Three months after the Biden administration unveiled a non-binding "Blueprint for Renters Bill of Rights" that was applauded by corporate landlords for doing little to rein in unfair rent increases and evictions, a new report by the government watchdog group Accountable.US showed on Monday that those same property owners reaped enormous profits in 2022 as they demanded more of their tenants' incomes in rent and excessive fees.
The group found that the six biggest property management companies in the U.S. — Starwood Property Trust, Mid-America Apartment Communities (MAA), Invitation Homes, AvalonBay Communities Inc., AMH and Tricon Residential — brought in $4.3 billion in net income last year, an increase of more than $1.3 billion from 2021.
That financial windfall came as the companies were raising rents and engaging in what Accountable.US called "abusive tactics" to evict people, in some cases after they had applied for rental assistance.
Starwood Property Trust increased rent by 30% or more at some of its thousands of properties in 2022 and saw its net income skyrocket by 115% to more than $1 billion, $591 million of which it spent on dividend payments to shareholders.
AMH and Tricon Residential credited their "pricing power" and "strong rent growth" for helping them secure $310 million and nearly $780 million in net income last year, respectively. The former company recorded a 47% increase while the latter's income grew by 70%.
MAA also reported that "higher fee income" and "continued growth in average rent per unit" were behind the ballooning of its net income, which grew by nearly 19% to more than $654 million.
"This is egregious," said tenants' rights organizer René Christian Moya of the report's findings.
This is egregious. And it is something the @WhiteHouse and @POTUS should be thinking very clearly about as tenants across the country are being gouged by corporate landlords https://t.co/SrfaFlhfaF
— René 🟥 (@rcmoya84) April 17, 2023
Four of the companies included in the Accountable.US report are members of the National Multifamily Housing Council (NMHC), which celebrated the omission of national rent control measures in the renter protections that President Biden proposed in January, while also claiming that the proposal's recommended regulations would be too "onerous" on landlords and would "discourage much-needed investments in housing supply."
Part of the companies' financial windfall was driven not by rent increases but by fees the landlords have piled on top of rent, including late fees and extra charges for "smart locks," pets and using online systems to pay rent.
"Corporate landlords 'squeeze more revenues from portfolios' by charging a range of 'ancillary' fees, resulting in 'fee revenue vastly outpacing rental growth,'" said Accountable.US.
Invitation Homes is one landlord that's been accused in the past of "fee-stacking" by tenants who filed a class-action lawsuit in 2018 — all while providing tenants with homes where they face "leaky pipes, vermin, toxic mold, nonfunctioning appliances and months-long waits for repairs," according to the report.
The record profits, dividend spending and poor service of the six companies, said Accountable.US — in addition to shelter costs rising by a "striking" 8.6% overall in the consumer price index last month — demonstrate that "aggressive interest rate hikes" imposed by the Federal Reserve "have done little to deter profiteering from corporate landlords."
The group called on Congress to work with the Biden administration to "stabilize runaway housing costs," for example by passing legislation proposed by Reps. Pramila Jayapal, D-Wash., and Grace Meng, D-N.Y., last month which would invest $200 billion in affordable housing, or a bill introduced by Sen. Elizabeth Warren, D-Mass., and Rep. Jamaal Bowman, D-N.Y., to end rent-gouging by corporate landlords.
"The nation's largest landlords have shown their burdensome rent hikes are based on greed, not need, after reporting billions of dollars in higher profits over the last year," said Liz Zelnick, director of Accountable.US' Economic Security and Corporate Power program. "These companies fueling the housing affordability crisis are among many corporations across industries that have shamelessly profiteered, undeterred by the Fed's repeated interest rate hikes."
"Higher interest rates have not curbed inflation sufficiently and have done nothing to combat corporate greed," Zelnick added, "and instead are causing severe economic consequences for everyday Americans, from lower wages to lost jobs."
