Since 2008, UHAB and our allies have learned a lot about how financial malfeasance in the rent regulated housing market puts low income tenants at risk. As Wall Street rejoices over the “rebound” in housing prices, we know the truth: the rebound goes hand in hand with a rebound in speculation and overleveraging. Last year, we created the Life Cycle of Predatory Equity that reveals that Predatory Equity to be a cyclical process: an overleveraged mortgage, harassment, neglect, foreclosure, and overleveraging again. Unfortunately, since 2008, we’ve seen many buildings enter their second cycle.
Buildings entering the second round of Predatory Equity often are faced with a new speculative landlord who will use familiar tactics to try and “improve the underperforming asset.” (i.e., Landlord speak for “increase rents by pushing regulated tenants out.”) One common tactic that’s particularly popular in gentrifying neighborhoods is a “buy-out,” where landlords offer tenants seemingly large sums of money to vacate their units. The money is never very much – hardly even enough to move. (One tenant we work with was offered $6,000 and a bus ticket to Philadelphia where, her landlord said, “housing is more affordable.”)
Fighting these buy-outs is important: when tenants opt to leave, landlords are automatically able to raise rent by 20%, contributing to the erosion of affordable housing stock in New York, and potentially even bringing the unit out of rent regulation. If a tenant decides to stay, landlords can only raise rent by 4% to 7.75% depending on length of lease.
We developed a fact sheet on these kinds of buy outs while working with tenant groups at 1153 and 1159 President Street in the rapidly-gentrifying neighborhood of Crown Heights. Check it out here.
News isn’t all bad: in the past few years, we’ve seen some buildings get preserved for long term, quality affordable housing. We’ve seen tenants successfully organize to reclaim their buildings from predatory banks, and are currently in the preservation pipeline
Finally, with the help of graphic designer/artist Donna Choi, we developed an organizing tool that we’re using to engage tenants fighting to break the cycle of Predatory Equity. The infographic, available in English and Spanish, explains how developers buy buildings that are in foreclosure and illustrates how tenants can organize and to demand that the building is sold to a developer of their choosing.
We encourage you to these resources and use them!