Rents are out of control. These tenants are trying a new tactic to fight back.

By Aarthi Swaminathan

Striking renters are calling on the federal government to bring what they call neglectful landlords in line

Five years ago, Anna Heetman and her partner moved from New Jersey to Missouri into what they believed to be an affordable apartment rental in a building called Independence Towers. Heetman was starting law school, and $585 a month sounded like a fair deal at the time.

She later found out that it was anything but.

Heetman, who has since graduated, gradually saw her monthly rent rise to $860 a month while living conditions deteriorated, she said.

At one point, she added, she didn't have hot water for two weeks. She found herself scooping out water from her bathtub when she was done showering due to a drain issue. Benches and chairs were missing from the outside of her apartment unit.

"There are so many things that I'm really angry about," Heetman told MarketWatch in an interview. "The fact that they're raising the rent and actually taking away amenities from us, and doing less year by year - that's what really gets me."

Heetman and her fellow renters' frustration has boiled over into a rent strike, part of a broader effort by the tenant-advocacy group KC Tenants and the Tenant Union Federation to push for new building ownership and fight what they say is disrepair and too-high rents.

Starting Tuesday, she and the majority of her neighbors in the Independence, Mo., building began withholding rent in an effort to win better living conditions. Another group of tenants in Kansas City, Mo., was also organizing a strike starting that day.

The two rent strikes are the first in the country to specifically target the Federal Housing Finance Authority, a federal agency that regulates the government-sponsored enterprises Fannie Mae and Freddie Mac. Fannie and Freddie are a critical part of the U.S. economy, as they guarantee and back a significant chunk of the country's mortgages.

Why striking renters are targeting the FHFA

When U.S. cities expanded rapidly in the 20th century, tenants deployed rent strikes as a tactic to push back against terrible living conditions, withholding rents from their landlords in order to eke out a set of demands. But today's rent strikes come at a time when tenants struggle with sky-high housing costs.

During the pandemic, for example, thousands of tenants went on strike to call for cancellation of rent payments and draw attention to a lack of housing affordability as they lost their income due to widespread shutdowns.

Rents have rapidly escalated over the past few years, rising 1.5 times faster than average wage growth, according to an analysis by the real-estate company Zillow (ZG). Renters in big cities have seen even steeper increases.

Nationally, the median rent was roughly $1,400 in August, according to Apartment List, an online rental marketplace. That's up over 20% from the start of 2021.

Residents of Heetman's building say they have faced neglect despite the rent hikes. The tenants are targeting the FHFA because the buildings they live in were bought by corporate landlords with mortgage debt backed by Fannie and Freddie, which are ultimately governed by the agency.

President Joe Biden, according to a letter from the Tenant Union Federation, has the ability to direct the FHFA to limit rent increases in an estimated 75,000 properties backed by Fannie and Freddie.

The 11-story building Heetman and her neighbors live in was managed by an entity owned by FTW Investments, the advocacy group said, and the owner had received $5.5 million in debt backed by Fannie Mae to purchase the building in 2021. The property is now managed by a receiver, who is appointed by and works for the court, during a foreclosure process.

FTW Investments and Webb denied ever having owned the property, but said they had managed it in a "professional" capacity from the company that owned it.

The FHFA told MarketWatch it was aware of the issues raised by residents in both buildings where tenants have gone on strike. Sandra Thompson, the director of the FHFA, was in Kansas City, Mo., in the spring and spoke with residents of the properties to hear their concerns, a spokesperson told MarketWatch.

The FHFA is also in touch with the advocacy group organizing the rent strike, Fannie Mae and others involved to identify ways to address the most urgent property issues, the spokesperson said.

"The work on tenant protections in Kansas City is active and ongoing," the FHFA spokesperson said, "and there's more work to be done."

The FHFA added that it had introduced new tenant protections for apartment buildings in July. Under the new policy, effective in February 2025, landlords who take out mortgages from Fannie and Freddie must provide tenants with a 30-day notice of a rent increase, a 30-day notice of when a lease is expiring, and a minimum five-day grace period for late payments.

'Decades of neglect and disinvestment'

The rent strikes of 2024 carry a different tone than ones in years past, Victor Monterrosa, an adjunct professor and the managing director of the Housing Justice and Tenant Solidarity Clinic at the Rutgers School of Law in Newark, N.J., told MarketWatch.

"There's been a real issue of allowing for decades of neglect and disinvestment," he said, and the fact that rents have rapidly increased over the last few years "makes people desperate."

And without legal recourse, tenants resort to a rent strike - which carries the risk of not only eviction, but also potential arrest.

Even though rents have risen at a relatively slower pace over the last two years, the extended period of rising rents through the pandemic has pushed many renters' finances to the brink.

About four in 10 households rented their homes in 2022, and among them, a record 22 million spent more than 30% of their income on rent and utilities, according to the most recent data available from Harvard University's Joint Center for Housing Studies.

Nationally, asking rents are 20% over prepandemic levels, economists at the credit-rating agency Moody's (MCO) said in a recent report.

In swing states like North Carolina and Nevada, renters are experiencing a higher cost burden compared with four years ago, they said. Population growth has pushed rents higher while incomes have failed to catch up, leading to a lack of affordability, they said.

Several states and cities, including New York City and San Francisco, have imposed various forms of price controls to limit rent hikes. Earlier this year, Biden proposed a national rent cap. Experts are critical of the impact of rent-control laws, as MarketWatch previously reported.

But many states - like Missouri - don't have policies to control rent increases.

Monterrosa, a longtime activist on social-justice issues such as housing, said he has seen a trend of people increasingly being underemployed or working in jobs for which they are underpaid. That's affecting their ability to pay rents in full and on time, he said.

"These folks require a much more complex approach," he added. "There are folks right now who still desperately need help and for whom there is no rental assistance available."

Heetman, the Missouri tenant, recalled feeling validated by the response of a congressman who visited her apartment in early September. After touring some of the apartments in her building, Rep. Emanuel Cleaver II, a Missouri Democrat and former mayor of Kansas City, Mo., was quoted in the Kansas City Star as saying "I would have to be mentally ill to say, oh, no, please pay your rent."

That visit was "a grounding moment for me," Heetman said. After living in the building for five years, she had gotten used to its problems - but his reaction reminded her that her reality was not normal.

"That really stuck with me," she added.

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-Aarthi Swaminathan

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