The Strategist

UN reporters blame Blackstone for fueling housing crisis

03/27/2019 - 07:59

The American group of direct investment and asset management The Blackstone Group LLP has contributed to the growing crisis in the housing market worldwide, has exploited tenants and destroyed local communities, according to UN reporters Leilani Farha and Surya Deva.

Charleston's TheDigitel
Charleston's TheDigitel
Blackstone manages rental housing worldwide, most often through subsidiaries or foundations, and is considered one of the largest players in the industry, writes The Guardian. In recent years, the holding and related companies have acquired hundreds of thousands of residential buildings in the United States, Canada, Europe, Asia and Latin America.

According to the report’s authors, Blackstone significantly overstated the rent, introduced a number of additional fees from tenants and a significant fee even for the simplest types of repair, as well as "aggressively evicted" tenants. The consequences were devastating not only for individuals, but also for entire markets: housing affordability has sharply decreased in some regions, and it has become more difficult for people with low and middle income to find a suitable option.

In an attempt to protect tenants, Farha and Deva turned to the governments of the Czech Republic, Denmark, Ireland, Spain, Sweden and the United States, accusing Blackstone and other companies in the industry of predatory practices. "We remind the whole state that, unlike gold, which is a commodity, housing is the right of every person," the report says.

Blackstone argues that all the allegations are groundless, and the UN report "contains numerous false statements, significant factual errors and inaccurate conclusions."

In the US, Blackstone readily bought any real estate with a big discount (in unfavorable areas, in poor condition). The authorities eagerly went to meet the requests, hoping that the company would help in restoring the regional economy, especially during the financial crisis and immediately after it. However, in pursuit of profit, the company sharply raised rental rates, in some cases by 30% or even 50%, and severely pursued defaulters, the speakers note. One of the group companies sent notices of eviction to a third of the tenants.

Responding to the accusations, Blackstone itself said that the company occupies a very small share in the US rental housing market: only 0.5% of almost 16 million single-family homes. In addition, the company stressed that the degree of satisfaction of its customers and the rental duration indicators are above the industry average.

Farhah has been the UN's reporter on housing since 2014. She has made it a priority to fight the pursuit of financial gain in the housing market, linking popularization of real estate as a market asset to a decline in housing affordability and an increase in the number of homeless people.


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