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Abstract

Over the past decades, institutional landlords – from real estate companies like the German giant Vonovia to private equity companies like Blackstone, or pension funds like ABP, the Dutch pension fund for government and education employees – have minted EUR 40bn of Berlin’s houses into assets that they rent out. This is roughly double the combined value of London’s
and Amsterdam's institutionally owned houses and it is a trend that has accelerated since the COVID19 pandemic. Europe’s residential real estate has become an attractive asset class for investors worldwide, supported by a range of government policies that are ostensibly aimed at homeowners: support for housing markets pushes up house prices and reduces affordability
for citizens, whereas income support for rent-paying households ensures stable returns for investors.

In response, citizens across Europe – from Berlin to Dublin and Madrid – have mobilized to pressure governments into taking action. From rent controls to better regulation or even expropriation of institutional landlords, the political tide seems to be turning against a decades-old phenomenon known as the financialization of housing. A mega-trend across housing markets everywhere,
it can be understood as (1) the disproportionate growth of housing finance relative to the underlying housing economy or (2) the turn to Housing as an Asset Class (HAC), captured by the increasing for-profit and financial orientation of actors in housing markets, and encouraged in Europe by a broad range of European-level financial legislation.

In this report, we explore the growing importance of institutional landlords such as Blackstone, focusing in particular on the mechanisms through which European legislation has accommodated their strategies to transform housing into asset classes. We use data to map the complex financial ecosystem behind private equity landlords. We then propose
a set of reforms that would de-financialize housing for the public good.