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Thursday, Oct 02, 2025

Ruthless private equity firms gobble up property and wreak havoc on tenants' lives

Ruthless private equity firms gobble up property and wreak havoc on tenants' lives

Multibillion-pound firms like Blackstone have become leading property players. People who need homes are paying the price

Parents at the Fount nursery in London’s East End were taken aback recently when fees for their children’s care went up by more than £200 a month.

The reason for the price hike? The nursery is based in a former railway arch and there had been a massive 49.2% increase in rent by the new landlord, US private equity firm Blackstone, following a £1.5bn sell-off by Network Rail of network arches around the UK.

On 13 September, the Commons public accounts committee issued a scathing report on the controversial sale of thousands of railway arches to a joint venture between Blackstone and Telereal Trillium. The MPs accused Network Rail of selling off a profitable asset for short-term gain, with a loss of income of at least £80m and potentially up to £160m a year. They also said the sale would mean fewer rights for future tenants, as well as denying existing tenants the option to extend their leases.

Rachel Munro-Peebles, who owns the nursery, faced a difficult decision: close the nursery or increase fees. She describes Blackstone as “ruthless”, pursuing a hardcore increase in rent that threatens the survival of her business. Hence the unpleasant news for parents.

But few of them would realise what they have in common with similar rent rises faced by a baker in Berlin, a bar owner in Toronto, and tenants in housing in Stockholm or Madrid.

The common factor is £6.7bn private equity behemoth Blackstone, now reported to be the biggest landlord in the world. It manages assets worth £123bn, including property in parts of Berlin, Toronto, Madrid, Dublin and Stockholm, where it is the biggest private owner of low-income housing

Local battles against rising rents, such as the protests against plans to redevelop railway arches in Brixton, where only nine of the original 39 businesses remain, are often reported as struggles against gentrification. But this is not gentrification. This is not about working-class areas being taken over by incoming hipsters and middle-class residents and businesses.

This is another phenomenon entirely. This is about how global private equity firms have become leading players in the property market since the 2008 crash. This was predicted by the late geographer Neil Smith in the 1970s, who argued that when the gap becomes big enough between the rent a property earns and what it could earn if redeveloped for new residents, private capital would flow in, attracted by the potential to make large profits.

The result is that since the financial crisis, many parts of London and other cities have become unrecognisable. UN special rapporteur on housing and human rights Leilani Farha says the commodification of real estate by private equity investors in recent years had made housing for many people increasingly expensive and precarious. “Landlords have become faceless corporations wreaking havoc with tenants’ right to security,” said Farha earlier this year, in a stinging critique of the role of companies like Blackstone in contributing to the global housing crisis.

She has written to Blackstone and to government officials in the Czech Republic, Denmark, Ireland, Spain, Sweden and the US, accusing the company of undertaking “aggressive evictions” to protect its rental income streams, shrinking the pool of affordable housing in some areas and effectively pushing low- and middle-income tenants from their homes. Her work on this has also been highlighted in a recent documentary by Swedish film-maker Fredrik Gertten.

On its website, Blackstone, which disputed the claims and said the UN report contained “numerous false claims, significant factual errors and inaccurate conclusions”, tells investors it seeks to “acquire high quality investments at discounts to replacement cost” – corporate speak for buying up assets cheap. It particularly favours what economists call “distressed markets”, as these have the greatest potential for capital growth. This includes repossessed homes in the US and Spain as well as increased activity in the UK – the company recently made a controversial move into the UK’s low-income housing market through for-profit housing provider Sage.

Following the financial crash Stephen Schwarzman, the company’s billionaire chief executive, described Blackstone’s strategy in Europe as “basically waiting to see how beaten up people’s psyches get, and where they’re willing to sell assets … You want to wait until there’s really blood in the streets.” Schwarzman recently gave Oxford University £150m – its largest single donation since the Renaissance – to fund a humanities centre that will be named after him. It’s a move to burnish his image that is unlikely to allay concerns about his company’s activities.

Meanwhile, despite reassurances from the company that now owns so many former railway arches, local communities remain fearful, including Munro-Peebles, who says Blackstone isn’t listening to any of its tenants. “How are we supposed to survive?”

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