ANHD 2016 Building the Community Development Movement
Neighborhoods around New York City saw a dramatic rise in harassment of tenants in recent years as landlords forced out working families so they could raise the rent. This increase in harassment was driven by the rise of a new type of buyer of New York City real estate: those raising money from Wall Street-type investors who demanded profit levels that could only be achieved in rent-regulated buildings by displacing tenants and undermining affordable rents.
Many of the lending institutions that provided huge loans for the purchase of these buildings packaged the funds into mortgage-backed securities. This securitizationwas one of the core issue that led to the subprime crisis, and has also encouraged a similar destabilization of decent multifamily housing by encouraging investors to engage in very risky deals. Both the private-equity funders and the lending institutions were aware, or should have been, that harassment and displacement of tenants was a necessary element in their financial model.
Private equity-backed developers, in the past four years, purchased an estimated 100,000 units of affordable, rent-regulated housing. This is an almost 10 percent of New York City’s rent-regulated housing and represented a major threat to affordable housing and stable communities. This overly aggressive private equity investment has become known as “predatory equity” and has undermined the best efforts of New York City and State elect-
ed officials to slow the loss of affordable rental housing.
