Thread by @DanielaGabor

want to understand the incoming Age of Institutional Landlords - minting assets out of your houses - and the state's role in it?

our new report 'My House is an Asset Class' w @sebastianmkohl for @GreensEFA has (nearly) all the answers

extranet.greens-efa-service.eu/public/media/f…

first, institutional landlords are not just notorious private equity firms like Blackstone, but your pension fund, insurance companies, family offices and endowments, cash-rich multinational corporations, Sovereign Wealth Funds and asset managers - a glut of institutional capital

institutional capital targeting European housing is large, a portfolio glut ready to deploy trillions if it can find houses to purchase at scale

we introduce new political economy of institutional landlords:
* adverse consequences for tenants, maintenance & neighbourhood
* portfolio glut chasing new/stable return assets
*Ability to profit from housing market crises & enlist state in de-risking housing asset classes

we explore regulatory derisking (European financial regulation such as Capital Markets Union and incoming Social Taxonomy) and macro derisking - fiscal& monetary de-risking supportive of house
price inflation.

we also warn that without a proper regulatory regime for institutional landlords, COVID19 pandemic may accelerate drivers of housing as asset class - austerity foments reliance on institutional capital as countercylical force to clean after burst housing bubbles

we take a deep dive into real estate funds - that raise capital from pension funds, or insurance companies - to purchase European real estate, including housing.
Here is funds targeting Germany's residential housing, most of them claiming high ESG scores

we then make 4 policy proposals:
1. A Sustainable Institutional Housing framework - a social-washing-proof Social Taxonomy to anchor mandatory disclosure & regulation of institutional landlords.

this would avoid social washing the new Social Taxonomy of European Commission

if you worry that European Commission is greenwashing (under pressure) Sustainable Finance Taxonomy, wait till you see scope for social washing new Social Taxonomy, despite ambitious human rights framework

political struggle over Social Taxonomy is coming but also an opportunity to regulate institutional landlords, if
- vertical & horizontal dimension applied simultaneously
- three bucket approach to vertical, with benchmarks for high performing, struggling and poor benchmark

with that Social Taxonomy in place, then
a) mandatory disclosure for all institutional landlords, so you know how Blackstone is behaving as your landlord
b) escalation-based regulatory regime, a la Bank of England approach to greening its corporate bond purchases

(we wanted to include expropriations as final stage of escalation, but you guessed, politics)

2. A European Housing Fund that works:
- countercyclically, to curtail use of public bad
banks as a conveyor belt for passing houses from commercial banks to institutional portfolios (Ireland, Spain).
- structurally, to invest in social housing

3. Housing Red Flag Rule on new European-level regulatory initiatives: European regulators must ensure that new regulatory initiatives do not inadvertently de-risk housing asset classes for institutional landlords (hello securitization of non-performing loans).

4. An extended macroprudential mandate for European central banks to react to house price inflation through the tighter, but socially just, regulation of mortgage lending following examples from Sweden and New Zealand.

learnt lots from @sebastianmkohl & other housing scholars, suffered through mapping EU financial regulation on housing assets, fought w Preqin data on institutional landlords - shocking to find such lack of data & transparency on something so fundamental to European citizens

finally, check out this interactive tool on deals across European cities that wizzard @sebastianmkohl made - it's a lower-bound estimate (since lots of data points missing in Preqin)

dataverse.shinyapps.io/big_realestate…

and here Guardian with a rather misleading title - we did not 'find' that institutional landlords increase prices, but argue that their growing footprint will accelerate negative aspects of financialisation of housing.

theguardian.com/world/2022/jan…

and yes, Blackstone is correct, our study stresses - in intro & main text - that institutional landlords have small footprint in housing.

But we stress secular pressures for that footprint to grow - and that we cannot rely on institutional landlords to self regulate.

we also cite Blackstone's lobbying in Spain against 30% target for social housing in institutional portfolios and its calls for state subsidies - institutional landlords punch above their (seemingly small) weight and need to be properly regulated.

take our study as an attempt to define what is at stake in the coming age of institutional landlords, so the state and activists are - for once - ahead of the curve in containing/disciplining financial capital.

'I saw it coming' - I will proudly and sadly tell my nephews, visiting them in their high rent, Social Taxonomy eligible flat.

if anything, our first paragraph blames the state for increasing house prices - which also works to derisk housing asset classes for institutional capital

all burst property bubbles lead to an institutional landlord:

Oaktree replicates its Ireland strategy, and China replicates Irish state strategy of relying on private equity as countercyclical force

ft.com/content/88f97a…

oh hello Irish derisking state, what a reliable partner for institutional landlords

businesspost.ie/houses/ires-re…

this @hvogell on private equity in US housing shows in great detail same political economy of institutional landlords we documented for European cities - critically, the role of the state in subsidising institutional landlords via derisking practices

propublica.org/article/when-p…