David Dayen, The Intercept:
For some on Wall Street, the financial crash of 2008 represented a once-in-a-lifetime opportunity. Homeowners who’d been walloped by the very crisis Wall Street had created were struggling to pay their mortgages, so financiers swooped in and bought up foreclosed homes, knowing the assets would eventually rise in price again.
But with so many people foreclosed on and out of work, selling the homes was difficult, so Wall Street hit on a different approach: renting them out. Now, the biggest practitioner of this gambit is spending heavily to make sure it stays lucrative.
Blackstone Group, a private equity giant that is also now the world’s largest real estate management firm, has pumped in $6,859,747 so far to battle a ballot measure in California that would allow cities to re-establish rent control laws, including on single-family homes. That figure constitutes $1 out of every $7 supporting the “No on Prop 10″ campaign and is part of a $45.5 million assault, mostly from corporate landlords and property developers, on the right of cities to determine their own rental laws.
Currently, cities in California are banned from pursuing rent control for apartments built after 1995 and for all single-family home rentals, of which there are 2 million in the state. Blackstone has a portfolio of over 12,700 single-family rentals in California, and if it helps defeat Prop 10, the firm can continue to jack up rents to an unlimited degree.
This map of single-family rental properties in Southern California explains why Blackstone is making such an investment to block rent control. They have spent around $540 per California property on the “No on Prop 10″ effort — a piddling amount to maintain the right to increase monthly rents by unlimited amounts.
“This is just another case of capitalism not only failing to provide shelter, a basic human need, but profiting off human suffering on a massive scale,” said Ducey. “With their donations to the ‘No on 10′ campaign, they are using tenants’ own money against them to ensure they can continue to gouge struggling families at will.”
Former tenants of Invitation Homes properties have complained for years about substandard conditions in the properties, like black mold, raw sewage, and swarms of giant spiders. Because the company targets and saturates specific neighborhoods, it can keep homes in bad condition and steadily increase rents, with tenants lacking alternative rentals.
“While we are operating as if this is a pre-foreclosure rental market, the Wall Street landlords found EVERY loophole in our system — a system that previously had laws in place that kept the power in check between landlords and tenants,” wrote Dana Chisholm, a former Invitation Homes renter in La Mirada, California.
Chisholm, a Trump-supporting conservative, says her Invitation Homes rental had rats and roaches, an air conditioning unit that was too small to cool the house, and a pool that leaked water, with the water bill paid by the tenant. “There are NO REMEDIES to fight your landlord because the landlord has more money than god!” Chisholm said. “So they can out wait you, out frustrate you, out threaten you with homelessness and ruined credit and an eviction on your record and sit pretty driving their Teslas living in one of their mansions.”
Supporters believe rent control can be part of a toolbox to prevent rents from soaring. They cite studies showing that construction rates in rent-controlled cities mirror rates in cities without rent control. Cities could also exempt new units from rent control in order to incentivize building.
Meanwhile, reports indicate that landlords in several California cities are threatening their own tenants by giving 60-day eviction notices and instituting rent increases. Some tenants have been told that these measures would only be canceled if Prop 10 fails. “Landlords are using their position of leverage in providing housing to sway the tenant vote,” said a spokesperson for Tenants Together, a renters’ rights organization.
Though Invitation Homes provided a statement, Blackstone did not return requests for comment. Blackstone’s Schwarzman may have been preoccupied with preparing for an investor conference in Riyadh, Saudi Arabia — days after the alleged state-sponsored murder of journalist Jamal Khashoggi, a critic of the Saudi regime — held at the same Ritz-Carlton Hotel where Crown Prince Mohammed bin Salman jailed dozens of rivals for weeks last year in a bid to consolidate power.
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