Renowned journalist and HBCU professor Nikole Hannah-Jones took time to share her thoughts on the startup venture backed by Jay-Z and Will Smith. According to Hannah-Jones, the rent-to-own housing program is predatory to low-income participants.
Hannah-Jones tweeted her objections last week about why credit counseling is not the key to helping low-income families realize homeownership.
Credit counseling is not what will take low-income renters to homeowners, wealth will. All this program does is charge struggling people additional fees for being poor, which is what every other predatory lender does. https://t.co/qdo1y9wXVd
— Ida Bae Wells (@nhannahjones) August 1, 2021
“Credit counseling is not what will take low-income renters to homeowners, wealth will,” Hannah-Jones wrote. She then linked an article about Landis technologies, the startup that Jay-Z and Will Smith have made a financial investment into.
The way that the startup works is that Landis buys “dream homes” for participants who will rent the homes for two years. In that two years, it is expected that the renters will save enough money for a down payment. At the end of the two years, they would then buy the home from Landis.
“Financial inclusion is really important to us,” Cyril Berdugo, one of the founders of Landis, said. “An aspect of Landis that we’re very proud to be a part of is wealth creation for low-income Americans.”
The hitch in the plan?
If after two years the renters do not have the down payment money, Landis has the option to offer them more time or sell the home to someone else.
Another caveat is that the renter may not be able to secure a mortgage at the end of the two years. Basically, after paying rent and possibly other obligations like maintenance and insurance, the hopeful renters could end up constructively evicted.
Nikole Hannah-Jones’ perspective has historical merit. Not only has the rent-to-own industry been generally predatory to people of color, but since the 1950s, things have only gotten worse.