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SAN FRANCISCO (AP) – A wealthy couple in San Francisco have landed a record buyout of nearly half a million dollars to vacate their three-decade-old luxury apartment, an indication of what some homeowners are willing to pay for tenants are abandoning their long-standing homes in a city with tight rent control and booming market rents.
The $ 475,000 buyback 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 per month for a seven-bed, eight-bath apartment made up of two units. It occupied most of the top floor of a century-old building with stunning views of the bay, the Golden Gate Bridge, and nearby Presidio Park. They refused to be named.
San Francisco has one of the strongest tenant protections in the country, encouraging tenants to hold on to apartments as market prices rise. While California recently passed rent controls and other tenant protections, San Francisco approved its Rent Control Ordinance in 1979 as a way to alleviate 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 set at less than 1%. Landlords cannot evict tenants without a valid reason, such as non-payment of rent. Homeowners who wish to move into their own single family home must pay tenants to move out. The maximum amount that tenants of a dwelling can receive for moving is $ 22,000, with an additional $ 5,000 for households with minor children or persons aged 60 and over.
In this case, the relocation fee did not apply; the owner and the tenants have entered into a voluntary agreement for their departure.
Steven Adair MacDonald, the attorney representing the couple, said there was mixed reaction to a six-figure buyout enough to buy a home in most parts of the country.
“The lawyers for the landlords think it’s outrage, and on the tenant side everyone is excited, they think it’s great,” he said. But MacDonald thinks the owner is the winner, as he will be able to rent the apartment for $ 25,000 a month and recoup the buyout amount in just over three years.
“After that it’s going to be gravy, so it’s a great investment,” MacDonald said.
MacDonald is also suing owner Friedman Properties on behalf of “fairly well-heeled” tenants of nine other units who have moved since March, unable to withstand the constant noise and dust from ongoing renovations to the Presidio Heights building.
Marty Friedman, listed as an authorized agent for the company, did not respond to a phone call seeking comment.
But his lawyer, David Wasserman, said it was incorrect to say his client wanted to kick the tenants away. The building needed improvements that were planned before the pandemic hit, and the owner felt he could not postpone the work, he said. The tenants in the deal offered to move in exchange for money, he said.
The real problem in San Francisco and California is the prohibitive cost of building housing, Wasserman said, and “until we fix that problem we’re going to have these rental problems because more and more people will become renters.” “.
The Financial Times was the first to report the deal.
Over 300 tenant buybacks were filed with the San Francisco Rent Board in 2020. MacDonald said average buybacks are $ 50,000 and they increase given the difference between market rent and length of residence. tenants.
San Francisco rents fell during the pandemic, but they still remain among the highest in the country. The average rent for a one-bedroom unit is $ 2,750, according to the Zumper rental platform. The median selling price of a home is $ 1.5 million, according to Redfin.
Renter groups say without rent controls poor and working-class residents would be driven out of San Francisco, unable to keep up with market rents.
Charley Goss, who manages government affairs for the San Francisco Apartment Association, said the landlords accept rent control as part of business in the city. But there are situations where the wealthiest tenants hang on to a rent-controlled apartment, he said. The association represents approximately 4,500 owners.
“Paying half a million dollars to a wealthy person who keeps a rent-controlled apartment in a city plagued by a housing shortage and affordability crisis is kind of a testament to how our local rent control distorts the market, ”he said.
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