PESP applauds state-level actions to rein in private equity investments in housing

In recent years, private equity firms have significantly increased their presence in the housing market, reshaping the landscape of homeownership and rental housing. These investment companies have capitalized on rising housing demand and limited supply by purchasing large volumes of single-family homes, apartment complexes, and manufactured housing communities.

Because the private equity business model needs to generate high returns on a short timeline, private equity landlords generally do everything possible to maximize cash flow to themselves while cutting costs, including deferring maintenance, skirting regulations, and saddling tenants with junk fees.

In line with their strategy for maximum wealth extraction from tenants, many private equity and corporate landlords use algorithmic software to coordinate and set rent prices in local communities. The leading firm providing this service is a private equity-owned software company called RealPage, which has been the subject of a Department of Justice lawsuit for alleged price-fixing. Three major private equity-owned landlords have been named in the lawsuit as well: Blackstone, Greystar Real Estate Partners, and Cortland Management.

In response to these trends, state and local governments around the country have introduced legislation to limit private equity investments in housing as well as policies aimed at preventing anti-competitive price fixing practices such as those employed by RealPage.

Policymakers in California, Colorado, Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Maryland, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Texas, Utah, Virginia, and Washington have introduced bills to regulate rental price fixing.

Policymakers in Arizona, Connecticut, Florida, Hawaii, Indiana, Massachusetts, Maryland, Minnesota, New York, Oklahoma, Texas, Virginia, and Washington have introduced bills to limit corporate ownership of housing.

“Private equity landlords have had no qualms exploiting the nationwide affordable housing crisis for profit, often to the detriment of tenants across the country,” said Chris Noble, Policy Director at PESP, of these legislative trends. “Residents of private equity-owned housing have had to contend with exorbitant rent hikes, pest and mold infestations, and aggressive evictions. First-time homebuyers have been priced out of the market by private equity firms’ deep pockets. Tenants and homebuyers can’t wait for private equity firms to put human decency ahead of these firms’ bottom lines. We applaud state-level policymakers across the country for taking decisive action to rein in private equity landlords in the interest of leveling the playing field for millions of working class Americans.”

The following state bills aim to address rental price fixing: WA SB 5469, OR SB 722, TX HB 2491, HI HR 171-2025, NY A 1417, CT HB 7209, IL SB 1996, UT SJR 14, HI SB 157, MN SF 2087, MA H 1564, MA S 1016, MA S 994, CA SB 384, CO HB 25-1004, MN HF 1142, CA SB 295, NM HB 215, IL HB 1427, NH HB 558, CT HB 6947, OH SB 79, NY A 4991, KY HB 358, CT HB 6478, VA HB 2047, VA HB 1870, NY A 3930, MD SB 609, MD HB 817, VA SB 1400, CA SB 52, CT HB 6497, HI HB 831, NY S 2697, NY S 1573, NJ A 4872, NJ A 4916, NJ S 3699, NJ S 3657.

The following state bills aim to limit the reach of corporate landlords in single-family housing: FL SB 1592, HI SB 1033, FL HB 1471, IA HF 745, MA HD 1735, MA S 1999, NM SB 77, MD SB 582, MD SB 510, WA SB 5580, MD HB 1428, OK HB 1064, TX SB 443, VA SB 1140, AZ SB 1209, CT HB 6500, HI HB 513, MA HD 3300, AZ HB 2360, IN HB 1293, NY A 1818, NY S 1572, CT SB 442.