Forums > Social Discussion > "Predatory equity" - US Capitalism is alive and kicking!

 Written by : International Herald Tribune

NEW YORK: Private investment firms have been amassing what may seem like unusual stakes in New York real estate: They have bought hundreds of apartment buildings with thousands of rent-regulated units across the city that produce meager returns.



As regulatory filings and promotional materials show, the companies expect to generate higher returns quickly by increasing rents after existing tenants vacate their units. Their success depends upon far higher vacancy rates than are typical in rent-regulated apartments in New York.



Some residents and tenant advocates say that they began seeing what they consider a pattern of harassment of low-income tenants this year and suspect that it is a result of the new owners' business models.



Tenants have been sued repeatedly for unpaid rent that has already been received by the landlords; they have been sent false notices of rent bills, lease terminations and nonrenewals; and they have been accused of illegal sublets.



Tenants must answer these notices in court, but many have responded by moving out, court documents indicate. When they vacate the apartments, the owners can increase the rents substantially.



"Predatory equity is undermining the best efforts of New York City and state elected officials to slow the loss of affordable housing," said Benjamin Dulchin, deputy director of the Association for Neighborhood and Housing Development, a nonprofit organization. "Both the private equity funders and the lending institutions are aware, or should be aware, that harassment of tenants is taking place as a result of their financial models."

 Written by : IHT

These companies often make clear that raising rents is crucial to their financial goals. On its Web site, Normandy Partners notes "the increased institutional appetite for New York City rent-stabilized housing transactions" and adds: "There is a near-term opportunity to increase cash flow by converting rent-stabilized apartments to market rate as tenants vacate units."



The companies say that they are not harassing tenants and that they are only trying to protect their rights by enforcing legitimate rules governing regulated apartments.