Big Story 10

UK social housing deal with private equity giant sparks fears for tenants

LONDON (Thomson Reuters Foundation) - Private equity giant Blackstone has struck a deal with UK social housing association Sage, sparking fears from campaigners that it will price out low-earning, elderly and sick tenants.

New York-based Blackstone, which owns the largest home rental company in the United States, will fund for-profit housing association Sage to buy affordable homes from private developers, property magazine Estates Gazette said.

“(Blackstone and Sage’s) purely profit motive is contrary to the social purpose objectives of most traditional housing associations,” said Tom Murtha, co-founder of SHOUT, which campaigns for more investment in social housing.

“To make the return they need ... Sage and Blackstone would increase rent beyond the means of those on low-income, in the greatest need,” he told the Thomson Reuters Foundation.

“If they acquired social housing, it would soon cease to be social housing,” he said in emailed comments, referring to homes below market rent for people on low incomes.

Blackstone and Sage declined to comment.

Britain is experiencing a housing crisis as homebuilding has not kept pace with demand, driving up property prices, with rents rising faster than wages and homelessness soaring.

Local authorities housing stock has shrunk dramatically since the 1980s, with ownership of social homes shifting to private charities and housing associations.

Rising income inequality has led to poorer residents being squeezed out of central areas as wealthier inhabitants and investors snap up real estate, campaigners say.

Blackstone’s 2013 purchase of hundreds of rent-controlled flats in the Spanish capital, Madrid, from the city council, sparked fears that thousands of tenants could be evicted.

The Grenfell Tower fire, which killed 71 people in public housing in June, has prompted debate about London’s stark social inequalities and whether neglect of social housing estates played a part in the disaster.

“Residents and communities, post-Grenfell, need to take center stage rather than large and unaccountable for-profit landlords supported by foreign investment funds,” said Kevin Gulliver, director of the Human City Institute, a think tank.

“Grenfell underscored the dire consequences of the marginalisation of social housing and its decline from 33 to 17 percent of housing over the last four decades,” he said in emailed comments.

On its website, Sage said that it has provided homes for 100,000 families in England and “partners with developers and managers from across the residential market, both public and private, to increase the supply of quality affordable housing”.