Let us talk about land, property and real estate. Everybody pays loads of money monthly to his landlord. And those, who owns an apartment or a house still pays a lot of money to a bank. Here is my thesis: The rent we pay (and the interest we pay to our banks) are fictious. They simply are not real. Real estate is NOT real. It’s unreal. Just economical fantasy. So why should I pay for things that do not exist?
I recently talked to a journalist who writes for Süddeutsche Zeitung. He said, that I am completely wrong with my thesis. (It turned out, that he himself was a landlord and rents out two small apartments). And when I had a talk in Ireland in front of architecture students at the Royal College of Art and Design in Dublin a few years ago, my listeners looked at me with big stunning eyes: Rent doesn’t exist. Living must be free. No one should pay a rent to his landlord. Sidenote: In Ireland about 70% live in their own apartment. (And sidenote number 2: The real estate industry collapsed a few years ago and made the whole country almost bankrupt.) Of course they would not agree with me, to someone who wants to disposess hard working people. Sounds like a crazy communist.
But I am not a communist. Well, maybe a COMMONist. Someone who cares a lot about commons. And let’s make one thing clear: I don’t want to disseize nobody. I just believe that there are seven commons in the world, who cannot be owned. Land is one of them. Land is real capital. Actually I am a capitalist, a Karma capitalist.
But please give me a chance to explain it and let me give some answers by asking three questions, addressed to all landlords in the world.
Question number one:
What makes you sure, that you really own the land?
You might say:
What a silly question. I have build the house on my land with my own hands. The Garden, the roof, the windows, the doors, the waterpipes: I did it all by myself. It’s mine. My property.
I say:
Without a doubt the house and all the things you installed and created is in a way connected to your person. I would agree – Yes it is yours: The house, the garden, the fence, the windows, the roof and so on. But I was asking something different: To who does the land belong to on which you put your house on?
You might say:
It’s mine. Look at the title register: I have bought it from another landlord.
I say:
Just because of the fact, that you pay money for something, doesn’t mean, that this thing become yours. You can buy the Mona Lisa piece from a thief for 1 billion dollars, but still it will not be yours. There are so many companies out there who sell solar energy, but the sun will never be yours. Think about wind parks, offshore energy. Well, they sell energy created by wind and storms, but who owns the wind in the sea? Vattenfall? No. There are even companies who sell stars (sic!) and galaxies (A galaxy called Supernova can be purchased for 199 Euro – with a 30 days garantee! – on www.sternkaufen24.de ). But we fortunately don’t seriously believe that someone really can own stars, don’t we? So let’s get back to my initial question: Who owns the land on which you have build your house?
You might say:
It was owned by the landlord before me.
I say:
Okay, so let’s ask him the same question, and probably he will send me to the next landlord he bought the land from and so on. And we will find out that there must have been a discoverer, who didn’t pay anything to nobody to get this land. A conqueror. A first settler. Someone who settled down on this piece of land for the first time and just claimed it to be his property. Not because he wants to make money with it or to demonstrate power or anything. There was simply no one else around him to ask for permission. Think about nomads in the sahara desert or the nomads in tibetian nowherelands. Remember the Americans who marked the moon with the US-flag in 1968. If the Russians wouldn’t have repeated that with their flag, obviously the moon today would have been counted as the 52nd state of America. As long as you don’t bother and harm your environment and people around you, why not: Settle down, dig in the earth, plant a tree and create a base for a house and give shelter to your family and farm. But: as long as there are other people around you who need to sleep in the gutter you can not act just like you were the only person in this world. And another thing: You can not trade with things that you don’t own! So selling out your land or pieces of it as a rent is simply wrong. You can rent out a service, a house or a carpet, tools, a bed whatever, this might be okay to a certain point, but land: No!
I don’t think, that the „unwritten rule of the first settler“ can be a good foundation for a civilisation: this rule describes that the „First settler“ becomes automatically the owner of the things he finds first. Just in case this rule becomes a law, I want to let you know, that I am the official owner of Oxygen. And noise. And laughter. And the universe.
Let’s sum up: A real estate economy which is based on people who get land just because of the fact that they were the first settler can not be right. If people still pay money to those landlords, it’s because they accepted their terms of condition. But basically he is not forced to do so.
Question number two:
You charge your renters monthly an amount which consists of three positions: rent (Kaltmiete), working expenses (Betriebskosten) and incidental costs (Nebenkosten). Why actually are you asking for rent?
You might say:
What a silly question. As a landlord I have to cover huge monthly costs, such as taxes, the waterworks, the energy works (heating, gas), Lift, cleaning, garden support, Lighting, Chimney sweeper, antennas and the maintenance man.
I say:
Well, you don’t pay all these things, my friend. These costs are called working expenses (German: Betriebskosten) and this is what you pass to your renters one to one. Working expenses are completely beared by your renters. You don’t have to pay a single cent to cover working expenses. So let’s get back to the initial question: What exactly is the rent?
You might say:
I have to pay waste collection, vandalism, vermin exterminators and assurances.
I say:
Again, my friend, these are so called „umlagefähige Kosten“ in german and means: You apportion it to your renters. To say it short: You don’t pay that, your renters pay that. You declare these costs in addition to the monthly rent as „incidental costs“ (German: Nebenkosten). But let’s go back again: What exactly are the costs that you call rent?
You might say:
Actually I have to repair and renew things, the administration, invest in modernisation and so on.
I say:
Alright, here we go: You of course you have a lot of responsibility in the role of the landlord. But come on: Is it really that high? An average apartment size in Germany is between 60 and 90 sqm. Let’s say 70 sqm. You charge about 630 Euro per month for a 70 sqm apartment – between 7 and 9 Euro per sqm just for the rent (Kaltmiete) – in Germany. Working expenses and incidental costs come on top. That is 7.560 Euro per year for one single apartment. And you have it for the rest of your life (and your kids too), so seven years (which is the average duration of a renter) would bring you over 50.000 Euro. What are you doing with all this money? Are you really repairing so much in it every seven years? Paying to your administration office? Let’s be honest. It’s your profit, it’s monthly income for you for doing nothing (remember: The hard work such as gardening, cleaning, repairing, fixing, chimney, water works, vermin and so on) is paid by the renters not by you).
You might say:
That’s not true. I have to pay my bank, because I had to take a big credit to buy this land. And my lawyers are expensive, my coaches whatever.
I say:
Now this is exactly the point: Your costs are not caused by land, these costs are caused by your debt and your business planning. That’s an important difference! When we pay the rent to our landlord, we do not pay the costs for the land, but the costs, that are caused by economical trade invented by investment bankers. All these costs (except of house administration and laywers) are centered in the financial market: Interest, debt, bank fees. The money which runs into the financial market has hardly no impact on the real economy. This is why real estate (which is dependent on debt and interest) is exactly the opposite: Unreal estate.
Let’s sum up:
The trade with estate causes costs, but land itself is free of charge. Land is – and will always be – free (otherwise the first settler would not have taken it). Free as Oxygen. Free as the stars in the sky.
Question number three:
In the German Bill of Rights called „Grundgesetz“ it is written in Article 14 (2): „Eigentum verpflichtet. Sein Gebrauch soll zugleich dem Wohle der Allgemeinheit dienen.“ This means: „With ownership comes responsibilty. Its use is also to serve the welfare of the general public.“ No more questions except of this one: Did you know that, Mr. Landlord? If not, check out what happened to the landlords around the Glienicker lake in Potsdam. They say they own the coastline of that lake and therefor do not permit people to come to close to the lake. All 21 landlords will probably be disseized now. The judge said, a lake and it’s coastline has to serve the welfare of the general public. The judge did know the German Bill of Rights, the landlords didn’t.
What I observe is, that real estate is not driven by questions like: How should people live like in a society? It is mostly in the hand of the free market. That means, it obeys the law of demand and supply. This is why in New York City (where there is a big demand and low supply on the estate market) you have to pay more than 3.000 Dollars for a single room with a shared bathroom. If we just keep on following this law (which is urged by growth), one thing will be sure: You just can make people (who earn less and less) buy more and more real estate, if you give them more and more credit. It’s a vicious circle catalyzed by interest. And the only way out is: The ultimate crash. It happened in the US, and made millions of people losing their home, it happened in Greece, in Ireland, in Portugal, in Spain. And when people lose their home and don’t find a job in their country, they knock on the doors of their neighbors country. And Germany has big difficulties with their door policy, as we all know.
I am okay with contributing my part to real costs and I am okay with paying a (little) profit for my landlord for his genious, but I am against paying someone’s debt. Living is a human right. We must free the rent.
All facts mentioned here are taken from these sources:
http://www.bild.de/geld/wirtschaft/miete/so-teuer-wohnt-deutschland-neues-mietpreis-ranking-29415214.bild.html
http://www.rechtswoerterbuch.de/recht/b/betriebskosten/
http://www.tagesspiegel.de/berlin/uferstreit-anrainer-des-glienicker-sees-droht-enteignung/9099116.html
http://www.kiepke.de/hv/info-kosten.htm
http://www.nyhabitat.com/new-york-price.html