New Research Addresses the Growing Challenge of Ownership Obscurity in Rental Properties

New research published in Housing Studies, “Linking Landlords to Uncover Ownership Obscurity,” examines challenges in identifying the owners of rental properties in the context of the increasing financialization of housing. The authors of the study find that these challenges stem from the increasing prevalence of rental property investors who operate through multiple corporate entities, commonly LLCs (Limited Liability Companies), to protect their assets, effectively obscuring their ownership. Ownership obscurity hinders efforts to understand trends in property consolidation, eviction, exploitative property management strategies, and other issues associated with the financialization of housing. Through innovative matching of corporate and tax data with property records, the authors find evidence of growing consolidation of rental housing ownership and an unequal concentration of evictions and other housing issues among the most consolidated landlords in Boston, MA. The authors recommend reforming LLC laws to continue providing landlords with important liability protections while improving ownership transparency.

In the wake of the 2008 global financial crisis, the U.S. experienced a surge in foreclosures of family-owned homes followed by the acquisition of these properties by investors seeking to operate them as rental properties. Since then, investors, especially institutional investors, have taken a greater interest in rental housing as an investment vehicle, a trend often referred to as “financialization.” This trend towards the financialization of housing is associated with significant consequences, including higher rates of evictions, housing cost burdens, and gentrification.

To better understand the prevalence of ownership obscurity and the extent to which it undermines efforts to study issues associated with the financialization of housing, the authors matched 15 years of tax records and corporate filings data to property ownership records in Boston, MA. Their findings revealed a notable trend of increasing consolidation of rental properties among larger landlords, particularly among those utilizing complex ownership structures. By accurately linking landlords to their properties, the researchers found a disproportionately large concentration of housing issues and eviction filings among the largest landlords in Boston. Specifically, the top 1% of landlords are responsible for more than half (52.8%) of all eviction filings. The top 5% of landlords cause over two-thirds (67.1%) of eviction filings, while the bottom 50% of owners only account for a small fraction (10.1%) of eviction filings in Boston.

As more landlords operate through LLCs, ownership obscurity will continue to grow. Meanwhile, efforts to accurately understand rental housing trends and attribute responsibility for housing outcomes to owners will remain a challenge. The authors recommend reforming LLC laws to provide greater transparency about ownership while continuing to afford landlords important protections from legal liabilities. To improve transparency even further, the authors argue for the creation of rental registries in which landlords are required to list all properties they own and operate.

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