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 imposing an array of heavy fees and charges for ordinary repairs – as having “devastating consequences” for many tenants in countries around the world.
The UN letter to the US government focuses on the way corporate landlords bought hundreds of thousands of ordinary family houses 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 the financial crash.
However, the need to maximize profits to repay investors typically led to a “constant escalation” of housing costs for tenants, primarily by hiking rents – in some cases by 30-50% – and ruthlessly pursuing eviction for non-payment. One corporation issued nearly a third of its tenants with eviction notices, the letter says.
New v old in Atlanta’s historically black Old Fourth Ward, home to the Martin Luther King, Jr historic site. Photo by Ben Rollins