PUSHBACK Talks

The Great Housing Reset: The Shift Directives Part 1

• WG Film • Season 8 • Episode 3

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In this first episode of a four-part special series, Pushback Talks Producer Kirsten sits down with Leilani Farha and Sam Freeman to introduce listeners to The Shift Directives; a revolutionary approach to the global housing crisis.

Setting the stage for the series, this episode begins reimagining how we understand, regulate, and experience housing in the 21st century. Hear directly from the architects of this new framework as they reveal the urgent catalysts behind The Shift Directives and paint a vivid picture of how a human rights-based approach could transform housing as we know it.

Follow along for the next 4 weeks and be sure to read The Shift Directives.

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Fredrik Gertten:

I'm Fredrik Gertten, and I'm the filmmaker,

Leilani Farha:

and I'm Leilani Farha, and I'm the advocate,

Fredrik Gertten:

and this is Pushback talks, and we are still trying to push back, and now we're pushing back with help of a legal framework created by Leilani Farah and the shift and Sam Freeman. And this is episode three of our mini series, Leilani. Welcome back to talk about your your directives. Tell us what is. Why do you do these directives?

Leilani Farha:

Yeah, you know a lot of actors in the housing sector, investors, private equity firms, landlords that are, you know, have corporations that have shareholders on there. They list their companies on Wall Street. They often are saying human rights like we don't even know what that means. No one's ever told us what human right to housing means. It's so complicated. And we thought, well, it's actually not that complicated, and we know what it means, and we're going to tell you again what it means. And so we created the shift directives. There's just 10 directives, very clear, straightforward, what's required of landlords, period and governments. So

Fredrik Gertten:

and then when you have these arguments, you can have them as tools or bats. You can put them in the in front of your your landlord or your friends, because this is also about your friends who start to buy maybe 10 apartments and make a small business out of it, or, or they have an extra apartment that they put on Airbnb. I mean, we are all part of the game. I will still say that the big problem are the big investors. The bigger you are, the bigger problem you are for the for the right of a home. But we all have a part and in this. What I mean now you and Sam are going to tell us about how we can handle the Airbnbs, how we can regulate those platforms, and you're also going to talk about the bank's role in this, which I think is really important. So just go ahead listen to Leilani Farah and Sam Freeman interviewed by Kirsten McRae here, and enjoy the episode three of our mini series.

Kirsten McRae:

Welcome back, listeners. We're continuing our deep dive into the shift directives, the groundbreaking framework that's reimagining housing as a human right not a commodity. The shift directives are the first comprehensive guide for governments and investors to address the financialization of housing through a human rights lens. For those just joining us, definitely go back and check out the first two episodes in this special series. We've explored the core principles of directives, 179, and 10, and discuss how they aim to transform the world's approach to housing policy. Today, we're tackling a crucial aspect of making housing rights a reality, a whole of government approach. We'll be unpacking what that really means when it comes to housing it's not just about one level of government passing laws. It's about coordinated action from the local level right up to national policies. So we'll be looking at how different levels of government can work together to create better outcomes. Joining us again are the brilliant minds behind the shift directives, Leilani Farha and Sam Freeman. They'll be sharing their insights on how we can make this multi level approach work in practice. Today we're going to be talking about directives four, five and eight. So we jump around a bit in each episode, but the goal is to focus on key themes throughout the document, and for me, directives four, five and eight really work together to illustrate why the implementation of the right to housing through law requires coordination across different levels of government, and because they give us the ability to discuss how housing law is implemented and upheld. So first, we'll welcome back our guests, Leilani and Sam. Hi,

Leilani Farha:

hi, Kirsten. What a great intro. Oh, thank you. What a great intro. I don't think we need to do this.

Sam Freeman:

Let's not bother speaking. Let's just let Yeah, Kirsten, you do it.

Kirsten McRae:

I'll just tell everyone everything. I doubt I know this as well as you two do. Was a great intro. Thank you so much. So we're going to jump straight into discussing the directives with directive four. Directive four is restrict investment in residential real estate and vacant homes by individuals. So my first question is, just, how has this trend evolved? But also, how is it different from what we would call institutional investment?

Sam Freeman:

Well, I mean, what we were trying to get at when we wrote this directive was the notion that financialization happens at different levels. You know, you do have these enormous, great, big behemoth investors who are owning 10s, hundreds of 1000s of homes, but you also have smaller scale operations who are. Buying up real estate and often using it for a specific purpose, whether it's as a part of real estate investment clause within a golden visa, which happens a lot, particularly in Europe. You know, countries will have schemed gold visa schemes where you can get a visa by investing a certain amount of money in real estate, whether that is by hyper wealthy individuals buying up properties and just simply leaving them empty, because they know that in major markets like London, Paris and Barcelona, the values of those properties are going to increase, and they don't need to go to the trouble of renting them out. So it's really important to us to capture that as a kind of side profile of this phenomenon of financialization.

Leilani Farha:

Yeah, and let's recall when we were writing these so it was fresh after the Special Rapporteur ship, and during that time, I had visited a whole variety of countries, including Portugal, with a very robust golden visa program Egypt, where individuals of considerable wealth were purchasing apartments that stood completely vacant in the middle of deserts, oddly, and New Zealand, where they actually don't have as many institutional investors, but they do have a serious problem of smaller scale investors buying up 10s of homes. And I'll give you an example. Whilst I was there, I was with a colleague from New Zealand who was showing me around, and we were we needed to take a taxi somewhere, so we were waiting for our cab, and we started to talk about capital gains tax, which is, you know, when you tax the sale of a property, of a secondary property or a primary property, which was a big issue of debate in New Zealand and most Western liberal states don't impose capital gains on the sale of your principal property, of where you know, your home, but they will tax secondary homes often, in any event, we were having a discussion about it, and our cab arrived, and we hopped in, and we continued our discussion about capital gains. And the cabbie said, oh, you know, capital gains, forget it. That's horrible. Like, no one wants capital gains. And I said, Oh, well, like, what's your interest in this? And he said, Well, I own 10 homes. Cab driver, right? And so even though we really want the directives to focus on those deep pocket institutional investors that are predatory and aggressive in their style, we couldn't just put aside the more individually driven investors, because they are having an impact. New Zealand has a terrible housing crisis. Egypt has a terrible housing crisis. Portugal has a terrible housing crisis, right? So we wanted to include them, but recognizing that it's the big institutional investors that actually enable the individual investors to feel good about what they're doing, to develop new business styles, right? And models they they open the floodgates the institutional investors to really support what these the institutional investors, sorry, open the floodgates for the individual investors. That's what I meant to say.

Kirsten McRae:

Yeah, that actually made me think of the condo market in Toronto right now, which is a bit of a state because there are all these buildings that are designed for individual investors to buy and then rent out, and they're not really designed for people to live in. So now no one wants to buy them, and you have these small scale landlords who are, you know, they're, I don't have the money to pay for this, and I'm not allowed to use it for short term rentals. And so now it's sitting on the market, and it's, you know, draining their finances. And a lot of the stories in the news are about, oh, all these small scale landlords are being crushed by the fact the condo market, the fact that no one wants to buy these. But these are, you know, huge towers of buildings that are designed around smaller investors buying them and then repurposing them that way, and not for living. So, yeah, yeah, I get that. Yeah. That makes a lot of sense. So our coincidence of you naturally taking the conversation to the next point I was gonna go continues, because Sam, you mentioned golden visas and kind of how they work. You kind of explained the concept already, but just, can you give us a like a clear explanation of what a golden visa is, how it tends to work? Sure.

Sam Freeman:

So a golden visa is a type of visa that is available through governments around the world, heavily in Europe or in the past, kind of heavily in Europe, and it allows individuals to obtain a passport to that country in exchange for something. And one of the somethings that they can do is investing in real estate, and that is the primary mechanism for obtaining a gold visa. Spain. Recently announced that they're planning to get rid of their golden visa scheme, but in doing so, they announced, I think, something like 93 or 94% of the Golden visas that are given out in Spain are through the residential real estate investment arm of the Golden visa. So yes, it allows, usually, people from countries with unstable economies or unstable political landscapes to obtain passports and residencies in countries that have far more stable economies and far more stable political landscapes through residential or other real estate investment.

Leilani Farha:

Okay, and they're, I mean, they're really huge across Europe. Greece has them Turkey, really. And I think Turkey has some of the cheapest investments. So it's like, a couple of 100,000 euros, you know, and that gets you this residency, yeah. I mean, it's cheap Cyprus, you know, it's really very common across Europe. And I actually think it is supported by the European regional bank. I think it's understood as a neoliberal policy. That's good. And then you see, I think in a place like Portugal, they originally thought that the golden visa program would result in Seaside homes, that kind of home, being purchased by these investors looking for alternative residency. But in fact, what happened is, no they wanted, you know, groovy apartments in Lisbon, and so that has absolutely contributed to Portugal's housing crisis. And Lisbon has a real housing crisis. So they've seen rents escalate higher than, I think, almost any other city in Europe. So, you know, under acute housing crisis, yeah. And just to say, I mean, we wanted to talk a little bit about what can be done about this, right? And, I mean, I will give a shout out to Al Jazeera, who did a really beautiful expose on Golden visas that, if people are really interested in this issue, should look up, if you just, you know, Google that, but on the idea of people buying homes and leaving them vacant, or, which is surely what happens under golden visa schemes, you only have to be resident for a few days. I don't know what it is, 60 days, or I don't know something small, nine

Sam Freeman:

a day to be there for a day to renew your visa. Crazy,

Leilani Farha:

right? So this is where we do get into these multi level actors. So vacant homes, for example, we've seen a lot of cities taxing vacant homes. That's an interesting move, and it can be quite constructive in that it produces a tax base. And in the case of Vancouver, for example, they tied that vacant home tax to affordable housing. So the monies made from that tax were intended, and I think they did go into the creation of affordable housing. So that's a really nice flow. And, you know, tracking the money, the problem is the vacant homes remain vacant. And you've got, you know, the starkness of people living in homelessness, right? And then vacant units. Like, it's not and often the numbers are really quite similar, which is odd, and I'm not drawing a direct correlation, but it has to be noted, right? And people living in homelessness know this like they're looking up at the skyscrapers in Toronto. And in fact, a fellow living in a park said that to me. He's like, I'm looking over at condos. I know those condos are empty, and look at me in a tent in a rich nation like Canada, right? So there is that tax base at the local level, but we see with something like golden visas that that's operating at the national level. So they just just not have those policies at the national level, right? I don't know, Sam, if you want to weigh in on that,

Sam Freeman:

only insofar as even with the tax policies taxing vacant homes, whether for homes owned under gold visa schemes or not, I think what you find is the taxes are never enough to provide a disincentive for leaving a home vacant, especially if you consider the types of properties that are often being bought. I was quite recently looking at an example from London, which was a property which was bought in, I think, 2014 or 2013 and then in 2017 it's a 9 million pound mansion in Kensington and Chelsea in London, one of the most expensive areas in London, completely empty. And in 2017 the local government imposed a fine of something like 1400 pounds for this property being empty. But in the three years that that property being owned, it increased in value by 1.1 million pounds. So what's the point? I mean, the disincentive of the taxes that are being imposed for homes being vacant are just wholly insufficient to deal with the problem of vacant homes, whether caused by Golden visas, which maybe this home was, I don't know, or simply, you know, investor speculation,

Leilani Farha:

yeah, and I wonder if we need to revisit the recommendations Sam, because I noticed that we say that there should be a progressive tax on the number of homes you own. And. Singapore did that, and I think that's where we got the idea. In the directors, we really tried to base our recommendations and things that had been done before. And so really, one should check out the end notes. They're an amazing amalgamation of cool things that have happened around the world. And I attribute a lot of those resources to Sam. So thank you, Sam for finding us all.

Sam Freeman:

Kirsten put a lot of that together too.

Leilani Farha:

Oh, there we go. That's right, yeah, the case examples at the end of the directors, that's right. That's right. So listeners, please do, do look at the full document. A lot of people wouldn't look at those case examples or the end notes, but the end notes provide just there's a lot of rich resources there. But only to say that I recently read that Singapore is in the throes of a real housing crisis with escalating housing costs like that, like they haven't seen in quite some time, and so they did that, the increased taxation. So let's say you buy one home and you pay a certain percentage of tax. You buy two, it increases by three. It increases like that. And the idea is to chill how many homes a foreign investor is going to buy. They receive a lot of foreign investment from Malaysia and from China, I believe. And so obviously it hasn't worked. Or there's something else going on in their housing system, I don't know. But just to say, maybe we'll relook at recommendations for directive four. Yeah,

Sam Freeman:

I agree. But it's that cost benefit analysis, isn't it? The people who are investing in real estate in this way are, as I said before, from countries where they are. They may be coming from a more unstable economic climate, a more unstable political climate. So yeah. I mean, you hear it quite a lot in the work that we do in relation to kind of fines and taxation, that it's just the cost of doing business. It's the cost of being able to move your money to somewhere safe. I mean, the risks of not doing that are far greater than the final or the tax that you're going to pay. So yeah. I mean, we, one of our other recommendations we've made under directive four is to set taxes at a rate which actually prohibits and puts off speculation, and that's something I don't think there's any government around the world that's doing adequately.

Kirsten McRae:

No. So I want to pivot just a little bit to discuss investment. So we were talking about that director for touches on individual investment, which is different from institutional investment. But I'm curious about what the regulation of those how the regulation of those two things would differ, you know? So we spoke a little bit about the regulation of institutional investment previously, but if we're looking at individuals, they wouldn't be operating on the same scale. And so how they would be regulated would necessarily need to be different. So I'm curious about how that could be the case. Yes,

Leilani Farha:

and no. I mean, I would say taxation is a huge tool, and that applies to the individual investor as well as the institutional investor. And I think when we do directive two, which is really about the big real estate investment trusts and the big private equity firms, et cetera, we will be talking about the tax advantages they receive. And so it might be a different tool where you're hitting you're kind of using a stick with the individual investor, right? You're hitting them with a higher tax rate to prevent them from acting, and with the institutional investor, and in many times, you're going to withhold the benefits you've been giving them as government, right? So governments give them tax breaks, give them different zoning out permissions, will waive taxes like no property no property taxes for 25 years. You know, that kind of thing. So we would be saying that governments should refrain from giving all these carrots to institutional investors and treat them the way we think individual investors should be treated, which is hitting them with taxes and also just preventing certain behavior. I mean, in Canada, the opposition leader Jagmeet Singh, just last week, suggested that what he called Corporate landlords, and by that, I think he meant the big institutional landlords should simply not be able to purchase any more buildings, period. Now, you might not want to say to individual households, you can't buy a second property, right? There are some second properties where I don't think I have a big problem with them, and it's not where I'd want to put the shifts energy, that's for sure. You know, people buy cottages on waterfronts. I mean, is that terrible in the grand scheme of things? Maybe not. But the idea of like stopping behavior that would definitely go toward the more institutional actor than it would toward the individual actor. Those are my I'm shooting from my hip here, so I don't know, Sam, what do you think,

Sam Freeman:

I mean, I have very little to add beyond that. I think that was a very, very good summary of the position of the shift directives. And you know how this kind of this, this dichotomy between individual institutional works, I think we have seen around the world, governments taking, maybe a more certain governments, I should say, taking a more hardline stance to. Towards the institutional investors. If you look at the Government of Catalonia, right, they realized that there were certain areas that were higher levels of housing need. And so I think a couple of summers ago, the government, they give large they specifically said large investors, large landlords, three months to tenant vacant properties, properties that have been vacant for a certain amount of time, and if they didn't do it by that period of time, then they risk those properties being expropriated, taking taken under municipal control so they could be utilized as affordable housing. And very specifically, put that towards larger landlords, because, you know, these landlords have resources, and when a landlord of that size is failing in their responsibilities to ensure the housing that they own is being utilized for its basic human need. I mean, it's in many ways, I think, more unforgivable than if you know an individual has one house and is maybe struggling to find a tenant for it. You know an institutional landlord has often millions of dollars or euros or pounds under their control that they can use for marketing, and they can use to find tenants, and they can use to bring rents down so that tenants want to move into their properties. You know, they have more flexibility, so it's, in many instances, far more unforgivable for them to fail to tenant to property or legal property vacant? Yeah,

Kirsten McRae:

I get that. So we're going to pivot again, so to directive five, which is regulate short term rentals and associated platforms. And

Leilani Farha:

we've discussed on on the show before, the impact of Airbnb. We had, you know, an episode about Athens where we talked about how so much of the country had been bought up for the purpose of tourism, that there were whole communities that had been displaced, and then within the recommendations for direct to five, you have municipalities must be given the competence to adopt and enforce legislation pertaining to short term rentals. And I brought this in because it's specified in this case that it would be municipalities that would be given this power, this authority. And I was curious as to why that is. I mean, that's a practical matter. It would be very difficult to monitor Airbnb at a national, zoomed out scale. This is happening at a local level, community by community, and cities are best placed to regulate and license and monitor short term rentals. But what we found when we were writing these and a lot has changed since we wrote about Airbnb in this document in the last two years, so we should talk about that. But when we wrote the directives, it was clear to us that many municipalities would have liked to do more or cities or local governments would have liked to have done more and didn't either have the jurisdictional capacity to regulate or didn't have the resources to actually implement their regulations and monitor and evaluate it's hugely expensive. I met a woman from Atlanta, Georgia, Atlanta has no she wasn't from Atlanta, my bad. She was from New Orleans. And you can imagine, I mean, it's a tourist destination, hot spot, and they had set up an office in New Orleans to deal with short term rentals, regulating them, licensing them, making sure that they were abiding by all the rules, they came under litigation. Like most cities that try to regulate Airbnb, Barcelona faced litigation in particular from Airbnb, but they told me they had 30 staff or something. This is a resource intensive endeavor to actually really regulate and monitor short term rentals, and so a lot of cities, local governments don't have the money, right? So it's both a jurisdictional capacity, but also a resource capacity. But I don't know, Sam, do you want to talk a little bit about what's changed in the last couple of years? Because a lot is going on like New York. So

Sam Freeman:

I mean so much going also, just maybe to add, I don't know how important it is, but there's also an interesting division when you talk about the regulation of short term rentals at the national and the local level, as to who has the biggest incentive to do that short term rental the income from short term rentals is taxed as income, right and that money goes to central government in most places, not to local government. So cities aren't making unless they impose restrictions, which include fees or registration requirements. Aren't making money off of short term rentals that they can use in their own housing systems, but they are having to deal with all of the disbenefits that come from having a housing market that's been taken over by short term rentals. So, you know, just in terms of putting the decision in the hands of the people who can actually understand the problems that have been caused by short term rentals, you know, why would anyone else be making those decisions in terms of policy and. And law, but luckily, some of them have, and we've seen around the world quite a few cities, local governments in particular, who have either looked to outlaw short term rentals or have placed heavy restrictions on how short term rentals should be operated. New York, I think, is the kind of big example recently or came. The law was passed in 2022 and they became active on in September 2023 and it says that properties have to be rented for periods of 30 days or longer. If they're rented for less. My understanding is that the owner of the property has to be present, physically present, for the entire stay. They also have a registration requirement that requires potential hosts, as they're called, to register with the government and pay a registration fee. And studies have shown that those kind of just the registration requirements work. I was reading one study that said that in cities that have introduced these registration requirements, there was a decline of 50% of Airbnbs, and that came with a 2% decrease in house and rent prices. So you can see that it has this related effect. If you impose these restrictions, it has that related effect. Now, the study that just focused on Chicago and Los Angeles, there was a 40% after a registration requirement was put in, there was a 40% decrease in in the number of units and a 4% decrease in house prices. So yeah, I mean, and hopefully one of the things we know from our work Leilani is that governments are famously risk averse in terms of taking the first step and imposing things like restrictions without seeing other governments having done it before. But there are now so many good examples of short term rental regulation that are having positive effects on the enjoyment of the right to housing for local populations.

Leilani Farha:

Yeah, I think we've reached the tipping point. Actually, I don't know if short term rental platforms foresaw there would be a tipping point, but there is a tipping point. And look at what's happening in Barcelona and parts of Italy, where the over touristification, which is absolutely associated with the rise in short term rental platforms, is taking a real a real hit. I mean, there are activists, everyday people going out and protesting in front of tourists and saying, Get out of my city and their tourists. Being in cities is directly related to the availability of short term rentals. It makes traveling cheaper. I mean, it's like that, and obviously the deleterious effects of short term rentals, we didn't really talk about all of them, but we know it's well researched and proven that it takes long term units off the market period, it raises rents. We're seeing the opposite, right? So where you decrease short term rentals? Housing costs are decreasing? Well, similarly, where we saw the rise of short term rentals in certain neighborhoods, we saw increased cost of housing. And so I think we've reached a tipping point. Barcelona said that they're going to try to end, like, really end short term rentals by 2027, 2030 something like that. Yeah, they're not going to be allowing any new leases or any new short term rentals. So that's it. Like they've reached their saturation. Athens just said for the next year they're not going to allow any new short term rentals to be registered. We're in a new place. And I think it's really exciting, because local people need to take back their cities

Kirsten McRae:

totally. It made me think so when you were speaking about how the availability of short term rentals changes the, you know, the cost of the housing. But I know one thing that I've also read agree, read a great deal about is the effect it has on social cohesion, like the nature of the community itself. And so when we're talking about housing, being about a home and about having a say in what happens to it, it's not just the the cost of the housing, but it's also about the quality of it, not only the physical structure, but also what type of community do I exist in? And so where there are short term rentals, where there are a lot of them, you see this kind of deterioration of community, because you have people in and out. They're strangers. You're less likely to know who lives in an area, who is perhaps there to commit a crime, right? You just lose those things so and

Leilani Farha:

the cultural disruption, exactly, Kirsten will remember, we did a podcast episode with a bunch of activists from Mexico. And at the time, the digital nomad thing was really gaining steam, and a woman had had posted on Twitter, as it was then, I believe, saying something like, Hey everyone, you ought to come and work in Mexico like I am. She's American. This is the life kind of thing. So all these people are flocking to Mexico, and our Mexican colleagues were saying to us, you go outside, you don't even hear Spanish being spoken anymore. It's all Anglos from the United States. So that cultural disruption. And two is very problematic, totally.

Sam Freeman:

Often I when I speak to people about things like Airbnb or VRBO or other short term rental platforms, there's this kind of strange almost like consciousness. These platforms are just individuals renting out their home for the summer. They've just got it, you know, they've got on holiday. They want to make a bit of that money back. So they rent out their home for a couple of weeks over the summer. And I don't doubt for one second that that is a part of these platforms. I'm not saying it isn't, but, you know, I bought stats to this episode. I looked on if you the organization inside Airbnb, they collect amazing stats on Airbnb in different cities around the world. And so I looked up three. I looked up three which I knew had real problems with short term rentals. In Paris, they have 95,000 homes and Airbnb, 31% of those are owned by hosts with more than one listing, right so they're multiple homes on the market. In London, 96,000 homes and 52% are owned by hosts with more than one listing. In Athens, where we know Airbnb is decimating neighborhoods. There's 13,000 homes, and 70% of those are from hosts with more than one listing. So it's not the case. I mean, we have to kind of get behind the marketing in some ways, of Airbnb or VRBO being like, oh, rent out your place while you're on holiday and make a bit of money back. It's a business. It's a business for many people. I mean, if you look at the listings of different cities, there's one company whose name I cannot remember, who are often at the top, and it's a company, and they often own hundreds of properties listed on Airbnb. I

Leilani Farha:

remember in Porto, one of the most beautiful cities in the world. I think it has UNESCO heritage designation. You know, it's just this incredible city. And I was taken around by some local advocates, and they were saying entire buildings were being purchased by companies, a company from France, and they were being turned they had been long term rentals. They were all being turned into short term rentals, you know. So that's absolutely right, Sam. And there's also the advent of this, these other companies, one of them people may have heard of, called sonder, S o, n, D, E R. I've seen another one called RE stay. I don't know who the corporate ownership of it is, but they are just simply purchasing hotels and floors and floors and floors of condo buildings and converting those into short term rentals. Now you might say, well, Leilani, they're hotels and they're condos. That's not taking long term rentals off the market, but it is because if we had really creative and proactive governments, they could be purchasing those hotels and turning them into long term rentals, right? And they could be purchasing the units, the condo units, you talked about Kirsten in Toronto, that the owners are having a hard time selling. They could be purchasing those and turning them into long term accommodation and being hardball about it and demanding below market rates for these purchases. But instead, they're not doing that. They're not being aggressive, and they're not. I mean aggressiveness by governments at this point would be proportionate to the crisis. We need governments to be aggressive, and that's part of what the directives are about. It's like, this is a real crisis. This is life and death for a lot of people, you're not doing enough, and I think the short term stay areas is one area where it's really clear governments, I mean, regulating isn't actually enough, right? Regulating isn't enough. Exactly. It

Kirsten McRae:

needs to go beyond that. Yeah, we're running low on time. So I want to squeeze in a little bit about directive eight, which is ensure compliance with human rights by Central and commercial banks. Are already laughing a little bit we're

Leilani Farha:

laughing because we came to directive eight with a lot of trepidation. Sam probably knew a little bit more about banks than I did. Not true. Okay, so we were both pretty ignorant. We had an amazing researcher whom we haven't mentioned. Yes, definitely, but one should always recognize the hard sweat labor of all of the researchers. So there was a fellow from Spain with tremendous experience. His name is Manuel gabarre de sous, and he really helped us with the bank section. This section was much longer. We had a thing on shadow banks, which, if our listeners don't know, shadow banks are actually like private equity firms. We decided to just stick with commercial banks because we knew they're having a major role, commercial banks and central banks, I should say, we know that they play a tremendous role in the real estate industry, and we wanted to name it people will recall at the beginning of covid, most central banks dropped interest rates even lower than they already were. And just to understand a commercial bank, the interest rates that are set by a central bank impact the interest rates. Charged by commercial banks. Okay, so they borrow money. Commercial banks borrow money, and they borrow money at this low interest rate, which then enables them to offer low interest loans themselves. Okay, that's the Leilani Farha trying to dumb this down so I can understand it version, okay, so when they made that move, it was because they could see people were really going to be struggling during this covid pandemic, and wanted to put a lot of money into the economy. This kind of quantitative is what's part of quantitative easing. And I'm not going to get into the details about what quantitative easing is, but it's like printing money and just making sure there's a lot of cash floating around at a in a crisis time. Okay, now that might sound good to the individual household, right? Oh, great. I can actually still purchase a home, or I can take out a loan and buy what I need to buy. The problem is institutional investors also have access to that money, and because they already have so much money, they can access a whole lot more money, right? They've got great down payments. Let's put it that way. And so the minute you lower interest rates really low, that is a gravy train for institutional investors, and in a crisis situation, what we've learned from 08 is that what happens is you start seeing abandoned assets. So you start seeing people you know, losing income in a crisis situation, and they can't really even with low interest rates. They can't make their mortgage payments. They put their property up for sale, the combination of abandoned or distressed assets and low interest rates is what enables institutional investors to invade the landscape and buy, buy Buy and buy affordable and turn it into expensive accommodation. And that's what we saw when the interest rates were made lower in 2020 so we had to include something in the directives about it. At the same time, we could see that, hey, wait a second. Okay, we don't know how to influence central banks, but we think central banks should be thinking about the impact on low income people when they set interest rates low, and that fiscal and monetary policy need to interact more. So monetary policy is like how you said interest rates, that would be what central banks do, and fiscal policy is how you regulate institutional investors. And so what should have happened is, when central banks lower interest rates so low, government should have swooped in and regulated the institutional actors and regulated the banks, and talked to the banks and made sure that things were in place so that affordable housing wasn't eaten up and turned into luxury. We didn't see that happen anywhere. We didn't see that happen anywhere. I don't know if I explained that clearly enough. I

Kirsten McRae:

thought that was wonderful. Yeah, I thought it was very clear, very easy to understand.

Leilani Farha:

I have to dumb everything down so I can understand which

Kirsten McRae:

we all benefit from. So thank you. So we're running low on time, but we it's a question that we usually ask our guests when they come on the show. I'll often ask them this before they come on the show, which is, what would your critics say about your position around these directives? I know that may be a little bit broad, but and then, what would you say back?

Sam Freeman:

That's a very interesting question. I love it. I you know, I think we know what our critics say about this because we've had many conversations with people who are critical of our position, but it's always very clear that when they're critical of our position, it's because they stand to gain from the maintenance of the inadequate status quo. I mean, you don't maybe that's unfair. Some investors, I think, in recent years, we have started to see something of a shift where they've started to recognize that the risks of not investing in a more sustainable and a more socially responsible way outweigh the kind of gains that they had previously expected to get from residential real estate investments. But you know, I think what we often hear from investors is that, you know, there's nothing that needs to be done here. We are capable of regulating ourselves. We're capable of we recognize that things haven't been perfect in the past, but we are the best place people to solve this issue. And it goes back to Peter S Goodman, right the cosmic life, the people who got us into this position in the first place cannot be the ones to get us out, because there is, realistically, no incentive for them to do so in a way that is fully compliant with human rights in order to get out of the mess that's being created. We do. I fully. Believe we need to fundamentally rethink the system that we have for housing. We need to reimagine housing at every level. We need to rethink the social level we have this kind of ingrained, especially in kind of Western European, North American countries, this ingrained idea of you need to get on the housing ladder, or else you're failing in life, right? Your housing is your future. Your housing is an investment. You need your house prices to rise, no matter what that means. One of the most popular board games in the world is built around housing investment, right? Like it's drilled into us when we're young, that homes are a thing to make you money. Yeah, we need to clear that out, and only by doing that can I think we get to a position where governments will be willing to shift their approach towards housing, to introduce policies that actually redefine housing as a social good and as a human right, and move investors out of this sphere to other spheres where they can be perfectly happy and make just as much money, not at the expense of human beings. Yeah,

Leilani Farha:

I'll add just one thing. When they want to get all businessy and uppity with us, right? Because that's their

Kirsten McRae:

there is a condescension they go to That's right, you don't understand economics is

Leilani Farha:

the problem, exactly. I tell you I am so trolled. I am so trolled by mostly white men neoliberals who say that to me that I don't know anything about economics and they the big thing that we talked about in one of our previous episodes was around fiduciary duty. So that's the idea that institutional investors are beholden to their shareholders, and everything they do has to benefit their shareholders, which means lining their pockets with more money, and we say back to them, actually, you have a fiduciary duty to ensure your shareholders understand the human rights implications and risks when investing in residential real estate, and that human rights actually Trump other fiduciary duties, that human rights are the highest law of the land, and they have to abide by human rights. The pushback on that is basically, well, we don't believe you. We think fiduciary duty is our it terrifies them the idea that human rights might Trump or have anything to say about fiduciary duty. But we're seeing movement. As Sam said, we are seeing movement. We're seeing investors who are definitely not willing to invest in in fossil fuels anymore. For example, we are starting now with the horrible atrocities happening in both Ukraine and in Gaza, as well as elsewhere, but in those two hot spots in particular, we're starting to see a lot of pushback on any investment in weapons, arms and that whole area, and that's because of human rights concerns. Right? Innocent civilians are being killed with those weapons. And I think the next big move is going to be people are being rendered homeless, and their life expectancy is cut in half when that happens as a result of some of these investments. And I think that's where this is going. And I think investors, especially individual shareholders, will be responsive. Absolutely.

Kirsten McRae:

I think that's a wonderful place to take it to. We're going to be looking, in the next episode more at industry and those practices. So I think that's a really beautiful place to leave it until we pick things up and we talk about directives two, three and six, which really touch on industry practices and how they can be changed to better protect and uphold the right to housing. So everyone go read the directives. They're on our website. I'll make sure to put a link in the description so that you can check them out. If you haven't already, definitely go back and read the previous episodes and come back next time to hear us round everything out and thank you again to both of you for your time today. It was really great to pick your brains about this further.

Sam Freeman:

Thanks to you. It's been a lot of fun again.

Leilani Farha:

Yeah

Kirsten McRae:

yay.

Leilani Farha:

Thanks. See you soon.

Sam Freeman:

See you soon. Bye.

Fredrik Gertten:

Thank you, Leilani and Sam for this. Leilani, what can you add?

Leilani Farha:

I think we said a lot in the episode, so I'm going to leave it there. But we want people to listen to our podcast, don't we, so we encourage our listeners to tell a friend or two about Pushback talks and get them to listen. It always helps. Also, if you review us and rate us and yeah, just enjoy pushback talks, and you can support us financially through patreon.com look for pushback talks. $1 here, $1 there, a euro. It all helps.

Fredrik Gertten:

This also goes for tenant unions and or maybe somebody who makes a lot of money out of Airbnb, but still think that it's theirs for so you can also send them some bucks. So we can keep criticizing you. I mean, the money is kind of anonymous, so, I mean, just, you're just, just come, just bring it on. Anyway. Leilani, have a great day over there in in the Far North? Well, actually, I'm thinking I'm further north. Anyway, you might be

Leilani Farha:

further north than me, yeah, but we have nice sunshine, so you too. Have a good day up there.

Fredrik Gertten:

Thank you, my friend. Take care. Bye.

Kirsten McRae:

Pushback Talks is produced by WG film. To support the podcast, become a patron by going to patreon.com/pushbacktalks, follow us on social media at make underscore the shift and push underscore the film. Or check out our websites. maketheshift.org, pushthefilm.com, or breakingsocialfilm.com