How to sell a flat to tenant (on a massive scale)

[Hugues Armand-Delille]

Humor me for a moment and Imagine you owned a portfolio of say 700 doors in a large city called Metropolis. Metropolis real estate is growing strongly both rents and housing prices are increasing strongly in the last 10 years (up 50% +) . Fundamentals are good (very positive demographic inflow, interest rates are low, tourism is up, local economy is booming). There is a lot of competition in the market.

The city is historically very very tenant friendly. There are a lot brakes put against raising rents. Metropolis has a rent stabilization policy. In metropolis there is a law that protects Tenants for 9 years from being removed from their lease when an investor buys a rented flat, even if the flat is meant for personal use!!

You would like to benefit from the market boom by selling your units high. The problem is 70% of your portfolio is tenant occupied. To make thing worse, the majority of these lease are old leases and most of these unit are yielding about 1-2,5% gross. (the operating costs have gone up with time but rents can not move). 

To get people out and raise rents, owners and investors in Metropolis are having to pay "severance packages" for tenant of 5 - $10,000 / $20,000 / $25,000 sometimes more depending on surface and other factors.

Your solution is to build model to sell these unit to the tenants (on a massive scale).

The model you come up with to tackle these 550 low yielding units you portfolio is the following: Instead of using bribes to kick people out you decide to "subsidizing tenants'" into 1st time ownership. i.e. you want to help them to buy there own flat (at least the tenants who are decent earners).

Instead of using money to get tenants out, the model would be to help them get financing by sponsoring a portion of the deposit on the Mortgage.

Finding financing partners is a big issue, yes. But politically this would fit the general agenda of the city to keep metropolis free from Evil speculators. How would you, My dear reader, go about carrying out this plan?