Low-income housing advocates are raising concerns about investment management firms that are buying up thousands of single-family properties and turning them into rentals.
A national housing group called Right to the City Alliance has issued a report that claims these growing single-family rental firms need government oversight to avoid another housing bubble.
These firms are buying foreclosed properties in low-income communities and raising rents and security deposits to unaffordable levels, the report says.
"In the meantime, families are left with absentee landlords that have little incentive to make repairs, deal with pests and discuss issues with rent," according to the report entitled "Rise of the Corporate Landlord: The institutionalization of the single-family rental market and its impact on renters." The report was released Monday.
Single-family rental firms such as Starwood Waypoint Residential Trust, based in Oakland, Calif, and American Residential Properties, based in Scottsdale, Ariz., could not be immediately reached for comment. Neither could the National Rental Home Council, the recently formed trade group for this nascent industry.
Its website says the trade group's members are able to "turn blighted structures into beautiful new homes" within a few weeks. These single-family rentals are "professionally maintained and managed and backed by institutional owners who provide stability, peace of mind and the highest standards."
Many of these firms are being financed by Wall Street through securitization, which makes them easy targets for the housing advocates.
"The same kinds of financial institutions that drove the foreclosure crisis and bankrupted families across America have a new target: the rental market," said Rachel Laforest, Executive Director of Right to the City, "The transformation of single-family rental housing from a 'mom and pop' industry to a global investment opportunity needs to be closely studied and regulated. If we don't act fast, we could be facing another bubble and another crash."
Homes for All Campaign, California Reinvestment Coalition, Occupy Our Homes Atlanta and Urban Habitat contributed to the Right to the City report.
"Nearly two-thirds of the tenants in these corporate rentals surveyed in my district are burdened with unaffordable rent," said Rep. Mark Takano, D-Calif. The California congressman, who represents Riverside County, called on the House Financial Services Committee to take a close look at the management and maintenance practices of these rental firms.
The ranking Democrat on the Financial Services Committee also called for hearings.
"The institutionalization of the single-family rental market is an emerging development that merits close monitoring and evaluation," said Rep. Maxine Waters, D-Calif.