by Peter Franklin
Tuesday, 17
November 2020
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07:00

The real problem with Marcus Rashford’s property portfolio

by Peter Franklin
What’s so newsworthy about someone investing the proceeds of their own talent in bricks-and-mortar?

The Mail on Sunday “can reveal” that “campaigning football star Marcus Rashford has bought five luxury homes worth more than £2million.”

There was no direct allegation of hypocrisy in the article, but it has annoyed a lot of people — not least Mr Rashford himself:

It’s easy to see why he and his many fans are upset. For a start, why pick on someone who’s done so much to help others lately? Why attach the label “luxury” to a portfolio of obviously non-palatial properties? And what’s so newsworthy about someone investing the proceeds of their own talent in bricks-and-mortar? As Chris Cook tweeted, a fairer title for the piece might have been “man with proven track record for being quite responsible invests in reliable asset class.”

The UK has more than 2.5 million landlords, of which about 150,000 own multiple properties. Something like a fifth of MPs have invested in buy-to-let. Therefore Marcus Rashford is hardly alone.

That, however, is the problem. When homes become a mass investment product, money floods into the property market pushing up prices and rents. That’s good for those who already own their homes and even better for those who also own other people’s homes, but it’s a disaster for those who can’t get onto the housing ladder.

It also pushes up the price of land on which new social housing could be built.

In his 2013 book Capital in the Twenty-First Century, Thomas Piketty argues that we can expect ever greater levels of inequality because, over time, the rate of return to capital (which, by definition, is owned by the wealthy) is greater than overall economic growth. Thus if an ever increasing share of national income is going to capital, that means an ever decreasing share for everything else, including wages. Inevitably the rich will get richer and the poor poorer. However, as another economist, Matthew Rognlie, points out, the increase in the share going to capital is mostly or entirely accounted for by one kind of wealth — property.

Therefore, while measures like free school meals help people in need, they don’t tackle the underlying causes of inequality. For that we must de-privilege the position of the rentier class in the tax and planning systems.

Economists and other wonkish types have been making this argument for years — in fact, decades. Unfortunately, though, we’ve made little headway. To achieve a breakthrough, what we need a truly gifted campaigner.

Anyone come to mind?

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