The United Nations’ housing advisor has accused one of the world’s largest corporate residential landlords, Blackstone Group, along with other private equity firms, of “wreaking havoc” in their tenants’ communities and “helping to fuel a global housing crisis,” according to The Guardian.
Advisor Leilani Farha and co-author Surya Deva, chairperson of the U.N. Working Group on Business and Human Rights, singled out Blackstone Group’s business practices in a piercing critique of the role of private equity in the housing market, the Guardian said. Farha and Deva said that Blackstone Group has been imposing large fees and charges for ordinary repairs and imposing massively inflated rents on their tenants. They said this has had “devastating consequences” for tenants across the globe.
Farha and Deva sent letters to Blackstone and to government officials in the United States and five other countries describing these practices. In these letters, the U.N. officials accuse Blackstone Group and its subsidiaries of attempting to push low- and middle-income tenants out of their homes by decreasing the number of affordable houses in certain areas and undertaking “aggressive evictions” to protect rental income streams.
As of Tuesday, Blackstone has disputed these claims in a letter obtained by the Guardian, which quotes the letter as saying the U.N. report contained “numerous false claims, significant factual errors and inaccurate conclusions.”
In its reply to the U.N., Blackstone said that private equity had in fact helped build the rental market at a time when countries around the world were facing housing struggles. In recent years, Blackstone Group has acquired hundreds of thousands of homes in the U.S., Asia, Latin America and Europe.
The U.N. officials sent out letters to the governments of the U.S., Czech Republic, Denmark, Ireland, Spain and Sweden accusing them of failing to regulate these corporate landlords, the Guardian said.
The U.S. letter focuses on the way landlords bought homes left empty after their owners defaulted on mortgage payments during the 2008 financial crisis, the Guardian said. The landlords were encouraged by U.S. government agencies to acquire these properties to bring homes back into use as local economies began to recover. The need to augment profits to repay investors, however, led to an escalation of housing costs for tenants. In some cases, rents were raised by 30-50 percent.
The U.N. authors said that a Blackstone subsidiary in the U.S., Invitation Homes, charges tenants for small maintenance repairs and tasks such as insect removal, and also imposes late rental payments of $100 regardless of whether there is an error in the company’s computer system. Similar accusations were detailed in the letters sent to the other five nations, the Guardian said. Blackstone has disputed these findings.
Farha has made the “financialization” of housing her top priority during her tenure as housing advisor. Since then, she has detailed how real estate being traded on global markets has caused homelessness crises around the world, the Guardian said.