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Tag: invitation homes

  • Echoing Trump, Newsom vows crackdown on corporate homebuying in California

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    In his final State of the State speech, Gov. Gavin Newsom took aim at a group that some say contribute to California’s housing affordability crisis: corporate landlords.

    Newsom vowed to take a tougher stance toward institutional investors, such as hedge funds and private equity groups, that buy up hundreds or thousands of homes in order to rent them out.

    “It’s shameful that we allow private equity firms in Manhattan to become some of the biggest landlords in many of our cities,” he said, adding that the practice crushes the dream of home ownership and raises rents for Californians.

    It’s unclear exactly which form the crackdown will take.

    “Over the next few weeks we will work with the Legislature to combat this monopolistic behavior, strengthen accountability and level the playing field for working families,” he said. “That means more oversight and enforcement, and potentially changing the state tax code to make this work.”

    It’s a rare moment of political alignment between Newsom and President Trump, who vowed a similar directive in a social media post in which he announced immediate steps to ban institutional investors from buying single-family homes.

    The post sent shockwaves through the market, lowering stock prices of corporate housing giants such as Invitation Homes and Blackstone Inc., but no specific actions have been announced.

    In California’s case, Newsom will have to work with the state legislature. The bill that most closely aligns with the initiative is AB 1240, which seeks to ban investors that own at least 1,000 single-family properties from buying more homes in order to rent them out.

    The bill, introduced by Assemblymember Alex Lee, passed the state Assembly last year but stalled after fierce opposition from real estate agents and the California Apartment Assn. It awaits a Senate committee hearing.

    Institutional investment in real estate became a focal point during the pandemic, when low interest rates sent the housing market into a frenzy, and first-time homebuyers competed with investors viewing the house as an asset, not a home. During the second quarter of 2021, 23% of home sales in L.A. County went to investors rather than someone wanting to live there.

    But data show that corporate ownership makes up a much smaller share of the market. Analysis from the California Research Bureau showed that 2.8% of single-family homes in the Golden State are owned by companies that own at least 10 properties.

    The biggest chunk of that appears to be smaller mom-and-pop landlords rather than giant corporations. Roughly 80,000 homes are owned by companies with more than 100 properties, while nearly 235,000 homes are owned by companies with 10 to 49 properties.

    Still, renters across the state have faced problems with institutional investors. In 2024, Invitation Homes, the largest corporate landlord in California with more than 11,000 homes, agreed to pay $20 million to resolve allegations of unpermitted renovations. That same year the company agreed to pay $48 million to settle allegations of unfair eviction practices and withheld security deposits.

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    Jack Flemming

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  • Single-family landlord Invitation Homes misled consumers over cost of a home, the FTC alleges

    Single-family landlord Invitation Homes misled consumers over cost of a home, the FTC alleges

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    Invitation Homes, the nation’s largest single-family landlord, has agreed to pay $48 million to settle a handful of allegations, including that it illegally charged undisclosed junk fees, withheld tenant security deposits and engaged in unfair eviction practices.

    The settlement was announced Tuesday by the Federal Trade Commission. Among the main allegations made by the FTC was Invitation Homes deceived tenants over the total cost of renting one of its homes.

    The company, which owns or manages more than 100,000 homes nationwide, including more than 11,000 in California, did not include mandatory “junk” fees when advertising its rental rates, according to the FTC.

    These fees — for things like smart home technology and utility management — at times raised the cost of rent by more than $1,700 a year and were only disclosed when consumers went to sign their lease, the FTC alleged.

    By that time, the agency said consumers were in a bind because they had already paid a nonrefundable application fee of up to $55. They may have also forked over $500 to reserve a specific home, which they would only get back if they signed the lease.

    Sometimes, consumers weren’t made aware of the junk fees until after they signed the lease and moved in, authorities said.

    In addition to junk fees, the FTC alleged Invitation Homes rented out homes that were often in disrepair and systematically withheld security deposits for items that were not the tenant’s responsibility.

    Invitation Homes also engaged in several unfair eviction practices, the agency said. Among them, the company told struggling tenants during the pandemic that their only options were to pay, move out or face eviction and failed to inform them of federal eviction protections available at the time, the FTC alleged.

    “No American should pay more for rent or be kicked out of their home because of illegal tactics by corporate landlords,” Federal Trade Commission Chair Lina M. Khan said in a statement. “The FTC will continue to use all our tools to protect renters from unlawful business practices.”

    In a news release, Invitation Homes said it made no admission of wrongdoing as part of the settlement and described its disclosures and practices as “industry leading.”

    “Today’s agreement brings the FTC’s three-year investigation to a close and puts this matter behind the Company, which will, as always, move forward with its continuous efforts to better serve its customers and enhance its practices,” Invitation Homes said in a statement.

    The company, which started buying thousands of homes in the wake of the Great Recession, has reached multiple settlements this year.

    In July, it agreed to pay nearly $20 million to resolve allegations it made unpermitted renovations across its portfolio in California. In January, it agreed to pay several million to settle allegations it violated the state’s rent cap law.

    Under the settlement announced Tuesday, which still must be approved by a judge, consumers would receive refunds and Invitation Homes will be required to include all mandatory monthly fees in its advertised rent.

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    Andrew Khouri

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