As Wall Street financiers snapped up huge swaths of the nation’s rental housing market in recent years, the deals sailed through unchallenged. Now, with the costs of renting an apartment or home out of reach for a growing number of Americans, four Democratic senators say these transactions need more scrutiny.
Sen. Elizabeth Warren, D-Mass., sent a letter to private equity giant KKR on Wednesday, demanding information about its recent $2.1 billion purchase of 5,200 rental apartments across eight states. Among her questions: How does KKR plan to ensure that long-term tenants will be able to stay in their homes and what proportion of profits does KKR expect to generate from hikes in rents and fees at the apartments?
“KKR is just the latest private equity firm using the housing crisis to rake in profits while squeezing families,” Warren said in a statement to NBC News. “I’m sounding the alarm because we can’t solve the housing crisis unless we crack down on predatory practices by Wall Street investors.”
Three other Senate Democrats signed onto Warren’s letter: Raphael Warnock of Georgia, Peter Welch of Vermont and Ron Wyden of Oregon.
A KKR spokesperson did not respond to a request for comment.
Homeownership costs have spiraled higher across the nation forcing many potential buyers to rent their homes, research shows. In 2023, the number of renter households in the United States rose by 514,000, the largest annual increase since 2016, according to a 2024 report from Harvard University’s Joint Center for Housing Studies. The total number of renter households in the U.S. is 44.5 million.
Unfortunately, rents have also skyrocketed, pinching tenants. Since 2001, median rents have risen 21% in inflation-adjusted terms, far more than the 2% rise in median renter household incomes during that period, the Harvard report shows. And when rents go up, financially vulnerable residents have to cut back on food and health care, the study shows.
According to a recent report from the National Low Income Housing Coalition, a full-time worker earning the federal minimum wage, or prevailing state or local minimum wage, cannot afford a modest two-bedroom rental home at fair market rent in any state, metropolitan area or county in the U.S. In only 204 counties, or 6% of those nationwide excluding Puerto Rico, can a full-time minimum-wage worker afford a one-bedroom rental home at the fair market rent, the report said.
Several factors are driving those price hikes, experts say, including higher costs to build new rental properties. But large purchases of rental homes and apartment buildings by private equity firms like KKR are another cause, research shows.
Private equity firms typically use a large amount of debt to buy companies and properties that the firms then try to sell at a profit after a few years. The short-term need to generate a profit often translates to reductions in quality or price hikes on the rental homes, health care or other products that companies backed by private equity sell.
Both Vice President Kamala Harris and Ohio Sen JD Vance, former President Donald Trump’s running mate, have flagged the problem of big investment firms buying up rental properties, crowding out individual buyers and raising rents for tenants.
Companies backed by private equity have been increasing their control of apartment complexes and single-family homes in recent years. The Private Equity Stakeholder Project, a nonprofit that monitors the industry’s impact on individual Americans, has identified more than 5,100 apartment complexes owned by more than 30 private equity companies in America, totaling almost 1.4 million units. That accounts for 6% of the 23 million apartment units in the country, according to the National Multifamily Housing Council. And 2022 research from Americans for Financial Reform, a nonprofit organization that advocates for stricter regulation on Wall Street, shows companies backed by private equity owned 2% of single-family homes available for rent.
As landlords, private equity firms raise rents, impose new fees, skimp on property maintenance and pursue tenants more aggressively in court, the Americans for Financial Reform research noted. “The cumulative effect is a massive transfer of wealth from mainly low- and middle-income renters, who can’t afford the onerous barriers to homeownership, to some of the wealthiest men in America,” it said.
Noelle Porter lives in the Navy Yards neighborhood of Washington, D.C., in an apartment complex owned by Brookfield Properties, a unit of private equity giant Brookfield Asset Management. Porter, director of government affairs at the National Housing Law Project, a nonprofit that advocates for housing rights, said she and other tenants have experienced reduced services and excessive utility fees at the complex recently. This summer, more than 100 Yards tenants organized and filed complaints with the District of Columbia attorney general and the Federal Trade Commission.
“They’ve added approximately $200 in fees since they changed some of the billing service providers,” Porter told NBC News. “We’ve had a series of security incidents — doors remaining broken for far too long, a homeless person sleeping in our building. When I called a corporate hotline that promised a response in less than 24 hours, not once did I get a response.”
A Brookfield spokesperson said: “Resident experience is our top priority and following productive conversations with our community this summer, we’ve announced and are executing a series of operational upgrades across the campus, including enhanced security and concierge services.”
New research from Americans for Financial Reform also indicates that Wall Street financiers are buying up significant numbers of troubled mortgage loans from the Federal Housing Finance Agency, the government overseer of Fannie Mae and Freddie Mac. Private equity firms have a track record of evicting residents from properties whose loans they own rather than working to keep them in the homes, the research found.
Jim Baker, executive director at the Private Equity Stakeholder Project, welcomes the scrutiny the senators are bringing to the KKR transaction. He noted that the properties KKR purchased in the deal — in California, Colorado, Florida, Georgia, North Carolina, New Jersey, Texas and Washington — are in states that already have a heavy concentration of apartment complexes owned by private equity. More than two-thirds of the apartment units in those states are owned by private equity, he said.
