NSW HOUSING: ‘Modern-Day Robber Baron: The Sins of Blackstone CEO Stephen Schwarzman’

We noticed a Twitter tweet: “People are roasting Airbnb on twitter, but not for the reason it sucks the most: it enabled the removal of thousands of rental units from tight housing markets across the country and displaced people along the way.” At the time, this tweet had already been ‘liked’ 4,440 times and retweeted 899 times. As we type, those figures have increased to 32,000 likes and 5,800 retweets. Talking of ‘roasting’, this article is about Blackstone CEO Schwarzman; a ‘must read’.

Blackstone’s sins:

Pressed to make big profits, Invitation Homes and other corporate landlords push “undue rent increases making housing unaffordable for many existing tenants and reducing the availability of affordable housing stock” in the United States.
Invitation Homes “is quick to threaten eviction or file eviction notices to late payment of rent or late payment of fees, no matter the circumstances.”
Invitation Homes tenants “indicated that they feel insecure living in these conditions, where above average rent increases, exorbitant fees, or the smallest infraction can result in arrears and lead to eviction and the threat of homelessness.”
Blackstone and its subsidiaries focus on purchasing apartment buildings in “undervalued” neighborhoods, which often means properties in working-class communities. The corporate landlord then refurbishes the buildings and increases rents (“often exorbitantly”), “driving existing tenants out, and replacing them with higher income tenants.”
Blackstone “used its considerable resources and political leverage to influence housing policy in a manner that is inconsistent with the right to housing,” noting that the corporate landlord had shelled out, in 2018, “at least $6.2 million” to defeat California’s Proposition 10. The ballot measure would have repealed a state law that places severe restrictions on local rent control policies.
Farha and Deva concluded that “Blackstone’s and its subsidiaries’ business model is pushing low-income, and increasingly middle-income, people from their homes. Blackstone’s practices… have abruptly increased the rental payments of single-family rentals, making them unaffordable for millions of existing residents, decreased the availability and affordability of social housing, and has undertook aggressive evictions to protect rental income streams to satisfy investors.”

The United Nations’ former Special Rapporteur on adequate housing, Leilani Farha, has issued a grim warning. Blackstone Group Inc (Assets Under Management US$619 billion 2020) continues to show interest in housing. Blackstone “…expects demand for residential apartments to be resilient in some parts of Asia as millennials are renting their homes rather than buying them. Housing markets in major cities in Australia, China and Japan are booming, spurred by low interest rates and improving sentiment among investors who believe the worst of the pandemic is likely over. Retention and renewal rates for apartments have been topping expectations, according to Alan Miyasaki, head of Asia real estate acquisitions.” Crown Resorts rejection of Blackstone’s $8bn Takeover Offer a few days ago demonstrates that Australia is firmly in Blackstone’s sights.

In terms of housing, Leilani Farha says:

“The problem is the likes of Blackstone and its CEO, Stephen Schwarzman, tend to wield incredible power. The revolving door between the political class and the lobbying power of corporations means that vulture capital is able to run roughshod over the majority of the worlds legislatures, even though housing is a human rights issue and many governments have deigned their commitment to it by signing international treaties to that affect…The corporate housing sector, often with the complicity of governments, uses dissembling language in order to camouflage what it does, which is essentially to buy assets, flip them on to the market for rapid profit and repeat ad infinitum”.

Professor Joseph Stiglitz argues that the housing sector is no longer concerned with the productive economy, but rather, the strategy of corporations like Blackstone is to “fish for fools” and then to exploit them through wealth extraction. What this process amounts to is a massive Ponzi scheme predicated on vulture capitalist business models centred on the accumulation of rapid profits.

(Note: Australia is known as a ‘safe harbour’ for parking laundered money in real estate.)

In 2020 La Trobe Financial, “Australia’s oldest non-bank lender”, successfully completed an AU$1.25 billion RMBS raising, effectively re-opening Australian debt capital markets after the coronavirus pandemic took hold and “confirming Australian residential mortgages as a global safe harbour investment”. La Trobe Financial is “a Portfolio Company of the US based Blackstone Group”.

Blackstone’s Australian operations are headquartered at Level 39, 1 Macquarie Place in Sydney, under the name of Park Hill Group – “a financial advisory firm in areas such as private equity, real estate and hedge funds”. Conveniently, all are located within shouting distance of the NSW Parliament. Blackstone has three firms lobbying the NSW State Government: (Liberal aligned) Barton Deakin, which also happens to be the lobbyists for Expedia/Stayz, campaign specialists C|T Group, and GRACosway, chaired by former Australian Senator Helen Coonan. Interesting: Helen Coonan is also Chair of the Board of Directors, Crown Resorts…

The Minister for Planning and Public Spaces appears not to have published ‘Diary Disclosures’ for January-March 2021 – why not? Who has been lobbying Rob Stokes this year?

A whole range of information, setting out how housing is being comprehensively commercialised, including links to podcasts and a film, can be found at The Shift, here.

We would very much appreciate an update from the NSW Government on its 2017 report that said that we had lost 216,000 homes to Airbnb-type rentals.

The homeless crisis in the Shoalhaven region is ‘set to worsen in winter’ (ABC). Shoalhaven Mayor Amanda Findley is reported as saying, “the ongoing property boom is leading to greater inequality in the region…the NSW Government (needs) to help address the ongoing shortage of affordable housing. This overheating needs some intervention from the state government and federal government”. A pity that Shoalhaven City Council Strategic Planning Manager encouraged Stayz/Expedia/ASTRA representatives to lobby the State Government to make Airbnb-type rentals ‘exempt’ and ‘complying development’. (Shoalhaven – 3,786 holiday rental listings, and only 157 homes for rent on Domain). Shoalhaven Council’s representative told a NSW Parliamentary Inquiry into short-term rentals: “Our revised LEP clause is based on one from our neighbour, Kiama Municipal Council. We stole it from them…We do not want to regulate the 4,000-plus holiday homes.”

Albury is the latest to complain of ‘Monumental pressure on housing’. With Newcastle reported as the “New face of homelessness".

If a home was purchased some 5+ years ago, the owners are possibly financially secure. If not, what hope for those now looking for a home or indeed those with mortgages that will never be paid off?

The Australian Short Term Rental Association (ASTRA) is inviting everyone to join their Webinar on Thursday, 03 June. You can ‘Save Your Seat’ by clicking HERE. ASTRA writes, “the NSW Government in a collaborative partnership between Dept of Planning, Industry and Environment (DPIE) and Department of Customer Service (Fair Trading) has introduced a new state wide regulatory framework for short-term rental accommodation (STRA)”. ASTRA Chair Rob Jeffress, who at last count had around 485 holiday rentals, will head the Panel. He will be joined by Zsuzsanna Handelsmann, who is Business Manager at Jeffress’ Robert Jeffress Holdings, plus fellow ASTRA Board Members Joan Bird, and Yoav Tourel – also MD of Airbnb-type management firm Guesty. Why not hook up to their Webinar and find out how ASTRA intends to further penetrate housing, at the expense of those needing a safe, secure and affordable place to call home?