Worlds largest corporate residential landowners called out for their practices of inflating rents and aggressive evictions
The UN’s housing advisor has accused private equity firms and one of the world’s largest corporate residential landlords, Blackstone Group, of exploiting tenants,” wreaking havoc” in communities and helping to fuel a global housing crisis.
In a stinging critique of the role of private equity in the housing market UN rapporteur Leilani Farha and co-author Surya Deva, chairperson of the UN Working Group, singled out Blackstone’s business practices- which they claim include massively inflating rents and enforcing an array of heavy fees and charges for ordinary repairs- as having “devastating consequences” for many tenants in countries around the world.
In a series of letters to Blackstone and government officials in Czech Republic, Denmark, Ireland, Spain, Sweden and the US, Farha and Deva accused private equity and asset management firms like Blackstone and its subsidiaries of initiating” aggressive ousters” to protect its rental income streams, shrinking the pool of affordable dwelling in some areas, and efficiently pushing low and middle-income tenants from their homes.
Blackstone quarrelled the claims. In a letter addressed to Stephen Schwarzman, Blackstone’s founder and CEO, obtained by the Guardian, the company said the UN report contained” numerous false asserts, significant factual faults and inaccurate judgments “. And the company was ” surprised and disappointed” that the UN would” send a communication without substantiating your affirms and providing appropriate context “.
Blackstone has, in recent years, acquired hundreds of thousands of homes in the US, Europe, Asia and Latin America, often through subsidiaries, inducing it one of the largest and most powerful global players in the dwelling investment sector.
In its answer, Blackstone claimed private equity had helped construct the rental market at a time when countries around the world were facing housing dearths and abided by all relevant locals laws.
Farha said the commodification of real estate by private equity investors in recent years had constructed housing for many people increasingly expensive and precarious:” Landlords have become faceless firms wreaking havoc with tenants’ right to security and contributing to the world housing crisis .”
The authors also wrote formal letters to six countries, including the US, accusing them of failing to regulate corporate landowners and protect tenants’ human right to procure housing:” We remind all states that while amber is a commodity, housing is not, it’s a human right .”
The UN letter to the US government focuses on the way corporate landlords bought 100 000 ordinary household mansions left empty after their owners defaulted on mortgage payments during the sub-prime crisis of 2008.
The firms were encouraged by US government agencies to acquire the heavily-discounted properties in part because they would bring homes back into use as local economies began to recover from financing of the crash.
However, the need to maximize earnings to repay investors typically led to a” constant escalation” of housing costs for tenants, mainly by hiking rents- in a number of cases by 30 -5 0%- and ruthlessly seeking ouster for non-payment. One firm issued nearly a third of its tenants with eviction notices, the letter says.
The authors allege that a Blackstone subsidiary in the US, Invitation Homes, enforces accuses for minor upkeep repairs and tasks such as removing insect infestations. She claims that it enforces late rental payments of $100, even if they are just one minute late, or due to an error in Invitation Homes’ computer system.
In its reply, Blackstone said it was a small player in the US rental marketplace, representing 0.5% of the nearly 16 m single-family homes for rent in the United States, and that its customer satisfaction and retention rates were in fact higher than average.
Letters outlining similar breaches of housing rights and failure to regulate corporate landlords were also sent to Sweden, Czech Republic, Spain, Denmark and Republic of Ireland, each of which has insured large influxes of corporate rental investment in recent years.
Blackstone disputed these findings too.
Farha has made what she calls the “financialisation” of housing the priority of her tenure as housing rapporteur since 2014, highlighting how the transformation of real estate into an asset class traded on global markets has triggered dwelling insecurity and homelessness crises in many metropolis around the world.
A paper she published for the UN two years ago noted how trillions of dollars of investments in hyper expensive apartment blocks in communities of major cities from London to Vancouver had put dwelling beyond the reach of all but the rich, breaking up established communities, and fuelling rising rents and evictions.
Farha’s investigation into corporate landlords’ care of tenants around the world is the subject of a new film, Push, which premiered this month. A sub-plot of the movie is Farha’s echoed but ultimately fated attempts to secure a face-to-face meeting with chief executive Schwarzman to discuss its role.
Read more: https :// www.theguardian.com/ us-news/ 2019/ mar/ 26/ blackstone-group-accused-global-housing-crisis-un