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Wealthy San Francisco couple land a record $ 475,000 buyout to vacate their three-decade-old luxury apartment, an indication of what some landlords are willing to pay for tenants to give up their homes in a city with tight control booming market rents and rents.
The buyout is considered the most important in the history of the city and reflects the high value of the apartment.
The tenants, a couple in their 60s with teenage children, were paying $ 12,500 per month for a seven-bedroom, eight-bathroom two-unit apartment. It occupied most of the top floor of a century-old building with stunning views of the bay, the Golden Gate Bridge, and Presidio Park. The couple declined to be named.
San Francisco has one of the strongest tenant protections in the country, a fact that encourages 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; the current increase is less than 1%. Landlords cannot evict tenants without a valid reason, such as non-payment of rent.
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 landlord and tenants have entered into a voluntary agreement.
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 this is an 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 in just over three years.
“After that it’s going to be gravy, so it’s a great investment,” MacDonald said.
MacDonald is suing owner Friedman Properties on behalf of the “fairly well off” tenants of nine other units who have moved out of the Presidio Heights building since March, unable to withstand the constant noise and dust of ongoing renovations.
Marty Friedman, who is listed as the company’s authorized agent, did not respond to a request for 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 COVID-19 pandemic hit, and the owners felt they couldn’t postpone the work, he said. The tenants in the $ 475,000 buyout offered to move in exchange for money, he said.
The real problem in San Francisco and California as a whole is the prohibitive cost of building housing, said Wasserman: “Until we fix this problem, we will have these rental problems because more and more people will become tenants.
The Financial Times was the first to report the deal.
More than 300 tenant buybacks were filed with the San Francisco Rent Board in 2020. MacDonald said the average buyback is $ 50,000.
San Francisco rents fell during the pandemic, but they 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 Assn., Which represents about 4,500 landlords, said they accept rent control as part of business in the city. But there are situations where wealthy tenants cling to a rent-controlled apartment, he said.
“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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