SAN FRANCISCO — A wealthy San Francisco couple set a record buying nearly half a million dollars to vacate their luxury apartment of three decades, a sign that some landowners have lost their lives in a city for tenants after their long time. What are you willing to pay to leave the house? Strict rent controls and rising market rents.
The $475,000 purchase is considered the largest in the city’s history and reflects the apartment’s high value. The tenants, a couple in their 60s with teenage children, were paying $12,500 a month for a seven-bed, eight-bath apartment consisting of two units. It occupied the top floor in a century-old building with expansive views of the bay, the Golden Gate Bridge and the nearby Presidio Park. He declined to be named.
San Francisco has one of the strongest tenant protections in the country, encouraging tenants to stay in apartments as market prices rise. While California recently adopted rent controls and other tenant protections, San Francisco ratified its rent control ordinance back in 1979 as a way to ease the city’s housing crisis.
This means that landlords can only increase the rent on certain properties by a certain amount each year, with the current increase pegged at less than 1%. Landlords cannot evict tenants without a valid reason such as non-payment of rent. Owners who want to move into their single family home will have to pay tenants to vacate. The maximum amount for relocating tenants in a unit is $22,000, with an additional $5,000 for minor children or children age 60 and older.
In this case, the transfer cost did not apply; The landlord and the tenants made a voluntary agreement to release them.
Steven Adair Macdonald, the attorney representing the couple, said the response has been divided into six-figure purchases that are enough to buy homes in most parts of the country.
“Landlord lawyers think it’s an outrage, and on the tenant side, everybody’s excited, they think it’s great,” he said. But McDonald thinks the landlord is the winner, as he will be able to rent the apartment for $25,000 a month and recover the buyout amount in just three years.
“After that, it’ll be gravy, so it’s a great investment,” McDonald said.
McDonald’s is also suing the landlord, Friedman Properties, on behalf of “fairly well-heeled” tenants in nine other units that have moved out since March, having to endure the constant noise and dust from ongoing renovations in the Presidio Heights building. are unable to.
Marty Friedman, listed as an authorized agent for the company, did not respond to a phone call requesting comment.
But his lawyer, David Wasserman, said it was wrong to say that his client wanted to evict the tenants. He said the building needed upgrades that were planned before the pandemic hit, and the landlord felt they couldn’t stop the work. He said that in this case the tenants offered to leave in exchange for money.
The real issue in San Francisco and California is the prohibitive cost of building housing, Wasserman said, and “unless we address that problem, we are going to face these rental challenges as more and more people are renting.” become.”
The Financial Times was the first to report the settlement.
More than 300 tenant buyouts were filed with the San Francisco Rent Board in 2020. McDonald’s said average buyouts are $50,000, and they’re increasing given the difference between market rent and length of tenant residence.
San Francisco rents declined during the pandemic, but they are still among the highest in the country. According to rental platform Jumper, the average rent for a one-bedroom unit is $2,750. According to Redfin, the median sale price for a home is $1.5 million.
Tenant groups say that without rent controls, poor and working-class residents would be driven out of San Francisco, unable to keep up with market-rate rents.
Charlie Goss, who handles government affairs for the San Francisco Apartment Association, said landlords accept that rent control is a part of doing business in the city. But there are situations where wealthy tenants live in rent-controlled apartments, he said. The association represents approximately 4,500 landlords.
“Paying half a million dollars to a wealthy person who owns a rent-controlled apartment in a city with housing shortages and an affordability crisis speaks volumes about the way our local rent controls distort the market,” he said. Said.