Real estate has seen growing interest as an asset class for investment institutions looking for long dated steady yielding assets, such as pension funds. However, until now much of the interest had been in commercial property such as office spaces and malls. But increasingly, residential real estate has also become a part of many portfolios. This has led to concerns from residents as the bargaining power gets consolidated with a few large landlords and hence are likely subjected to rental hikes at will. This long read in The Guardian is about how such an uproar among residents in Denmark resulted in a change in legislation which makes it hard for large institutional asset owners in real estate to gain at the expense of its tenants. Because the institution involved in this case was Blackstone, the American private equity giant, the new law is come to be known as the Blackstone law.
“The company has acquired houses and apartments at a voracious speed in cities around the world. Like any company, Blackstone is focused on creating returns for its investors. Residents in some Blackstone properties have accused it of raising rents while reducing overheads…
…In most places where it began to buy up residential properties, Blackstone faced little opposition from governments or politicians. That is, until it arrived in a small Scandinavian country, which, when confronted with the indifferent force of this global real estate company, decided Blackstone had gone too far. “Blackstone was like a boxer walking into a heavy right-hand hook to the jaw,” Curt Liliegreen, a Danish housing economist, told me. “They didn’t see it coming. They picked totally the wrong place.”
Blackstone began owning residential real estate in the US post the global financial crisis in 2008 when plenty of homes were available cheap as mortgage holders defaulted. It then expanded into Europe – Spain and Sweden before entering Denmark.
A new landlord had started buying up properties in Copenhagen, blitzing through the city at high speed. Some tenants said they would arrive home to find their apartment block wrapped in scaffolding and workmen traipsing up and down the stairs. One tenant wrote to Højte that their new landlord had stressed her out with letters and “unpleasant measures”. Another said they had been sent five reminders about late rent, despite having paid on time every month. The same tenant complained about the landlord’s “ice-cold communication”. Others believed the landlord was sprucing up the buildings for a more affluent class of resident, making cosmetic improvements to stairwells and facades. To some tenants, these renovations seemed as much about disrupting their lives as fixing anything.
The new landlord was a small Danish firm called 360 North. Behind its shopfront was a giant. Blackstone had moved into Denmark, paying its operating partner 360 North to buy up apartment blocks on its behalf. For the tenants union, gaining an overview of exactly how many apartments Blackstone owned in Copenhagen was tricky. When it bought a building, it would set up an individual property company, a “PropCo”. Each block of apartments was owned by a different “PropCo”, which was in turn owned by a holding company, a “HoldCo”, which was in turn owned by another holding company, a “TopCo”. And to make matters more complicated, that TopCo was owned by another holding company, Calder Holdco, which was based in Luxembourg. This structure is a hallmark of the asset management industry. “It is like a spider’s web”, Claus Højte said of his attempts to find out which properties Blackstone ultimately owned.
Copenhagen is a small city where outrage travels fast. Soon, the media started to take an interest in tenants’ stories. One told Danish TV that her apartment had been soaked in rainwater after workmen removed parts of the roof, and another said cracks had started to appear in her ceiling. A TV channel broadcast a documentary called City of the Rich, which cast Blackstone as its villain. People suspected the motive behind the company’s disruptive renovations was to get tenants to leave so it could renovate their homes and charge new occupants higher rent.
360 North even offered some residents sizeable sums to vacate their properties for good. Once the company had renovated an apartment for new tenants, it would sometimes double the rent. (Owing to a law introduced in the 90s, landlords that invest a certain amount in renovating old rent-controlled apartments can raise the rent when a new tenant moves in, meaning new tenants can end up paying close to the market rate for such apartments.)
….It helped that some residents were well-connected and knew how to get journalists and politicians to listen. A few of the people living in Holckenhus were civil servants, artists and writers. Some co-wrote an op-ed for a major Danish newspaper; others convened a meeting with a minister. The media ate up their stories, spotting a convenient narrative: a plucky social democracy versus an unrepentant American investor.
“What happened in the Blackstone [case] was the middle classes discovered they were in danger of not being able to house themselves,” Claus Højte told me. “In Denmark, when something starts affecting the middle classes, something political happens.”
…By autumn 2019, the backlash against Blackstone had made it all the way to parliament. Mette Frederiksen, the new prime minister, attacked the company in a speech. “An American private equity fund is purchasing our houses,” she declared. “Does greed know no boundaries?” Dybvad spent that winter hammering out the details of a plan for a new law that would stop Blackstone and other companies from speculating on Danish housing. This would also be an opportunity to devise a high-profile policy that would burnish his reputation as an ambitious new minister.
He wanted to introduce a new law that would prevent landlords from hiking the rent on apartments they renovated until 10 years after they had bought them. It would stop not just Blackstone, but every investor in Denmark from gambling on Copenhagen’s old properties. Unsurprisingly, Denmark’s landlords association and pension funds were furious at the proposal. Dybvad was a pragmatist; he knew he desperately needed the support of his opponents to have any chance of passing a bill. So he shortened the rule to five years – long enough to put the brakes on speculation and prevent landlords from making quick profits, but moderate enough to appease rightwing members of parliament.
Finally, in July 2020, the Danish parliament passed what became informally known as the Blackstone Law, or Blackstone indgreb.”

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