U.N. blames Blackstone Group for making housing crisis worse in U.S.

U.N. blames Blackstone Group for making housing crisis worse in U.S.

By Lynda Carson - March 28, 2019

Oakland - In a March 26, 2019, release from United Nations human rights experts Leilani Farha and Surha Deva, they have condemned the “egregious” business practices of giant private equity and investment firms including the Blackstone Group L.P., for scooping up low income and affordable homes throughout the world, and forcing tenants out of their homes after upgrading the properties and raising the rents.

3093 Broadway in Oakland, is a 423 unit apartment complex that is unaffordable to low-income renters in Oakland that is being developed by City View and the Blackstone Group, and is scheduled for completion in 2019.

The unaffordable apartments to low-income renters range in price from $2,710 - $2,860 for a studio apartment, to as much as $5,100 per month for a 2 bedroom apartment in a building that does not have rent control, or just cause eviction protections.

According to the release from the U.N., “Leilani Farha, the UN Special Rapporteur on the right to adequate housing, and Surya Deva, Chairperson of the Working Group on business and human rights, have written to one of the world’s largest investors in residential real estate, the Blackstone Group L.P., expressing serious concerns that its actions are inconsistent with international human rights law with respect to the right to housing and its responsibility to respect human rights under the UN Guiding Principles on Business and Human Rights.”

Additionally they say, “Almost overnight multinational private equity and asset management firms like Blackstone have become the biggest landlords in the world, purchasing thousands and thousands of units in North America, Europe, Asia and Latin America,” the experts said. “They have changed the global housing landscape. Pouring unprecedented amounts of capital into housing, they have converted homes into financial instruments and investments.

“Their business model, of which Blackstone is a frontrunner, is becoming the industry standard. Properties that are deemed ‘undervalued’, which generally means affordable to those living there, are being purchased en masse, renovated, and then offered at a higher rental rate, pricing tenants out of their own homes and communities. Landlords have become faceless corporations wreaking havoc with tenants’ right to security and contributing to the global housing crisis.”

Stephen A. Schwarzman, is the CEO & Co-Founder, of the Blackstone Group L.P., and according to campaign contribution records, and Wikipedia, Stephen A. Schwarzman resides in an expensive 24 room condominium that he bought for a little over $35 million at 740 Park Avenue, in New York City. This is in the same building that David H. Koch allegedly resides in, and is allegedly the same building that Jacqueline Kennedy Onassis was raised in.

The Blackstone Group is a large campaign contributor to the Republicans, and according to the website of California’s Secretary of State, with a contribution of $5 million, Blackstone was the second-largest contributor to the "No on Proposition 10" campaign, to defeat the campaign that was trying to repeal of the Costa-Hawkins Rental Housing Act, last November.

Additionally, according to the release from the U.N., “The experts said they had heard countless stories of tenants’ whose buildings had been bought by private equity firms and whose rents had skyrocketed almost immediately afterward, sometimes by 30 or even 50 percent, making it impossible for them to remain.”

“Real estate equity firms have an independent responsibility to respect human rights, which means that they need to conduct human rights due diligence in order to identify, prevent, mitigate and account for how they address adverse impacts on the right to housing,” the experts said.

The Special Rapporteur and the Working Group have also sent letters to the Czech Republic, Denmark, Ireland, Spain, Sweden and the United States of America, noting that each had facilitated the financialisation of housing in their own countries through preferential tax laws and weak tenant protections among other measures.

“We remind States of their human rights obligations to regulate investment in residential real estate so that it supports the right to adequate housing and in no way undermines it. This cannot be left to the private sector to undertake on a voluntary basis,” the experts said.

“What makes this practice particularly egregious is that it is being done without any monitoring, or accountability mechanisms in place. Governments seem not to have made the connection that this new form of finance is taking place in an area that is governed by international human rights law, which imposes obligations on them. We remind all States, that while gold is a commodity, housing is not, it’s a human right.

“We want to alert States and private equity and asset management firms that the financialisation of housing in its current form runs afoul of international human rights norms and cannot continue. At this time we have identified six States, but there are many more where these same issues are of serious concern, including in the global South. We are ready to engage in a dialogue with all relevant States and financial investors as to how this problem can be addressed,” the experts said.

Last May, tenants in Alameda reportedly became very worried about being displaced when it was reported that the Blackstone Group bought the 615 unit complex known as the Summer House Apartments for $231 million.

The Blackstone Group also owns Invitation Homes which merged with Starwood Waypoint Homes, becoming the largest single-family home rental landlord across the nation with around 13,000 rental properties in California.

An additional report about the Blackstone Group/Invitation Homes exists that also reveals how they operate.

Lynda Carson may be reached at tenantsrule [at] yahoo.com

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