So how do they make those profits? They make profits by charging you more money than it costs to own and maintain the property, and pocket the difference. This incentivizes them to cut corners whenever possible, often leading to unsafe ill-maintained properties (they aren't the ones living there, they don't give a shit if you don't have A/C or heat if it makes them extra money). tl;dr: They will only do the bare minimum to keep their properties rented and there are always more renters.
- The more properties you own (as a landlord), the more profits you make. Then you can use THOSE profits to get even MORE houses (using the equity from the original purchases and/or the profits they stole from renters). This incentivizes landlords to buy up as many properties as they possibly can, and is made drastically worse by big companies (with deep pockets) doing the same thing. It's cheaper/easier for them to buy already developed properties, so the “golden goose” is buying single family housing that is already built. This is why we see less building of new houses/apartments and a housing market that is absolutely ridiculous (cash offers, exploding home prices, very limited supply). This has gotten a little better with the interest rate hike, but mostly because people can't afford the explosive home prices at the current interest rate (as most non-landlords need loans to buy properties, and a doubling of the interest rate explodes their total cost and required minimum monthly payment). tl;dr: They cause housing shortages and increased costs for everyone trying to buy their own home, to the point where most can't now.
- It used to be small time Landlords were happy building equity in properties as their form of profit, so rents didn't necessarily need to be more than the mortgage (after all, LANDLORDS get all of the ownership of the property, not you, even though you are paying for their mortgage). Back in the day you would see rents for less than the cost of the mortgage, because after all, even if the landlord was paying a little bit every month, they were getting the FULL equity of the house, and would still be making profit. Over the last decade or so this has shifted due to point #2 above, as landlords leverage existing properties to buy more, they want the rents to be HIGHER than the mortgage so their cash flow is always positive. As more landlords did this, it raised the rents substantially and now it is almost impossible to find rents for less than what you would pay if you had your own mortgage on the property. They use the excuse “Well if I charged LESS than my mortgage I would be LOSING money!” but this isn't true, they are building equity in the house no matter what, and they're doing it for far less than they would be paying if they didn't rent the house out. This is one of the major “wool over your eyes” problems that seems like common sense, but it actually really insidious.
- Housing has moved from a necessity (let's keep costs low to people can afford housing) to an investment vehicle. When deep pockets expect housing prices to keep increasing in value over the long term, they do (self-fulfilling prophecy, and retirement/investment accounts pumping money into housing conglomerates with the expectation that their investment will return value). If prices dip too much, it's seen as a great investment deal. This coupled with the boom/bust economy of capitalism means the housing “floor” will never fall too much, as it's now a “good deal” and there will always be deep pockets wanting more housing (See point #3 above). It wasn't always this way, but now it's hard to imagine the housing market any other way.
- Landlords fight against programs to help the homeless and affordable housing, because it would cut into their ability to make big profits. If we build more houses, if we make them more affordable, their investment might lose value, and rents would lower. Since in the US, the rich have all the power (bribing politicians), we will never see affordable housing and big programs to house the homeless because it would disadvantage the rich. So instead our government spends more money than it would cost to house the homeless (our taxes) on band-aid fixes when “housing first” has been shown to work, give people houses, and cost less than the band-aids.
- Short term rentals. Single family houses being bought up not to house families long term, but for short term airbnb and vacation rentals. This takes housing away from families that need it to make even more profit for landlords. This could be a whole post in itself, but let's just say it's a problem.
- Vacant houses owned by the rich that don't even need to make profits from them. When so many are homeless or housed in shit, it's morally wrong to keep housing empty when people need it as a human need. This is akin to destroying food to keep the price up, when people go hungry. More than 16 million homes in the US are vacant.
All of these problems combined means that regular working class people have an EXTREMELY difficult time owning their own houses. If you don't own your own house, you are paying EXTRA money every month to pad your landlords pockets. That money adds up, and keeps us impoverished, and increases the wealth gap. The higher rents go, and the lower wages are suppressed, the more of us live paycheck-to-paycheck, go homeless, and are completely unable to build any sort of retirement. To be a bit cheesy, home ownership is what enabled the American Dream for the boomers, and it's becoming more of an unachievable dream as housing costs (and rents) skyrocket and wages stagnate. This makes land-lording even MORE profitable per house (when you already have equity, AKA the rich/companies) and makes the cycle worse year over year. Landlords are literally stealing your future to pad their own profits with “passive income” (meaning generating money they don't have to work for).
Now, to answer the reactionary take “but landlords DO work! Some of them do maintenance and they have to find houses to buy, and tenants to rent! They take the risks and have the capital!” Let's break this down next.
- “Landlords do maintenance” – First off, many landlords don't do their own maintenance, they pay a maintenance company, or hire a professional. They do those things with the extra money that YOU pay them. If you owned your own property instead of paying inflated rent (point #1 above), you could afford to hire those professionals yourself, and have extra money left over (if they didn't have money left over [profits], land-lording would not be profitable, and that's not what we see). In addition, they are performing maintenance on THEIR OWN ASSET, so keeping it from degrading is actually them helping themselves to maintain the value of their (ever-increasing) asset. Basically, any work they do (or pay for) on the house is for their own gain, as they OWN the house. If we abolish landlords, and instead the small time ones decide to do home maintenance full time as a job, well that's labor, and they deserve to be paid for it. That's not what's happening now though.
- “They have to scout and buy houses! They have to find tenants!” – I suppose this is “work” in that it takes them time and effort, but again, they are not producing anything extra in value. From point #2 above, they are actually making things worse for others, taking from the housing market, inflating prices. This is not “producing value”, but actually “stealing value”. In addition, because they want to keep their investment in as good shape as possible, they try to get “only the best tenants” that won't damage the property and will pay rent on time, etc. The problem with that is many people are unable to even GET housing to even rent (bad credit, no rental history, not an attractive tenant from an income standpoint, etc). This creates even more divide where the higher income people can find good rentals, and everyone else has to settle for less, get pushed to unsafe areas, etc.
- “They take risks” – How much risk do they take when they own an “asset” that increases in value over time? How much risk do they take when they can bill tenants for repairs? How much risk do they take when they have insurance to cover unexpected damages? The answer is not nearly enough risk to make Landlording unprofitable or even deter them a little. They control the asset and it's in their best interest to raise rents as much as possible to cover any potential costs to keep profit high. As all of them continue to raise prices, the others look and say “see! Market rate for rents have increased, so I have to increase your rent to keep up!”. They will never have to take risks greater than the profits they will receive (point #1 above).
- “They have capital and can buy what they want with it!” – Yes, this is the problem. It increases the gap between the “haves” and the “have nots” to the point where we can't get affordable, safe housing, we can't build anything for retirement, and we can't do anything except work ourselves to the bone for a bare minimum existence. This is a nice bonus for capitalists, “work or starve”, ensuring they always have desperate workers and renters that are too busy surviving to work to change the system.
- “Landlords allow those unable to afford deposits to have housing!” – As I've mentioned in #2, they only want the best tenants, so often a bad credit score causing you to be unable to BUY a house, means you won't be able to rent a decent one either (or pay an even higher inflated cost). Since WE are paying more than the cost of mortgages (problem #4), we should be able to easily pay those mortgages ourselves, and build ownership. We can't though, thanks to gatekeeping (deposits), competition (cash offers, raising home prices), and rising interest rates (which the rich who have capital do not have to worry about, they don't need mortgages).
- “Not all people WANT to own a home, maybe they're only in a spot for a couple years, aren't landlords providing THEM a service?” – Yes, that is one of the few features of the rental market. Buying/Selling a house is expensive and it doesn't make sense (the way we currently do it) to buy for a short period of time. The thing is, you're paying a LOT for this “service” and landlords like it that way. In an ideal world, we would be able to “rent” short term housing WITHOUT paying landlords a fat profit. This could be done through government ownership/renting of temporary housing, or fixing the housing buy/sell process so it's not a huge expense to sell your house and buy another one somewhere else.
Now, before I get a bunch of anecdotal stories about grandmas renting out rooms in their houses because they're on a fixed income: That's not what I'm talking about. The smaller the landlord, the less of a problem it is. However, the system enables many FAT ASS landlords, so please don't use examples of the smallest ones and talk about how they're not a problem. The SYSTEM is the problem and no amount of minimizing will make the above problems go away.
What can we do about it? Not much without power, but if we ever happened to get that power, we could limit housing to 1-3 per family. We could separate the investment market from the housing market. We could allow only the government to rent properties without making profit. We could make it illegal for companies to own/rent single family houses. There are other things, but this post isn't about solutions, it's about recognizing the problem.
tl;dr: Rent is theft and they are stealing as much value as they can from you, keeping you poor and unable to own your own housing.