Housing Inequality: The Need for a Shift in Public Policy Intervention

The policy of homeownership

First, public intervention in the field of housing is clearly in a contradictory state. The spread of homeownership is everywhere encouraged both by the market and by public policies (Ronald, 2008). Part of this growth in homeownership relates precisely to apartments purchased through right-to-buy policies, as was the case for Grenfell Tower. This continues the historical process of expropriation/appropriation of the land and what is built on it, which began with the 18th-century enclosures (Linklater, 2013). The justifications advanced for public policies incentivizing homeownership cite its positive consequences on health, economic conditions, and social relations.

Homeownership can affect physical health in many ways. First, homeowners tend to keep their property in better condition than do tenants (Haurin et al., 2002; Shaw et al., 1999). In practice, this may involve several aspects: from repairing minor plumbing problems to ensuring the best hygienic conditions; from the use of lead-free paints to ensuring that the domestic environment is free from accident hazards. One of the reasons that lead to better property maintenance is undoubtedly the owner’s interest in protecting home equity. In addition, homeowners generally speaking expect to reside for a long time in the dwelling. On average, households living in a house they own stay longer in the same place than tenants (Dietz and Haurin, 2003). Greater residential stability leads to another channel whereby homeownership influences health: over time, households acquire a good knowledge of local health services, as well as physicians and dentists. ¹ Third, homeowners have access to more resources that can be invested in care services (Rasmussen et al., 1997). Not only do they have more income and wealth, but they can devote what was previously spent in rent or mortgage payments to better healthcare (this applies less to financialized households).

Another crucial dimension is economic. Homeownership is in fact the main component of household wealth everywhere. Although analysis of the distribution aspects of economic inequalities has traditionally focused mostly on monetary incomes – without considering the issue of wealth in-depth – household wealth is to be considered central in inequalities research. It is well known that wealth inequality is growing more steadily than income inequality (Credit Suisse, 2016; Piketty, 2013). As homeownership outweighs the other components of household wealth, becoming owners also requires that significant disposable resources be available for a down payment. In general, the banking system lends money to those with better financial assets, and access to mortgages may indicate strength on the financial market rather than fragility (Chiuri and Jappelli, 2003).

The third area of influence, central to the stratification framework, is social. Domestic reproduction and family care activities take place within the house. Moreover, housing need, unlike, for instance, the need for healthcare, does not have a specific and limited localization over time, but is both constant and significant. It also covers the entire life course and is linked to the different biographical trajectories of those who live in the same household (Olagnero, 2008: 23). In this latter respect, it should be mentioned that the house is a primary good per se, as it provides shelter and is the place where new families are formed (cf. transition to adulthood studies). In this regard, homeownership can be associated with a greater sense of security. Homeowners do not risk eviction and usually have a more stable housing career.

The downside of the global spread of homeownership is that it makes the real estate market particularly rigid, leading to a segmentation between those who are excluded from the homeownership system and the others. Tenants are more likely than homeowners to suffer from housing deprivation, both in terms of structural problems related to housing and in terms of overcrowding and unaffordable housing costs. Therefore, public intervention – the same that has encouraged homeownership – returns in various ways, depending on the context, to support the rental market. Building public housing is one of the main ways in which the State intervenes with the aim of increasing housing to sustainable standards. And here lies the main paradox of public intervention, dramatically shown by the Grenfell tragedy. It results in a further segmentation of the real estate market: not only between those who are owners and those who are not, but also between those who are tenants in the free market and those who are tenants in the protected market at reduced rent. In addition to homeless people, who are the most vulnerable population in terms of housing (and income, social inclusion, etc.), there are rent-protected households, followed by tenants in the free market, representing those who are in a weaker position in the market.

Social inequality and housing

The second point to which the recent fire draws attention concerns the structuring of social inequalities in general and of housing inequalities in particular. If one looks at the tower blocks in England, in terms of their residents’ social composition, the nexus between prejudice, poverty, and locality emerges (Dorling, 2011): households with a migrant background were overrepresented among the 71 dead of Grenfell. Housing conditions are not just the mere reflection of individuals’ position in the social stratification, but also contribute to strengthening and reproducing structured inequalities. Since the 1970s, several scholars have considered the concept of housing class (Rex and Moore, 1967; Saunders, 1984), proposing classifications based mainly on the tenure of the dwelling. In other words, housing classes are not alternatives to social classes, as the two are interdependent. Conley (2001) built a model that combines living conditions with other dimensions of social status, showing that homeownership is a key predictor of the stratification based on education. The distribution of tenure is fundamentally determined by the specific context’s institutional and cultural conditions. Geography also plays a major role in distributing inequalities among households. Gentrification and decay do not occur randomly in the urban space, and they give a spatial shape to other disadvantages (Smith, 1996).

Taking social classes into account shows that although homeownership is the most important dimension in housing inequalities, the dichotomy between owners and tenants is too limited. On one hand, higher social classes generally have better chances of living in a home they own, while lower classes are more likely to rent (Kurz and Blossfeld, 2004). On the other hand, considering other housing characteristics in addition to tenure, there is a directly proportional relationship between social class and housing conditions, referring to both ownership and absence of deprivation (Filandri and Olagnero, 2014). Moreover, it is not true that expanding access to public housing results in social class having less influence on housing circumstances. The role of social class is also relevant where homeownership is the institutionally promoted cornerstone of welfare, since it does not prevent the reproduction of social inequalities in the main aspects of housing (Filandri and Olagnero, 2014).

The financialization of housing

Finally, the Grenfell Tower tragedy draws attention to a third aspect linked to the two discussed above, viz., the financialization of housing. The relationship between financialization and the structure of inequalities is currently considered a relevant issue by several scholars. One of the reasons for this undoubtedly lies in the widespread reliance on a financial approach and its instruments in many areas of daily life, in a scenario of continuing economic and financial crisis. More and more households rely on financial markets to access essential goods and services for social reproduction and individual well-being (Barbera et al., 2016).

Removing barriers and easing credit access for low-income households (with weak financial positions) has ambiguous effects. While enabling and empowering some, the unequal spread of indebted households can take on a negative connotation. The process of financialization constitutes the contemporary basis for accessing better living conditions, but it can also bring further fragility to already disadvantaged households. This ambiguity reflects the progressive inequality of the socio-economic system, which increases and at the same time is increased by the financialization process. Household financialization is not independent of unequal opportunities and conditions of access to fundamental goods and services (Bowman et al., 2014). The Grenfell case is a particularly good illustration of what happens to maintenance and security when profits and costs are a part of the same equation.

Moreover, housing is fully a part of this process, since it is not just the subject of welfare policies, and there is thus a risk of limiting the analysis only to what policies explicitly do to ensure protection to the most disadvantaged individuals (and only to them). Adopting a political economy approach, Aalbers (2016) shows how housing participates in the so-called capital circuits, like mineral resources, land, or stocks. In particular, Aalbers argues, as Harvey (2011) and Sassen (2014) had already done, that financialization is not simply the highest availability of financial instruments offered to households by the credit system, but rather the transition from the second, or financial, circuit of capital, to the so-called quaternary circuit, or financialization as such. This is best seen when considering the well-known sub-prime mortgages and the creation of the US’s Fannie Mae, Freddie Mac, and Ginnie Mae. These institutes were created to standardize and acquire mortgages offered by other private credit institutes, with the aim of reselling them at the top level of the financial system. The mechanism works as follows: by authorizing the spread of riskier and higher mortgages, the pool of applicants is increased, which, given the relative inelasticity of the construction business (building houses takes time), raises the prices of real estate. As a result, speculative housing bubbles emerge and eventually burst. Contrary to the popular neoclassical vision, which holds that increased demand for housing is what raises prices, here we see that the supply of financial products (mortgages) generates new demand, which then produces price inflation. In this regard, national governments play a central role through what Aalbers (2016) calls regulated deregulation, the combination of competition and economic incentives on one hand, and the coordination and regulation of different economic sectors and industries on the other. Aalbers shows how different stages of liberalization have always entailed a larger role for the public actor.

Final remarks

Sociology must come to grips with this progressive increase in the inequality of the global socio-economic system and its complex internal processes. These processes are only partially related to the side effects of neoliberalism that policies fail to remedy. Indeed, a high level of inequality in the distribution of resources, which defines large areas of marginality and exclusion, can be understood as a constitutive element in the reproduction of subjects and institutions (Sassen, 2014). Focusing on the boundary between inclusion and exclusion will shed light on these dynamics: from the marginality of the weaker part of the population to the precariousness of rights linked to full social inclusion (education, health, etc.). This precarization is spreading, favouring the penetration of value extraction mechanisms into a multiplicity of spheres that, at least throughout the Fordist period, were subject to specific safeguards from market approaches. However, it is not an unexpected effect that the contraction of Fordist-Keynesian inclusion policies has led to greater market space. This space in some cases has proved – according to the most widespread narrative, mainly because of greed, mistakes, and private means – too extensive and incapable of guaranteeing individuals access to goods and services that are considered fundamental in advanced economies. The dynamics of exclusion described above, on one hand, are essential to neoliberal configurations and, as such, cannot be eliminated or buffered without a radical paradigm change (Sayer, 2014; Stiglitz, 2012). On the other hand, they are entirely consistent with so-called predatory capitalism, and are indeed a fundamental part of it (Sassen, 2014). By creating areas of marginality and gradually undermining the social state, predatory capitalism lays the foundations for its penetration into areas that used to be protected, changing, for example, the conditions of access to housing, education, social protection, and health. Housing commodification shows this dynamic at its best (or worse), as the structural conditions of Grenfell Tower dramatically highlighted.

Decades of specific neoliberal policies reframed the role and the very meaning of home in European societies. What we need now is not simply more public intervention, but rather a radical shift in housing policies, tackling the nexus between inequality reproduction, extraction mechanisms, and living conditions.