The House Committee on Financial Services, led by Chairwoman Maxine Waters (D-CA), convened for a Subcommittee on Oversight and Investigations hearing yesterday entitled, “Where Have All the Houses Gone? Private Equity, Single Family Rentals, and America’s Neighborhoods.”
In October 2021, the Committee sent a longitudinal survey to five of the nation's largest single-family rental companies to investigate how their business practices operate at-scale. The responses confirmed that many potential homebuyers in the United States face a worsening housing crisis as these companies are not affordably serving the renters living in these units. During the hearing, Democratic Members of the Committee further examined the practices that allow for the mass purchasing of single family rental homes by private equity firms, and specifically how it has adversely impacted first-time homebuyers and communities of color.
In her opening statement, Chairwoman Waters thanked Representative Al Green (D-TX), Chair of the Subcommittee on Oversight and Investigations, for steadfastly focusing on the nation’s affordable housing crisis. She continued remarks discussing how would-be homebuyers are increasingly pitted against Wall Street-backed investors and cannot compete with these institutional investors’ offers, which are often in cash and well above asking price.
“Thank you for focusing on the fact that we have institutional investors who simply go into these communities, and they buy up large number of homes. That if the financial institutions absolutely gave them, [potential homebuyers], the loans that were needed to purchase some of these homes, they would be homeowners also,” Chairwoman Waters said in her opening statement.
During questioning, Chairwoman Waters examined how corporate landlords and private equity firms take advantage of the same renters they have effectively shut out of the homeownership market by imposing onto them aggressive rent hikes and fees and commented that their business practices not only rob renters of purchasing power, but also leave them struggling to even keep up with these exorbitant rental costs.
“Renters who live in single-family rental units owned by private equity investors pay higher rents compared to other renters and are more likely to see steeper rent hikes each year. Nationwide, rents have increased at the fastest rate in decades, with year-over-year U.S. single-family rents rising by 14 percent in April 2022, more than double compared to a year earlier,” Chairwoman Waters said during her line of questioning.
“In addition to the aggressive rent hikes, the Committee’s survey of the five largest single-family rental companies concluded that fees per rental lease increased by approximately 40 percent from March 2018 to September 2021, and that the total number of renters who have fallen behind on late fees and rent have doubled in that time.”
Watch the full Committee hearing HERE.