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UN human rights experts have condemned the "egregious” business practices of giant private equity and investment firms which are scooping up low income and affordable homes around the world, upgrading them, and substantially raising rents, forcing tenants out of their own homes.
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.
"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.”
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.