Using very moving, sometimes chilling examples of the consequences faced by ordinary families who live in single family rental housing owned by private equity and big corporate firms, The Toronto Starpresents arguments on how that industry “is structurally biased toward bad outcomes for tenants.”
The Star looks into the Canadian Public Sector Pension Investment Board’s (PSP’s) recent $700 million investment with private equity firm Pretium Partners, which owns single family rental company Progress Residential and recently acquired competitor Front Yard Residential along with Ares Management.
Combined, Progress Residential and Front Yard Residential have filed to evict hundreds of residents since the beginning of 2021 in several states where the Private Equity Stakeholder Project has been tracking eviction filings.
Author and investigative reporter Aaron Glantz told The Toronto Star, “When you have a corporate landlord, their entire relationship with the property is money. You’re talking about a company that wants to charge the highest rent possible and do as little maintenance as possible to return massive profits to its shareholders, which would be the pension fund in this case. What you’re investing in is companies that are gobbling up homes that used to be owned by families, jacking up rents, resulting in a huge transfer of wealth from thousands of American families to a small group of people. You are taking the life savings of Canadian retirees and investing them in a company that is taking the hopes and dreams of the American middle class.”
Urban planner and assistant professor Elora Raymond told The Star, “[A] lot of these firms generate a lot of housing instability relative to their peers… [R]esearch has shown that having more single-family rentals in an area depresses the home ownership rate so they are kind of cannibalizing home ownership opportunities.”
According to The Star, to increase profits large corporate firms have reduced costs on things like maintenance and overhead even as they have increased revenues by raising rents and charging fees. “There is a lot of gouging around fees,” Raymond told The Star.
Likewise, even with a national eviction moratorium, court documents show that landlords like Progress Residential and Front Yard Residential have continued to advance eviction actions even in some cases where tenants have filed a CDC hardship declaration.
Suggesting that there are structural issues with the business model itself, The Star reports how “Wall Street firms have one job, and that’s to make more money for their investors.”
“Studies in Atlanta and Los Angeles found that tenants in institutionally owned single family rentals reported higher rates of property mismanagement, more evictions and faster rising rents than did tenants in other forms of housing. Institutional investors in Atlanta were also more likely to evict their tenants, according to another study, even when correcting for factors like income, property and neighbourhood.”
Photo: The Aspen Institute