At Hearing, Senator Warren Calls for Creation of Tenant Protection Bureau to Protect Families from Predatory Corporate Landlords
Warren: “Private equity, real estate investment trusts, and big corporations have gobbled up more and more of the rental market and now serve as landlords to thousands and thousands of Americans.”
Video of Hearing Exchange (YouTube)
Washington, D.C. – At a hearing of the Senate Banking, Housing, and Urban Affairs Committee today, U.S. Senator Elizabeth Warren (D-Mass.) called out corporate landlords’ growing role in the rental market and emphasized the need for a Tenant Protection Bureau to hold corporate landlords accountable and protect renters from extreme rent hikes, illegal eviction, and other predatory practices.
“Today, with families struggling with these rapidly rising rents, and with the economy at risk of being pushed into recession by the Fed’s overzealous interest rate hikes, it is urgent that we take steps to protect renters from predatory schemes and ensure that corporate landlords at least follow the rules that are in place,” said Senator Warren.
The Senator pointed to a recent earnings call for private equity firm Blackstone on which executives boasted about how slowing home construction and rising mortgage rates due to the Federal Reserve’s interest rate hikes would lock more families into the rental market, benefitting Blackstone’s bottom line. Big investors like Blackstone have acquired an increasing share of the rental market and now serve as landlords to thousands of Americans.
In response to Senator Warren’s questions, Professor Matthew Desmond, Maurice P. During Professor of Sociology at Princeton University, noted that families living in corporate-owned homes “will pay more, and sometimes a lot more,” and that housing quality would decrease because “institutional investors divest from housing as part of their business model.”
Senator Warren has proposed the creation of a Tenant Protection Bureau that would allow tenants to easily file complaints against unscrupulous landlords and provide federal and local officials with the data they need to enforce tenant protection laws. Diane Yentel, President and CEO of the National Low Income Housing Coalition, agreed that a Tenant Protection Bureau would be “tremendously helpful” and “if we had it today, it could help further enforce tenant protections, prevent egregious rent hikes, and let tenants hold their landlords accountable.”
Transcript: Senate Banking Committee Hearing to Examine How Renters
and Communities are impacted by Today's Housing Market
U.S. Senate Committee on Banking, Housing, and Urban Affairs
Tuesday, August 2, 2022
Senator Elizabeth Warren: Thank you, Mr. Chairman. America's renters are struggling and the Fed's interest rate hikes are making it both more expensive to build more housing and more expensive to take out a mortgage to buy a home. This could lock more families into the rental market and push rents even higher. Now, big Wall Street firms are watching this with dollar signs in their eyes. Private equity, real estate investment trusts, and big corporations have gobbled up more and more of the rental market and now serve as landlords to thousands and thousands of Americans. In 2018, non-individual investors owned 26% of the rental stock, up from 18% in 2001.
On a recent earnings call executives at the private equity firm Blackstone bragged that slowing housing construction -- that is less supply -- and higher mortgage costs (quote) "provide a lot of support" (end quote) for their bottom line since (quote) "people will still have to live somewhere." So Professor Desmond, you're the leading expert on predatory housing schemes. So let me ask you, as corporate landlords like Blackstone buy up rental properties, what will be the impact on families who are in those homes?
Professor Matthew Desmond, Maurice P. During Professor Of Sociology And Director Of The Eviction Lab: Senator Warren, first those families will pay more, and sometimes a lot more. Institutional investors are on record by raising the rents double digits, even in a single quarter. Those families also might experience a reduction in housing quality as institutional investors divest from housing as part of their business model. They saddle tenants with extra fines and fees, including tenants that can't make the rent at the beginning of the month, just because they don't get paid on a monthly basis. Plus, those tenants are often outgunned, not only politically but in court, where many of those tenants don't have access to a lawyer but over 90% of landlords do. That leaves those families in an incredibly vulnerable situation.
Senator Warren: Right. You know, in fact, thanks to an investigation by the House Select Subcommittee on the Coronavirus Crisis, we know that during the height of the pandemic corporate landlords illegally evicted families by the thousands, violating federal and state moratoriums that had been put in place to protect tenants.
So today, with families struggling with these rapidly rising rents that you talked about, and with the economy at risk of being pushed into recession by the Fed's overzealous interest rate hikes, it's urgent that we take steps to protect renters from predatory schemes, and ensure that corporate landlords at least follow the rules that are in place.
And that's one reason I've proposed creating a new Tenant Protection Bureau, which would allow tenants to easily file complaints against unscrupulous landlords and to provide officials with the data they need to enforce tenant protection laws. Ms. Yentel, how could a Tenant Protection Bureau protect family's rights and force these Wall Street landlords to actually follow the rules?
Diane Yentel, National Low Income Housing Coalition: It could be tremendously helpful, Senator Warren. As you said, that report only verified what we knew was happening during the pandemic, which was some of these corporate landlords were flouting the law. And we pushed throughout the pandemic for the federal government to hold them accountable, to apply the penalties to them for not following the CDC eviction moratorium, but there was no single agency that was charged with or empowered to do that. And so it didn't happen. If we had a Tenant Protection Bureau in place during the pandemic, it could have prevented untold harm and evictions of some of the most marginalized people. And if we had it today, it could help further enforce tenant protections, prevent egregious rent hikes, and let tenants hold their landlords accountable.
Senator Warren: Yes, that's a very powerful answer, and I appreciate it.
Look, to ensure that every family has access to safe and affordable places to live. We've got to build more housing, that is the ultimate answer. We need more supply. There's no way around it. These investments are overdue. But it is also urgent that right now we stand up to big corporate landlords and to protect tenants from these predatory schemes that could push them out on the street. And a Tenant Protection Bureau would be a good start.
So, thank you very much. Thank you for your work. Thank you for being here. Thank you, Mr. Chairman.
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