PRS Financialization III: Renovictions

The Week in Housing 11/04/25

This is the third in my series on PRS financialization. This week we are looking at the so-called ‘renovictions’ phenomenon, whereby financial landlords acquire rental apartments en masse, renovate and jack up prices. This has taken place in a host of countries, mainly over the last ten years or so, from Sweden to Canada. As ever, a bibliography can be found at the end. Also, a reminder that the second in the Making Rental Housing Affordable series I'm organising with Sarah Sheridan will discuss the latest progress on Cost Rental Housing in Austria with Dr Gerald Koessl from 1-2pm on Wednesday April 16. We hope to zero in on some of the challenges that have emerged in the rolling out of Cost Rental here in Ireland, especially costs and affordability.

Renovation-led investment strategies on the part of institutional landlords have been identified in research on Denmark (Christophers, 2022), Canada (August & Walks, 2018) and the US (Raymond et al., 2021), as well as featuring in the literature on the financialization of former public rental stock in Germany and Sweden.

In the Swedish case, renovations are used to upgrade apartment standards, and thus take advantage of a particular aspect of Swedish rent regulation, which is generally very stringent, that allows for increasing rents following renovations. Although Sweden has a longer tradition of domestic institutional landlords, in more recent years a significant proportion of the rental stock has been acquired by international financial landlords.

Of course, rent increases may represent a desirable investment strategy in general, but Gustafsson (2024) argues that financial landlords are particularly interested in the uplift in capital gains, and therefore share price, that institutional landlords enjoy on the basis of increased rental income revenue. This is an interesting example of a specifically financial logic introduced via these novel investors.

Christophers (2022a: 711), discussing the Swedish case, but also the wider international picture, also notes that only very large financial institutions with significant access to capital have the scale and financial power to acquire, en masse, residential housing and invest in renovations:

Not many property investors are of a sufficient scale and financial wherewithal to undertake the combination of acquisition and largescale renovation that Blackstone pursued in say Sweden or the US; perhaps no others, meanwhile, would be big enough, not to mention motivated enough, to undertake the strategy in Sweden, the US, Berlin and Copenhagen more-or-less simultaneously.

Blackstone’s investment strategy has come in for particular scrutiny in Denmark. Between 2017 and 2019, Blackstone acquired approximately 2,300 rental units in Copenhagen, focusing on older housing in need of renovation (Christophers, 2022). As in Sweden, rents are tightly regulated in Denmark, but undertaking renovations can release properties form the rent-controlled segment, enabling significant rent increases. This can also lead to the displacement of tenants (Christophers, 2022a). Blackstone’s activity was strongly criticized in Denmark, including by the country’s Prime Minster: ‘An American private equity fund is purchasing our houses. Does greed know no boundaries?’ (then Prime Minister Mette Frederiksen, quoted in Christophers, 2022a: 709). The Danish Government went on to introduce a law, which became known as the ‘Blackstone Law’, that prohibited rent increases on renovated apartments for a period of five years.

On the other side of the Atlantic, August and Walks’ research in Toronto finds two principal investment strategies associated with a wave of institutional investment:

In affordable buildings in lower income post-war suburban neighbourhoods, revenues are squeezed from tenants and buildings… [through] rent increases, increased ancillary costs, and building-wide efficiencies. With a reliable supply of desperate renters, landlords can be sure that tenants will absorb increased costs or be replaced, and can nudge rents higher upon unit turnover. The second general strategy is gentrify-by-upgrading, “repositioning” buildings in coveted areas with strong markets, transforming them from affordable into luxury buildings… In some cases, such a repositioning strategy is coupled with a short-term investment focus and the flipping of repositioned buildings (August & Walks, 2018).

Acquisition and renovation strategies are often tailored to both national legislative contexts, for example the specific rent regulations in the Danish and Swedish cases, but also to local neighbourhood contexts and the path-dependent legacies of the built environment (Christophers, 2022).

The impact of renovation as a strategy of institutional investors is well documented, perhaps offering the best evidence of the potential negative impacts of financial landlords. As noted already, renovation can lead to higher rents for tenants, which can in turn trigger displacement (August & Walks, 2018; Gustafsson, 2024). Due to the concentration of ownership of rental stock in certain local markets, this can also be part of neighbourhood-wide gentrification processes (Gustafsson, 2024; Wijburg et al., 2018). Raymond et al. (2021), for example, found that neighbourhoods with investor purchases of multifamily residential properties had 33% higher odds of an eviction spike in the same year, and that such neighborhoods have 166 fewer Black residents and 109 more White residents over a six-year period compared to adjacent neighborhoods without such purchases. Overall, then, despite the potential benefits of renovation investment, the literature suggests that ‘[l]imited access to affordable housing is a primary consequence of renovations’  (Gustafsson, 2024).

Events & news

This today event, City Reimagined: Retrofitting for a Resilient Future, will look at Dublin’s efforts to secure ‘resilient connectivity’ through advancing the infrastructure, large-scale retrofitting of buildings, and integrating modern technologies for maintaining heritage. I had a piece in the Irish Examiner earlier in the week looking at the options for RPZ reform.

What I’m reading

Must listen Inside Politics podcast with Barra Roantree (TCD) on why building infrastructure is so expensive. A new book by Aideen Hayden looks at the role of tenant purchase in Irish housing policy. The latest in the Housing Agency’s Housing Insights series looks at the role of infrastructure provision in the development of Cherrywood.

References

August, M., & Walks, A. (2018). Gentrification, suburban decline, and the financialization of multi-family rental housing: The case of Toronto. Geoforum, 89, 124–136.

Christophers, B. (2022). Mind the rent gap: Blackstone, housing investment and the reordering of urban rent surfaces. Urban Studies, 59(4), 698–716.

Gustafsson, J. (2024). Renovations as an investment strategy: Circumscribing the right to housing in Sweden. Housing Studies, 39(6), 1555–1576.

Raymond, E. L., Miller, B., McKinney, M., & Braun, J. (2021). Gentrifying Atlanta: Investor purchases of rental housing, evictions, and the displacement of black residents. Housing Policy Debate, 31(3–5), 818–834.

Wijburg, G., Aalbers, M. B., & Heeg, S. (2018). The financialisation of rental housing 2.0: Releasing housing into the privatised mainstream of capital accumulation. Antipode, 50(4), 1098–1119.