San Francisco tenants get 6-figure buyout to leave luxe unit
SAN FRANCISCO (AP) - A wealthy San Francisco couple made a record purchase of nearly half a million dollars to vacate their three-decade luxury home, underscoring the efforts some landlords will be making to attract long-term renters in a city with strict rent control and rising market rents.
The $ 475,000 voluntary buyout is considered the largest in the city's history and reflects the high value of the apartment. The tenants, a couple in their 60s with teenage children, had recently paid $ 12,500 a month for a seven-bed, eight-bath apartment. It occupies most of a floor in a centuries-old building and offers expansive views of the bay, the Golden Gate Bridge, and the nearby Presidio Park. They refused to be named.
San Francisco has one of the strongest tenant protections in the country, encouraging tenants to hold onto the apartments as market prices rise. While California recently introduced rental price caps and other tenant protection measures, San Francisco passed its rental price ordinance back in 1979 to alleviate the city's housing crisis.
This means that landlords can only increase the rent for some properties by a certain amount each year, with the current increase being less than 1%. Landlords cannot terminate tenants without a valid reason, such as failure to pay rent. Owners who want to move into their own family home have to pay tenants for the evacuation. The maximum amount renters in a unit can receive for moving is $ 22,000, with an additional $ 5,000 for households with minor children or seniors 60 and over.
In this case there were no moving costs; The landlord and tenant have made a voluntary departure agreement.
Steven Adair MacDonald, the lawyer representing the couple, said the reaction was split to a six-figure buyout, which is enough to buy a home in most parts of the country.
"The landlord's lawyers think it's an outrage, and everyone on the tenant side is excited, they think it's great," he said. However, MacDonald believes the landlord will be the winner as they can rent the apartment for $ 25,000 a month and recoup the amount in just over three years.
"It'll be a sauce after that, so it's a great investment," said MacDonald.
MacDonald is also suing landlord Friedman Properties on behalf of "fairly well-heeled" tenants in nine other units who moved out since March and can't stand the constant noise and dust of ongoing renovations in the building.
Marty Friedman, listed as the company's authorized representative, did not respond to a call for comment. His lawyer, David Wasserman, did not immediately respond to an email.
The Financial Times was the first to report on the agreement.
In 2020, more than 300 tenant buyouts were submitted to the San Francisco Rent Board. According to MacDonald, the average buyouts are $ 50,000 and they increase given the difference between the market rent and the length of tenant residence.
San Francisco rents fell during the pandemic but are still among the highest in the country. The average rent for a one-bedroom apartment is $ 2,750, according to the Zumper rental platform. The average sales price for a home is $ 1.5 million, according to Redfin.
Tenant groups say that without the rent cap, poor and working-class residents would be evicted from San Francisco because they would not be able to keep up with market rents.
Charley Goss, who is responsible for government affairs for the San Francisco Apartment Association, said landlords accept that rent control is part of doing business in the city. But there are situations where wealthier tenants hold on to a rent-controlled apartment, he said. The association represents around 4,500 landlords.
"Paying half a million dollars to a wealthy person holding a rent-controlled apartment in a city with housing and affordability crises speaks to the way our local rent brake is distorting the market," he said.
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