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Taking housing back from the banks

  • 12 January 2009

The housing crisis is here, but its effects are just beginning to be realised. The market has outgrown itself, and the conventional method of buying homes has outlived its usefulness. There must be an alternative.

I started thinking about the power of the housing market when I first considered home ownership for my family. I did the usual calculations and found there is a ridiculous amount of money involved, and I started thinking there must be a way of subverting that power to make it available to those who can't access secure long term housing.

I now work in the crisis housing and support field, helping people who are subject to the desperate shortage of housing. There are two key reasons for the shortage. The first is that housing is controlled primarily by market forces, and a market is only able to understand money, not people — and especially not disadvantage.

The second is a lack of creative thinking and action by governments who are driven purely by economics and politics. Both the market and the government benefit from the way things are, and therefore neither can entertain the possibility of an alternative future.

In the current housing market, Joe and Jo, a young couple considering buying a first home for their family, will have to maintain a double income to do so. The wage of one would cover living expenses, while the other's wage repays the loan. Without interest, the loan would be repaid in 11 years. With interest, the repayment period is extended to 25 years.

In other words, for 14 years half of their work is for the profit of a financial corporation and its shareholders. That represents a high value, which can be used to subvert the conventional method of purchasing a home and create an alternative. Imagine if Jo's employer bought them a house and in return she worked for free for 25 years ...

An alternative source of capital is needed. No-interest capital can liberate a significant amount of people's time. Assuming a source of no-interest capital can be tapped, a 'common equity' housing model could be developed, consisting of a pool of communally owned houses paid off by the occupants at cost.

Instead of buying a property conventionally, or renting from someone else, Joe and Jo could live in a common equity owned house. As a communally owned house, they would treat