Managing fictitious capital: The legal geography of investment and political struggle in rental housing in New York City

Since 2001 investors have purchased rent-regulated housing in New York City with heightened expectation for financial performance, placing pressure on tenants and communities through increasing rents, harassment, eviction, and when financial targets are not met, physical deterioration of buildings. At the heart of this investment strategy is fictitious capital, the extension of credit based on assumptions about future events. This paper shows that beyond assessments about the truth or rationality of the expectations underlying fictitious capital, the management of value as a problem is at stake. When the expectations underlying fictitious capital are not realized, a network of actors engage in a set of legal-financial practices to manage the value of rent-regulated multifamily buildings, including banking regulation and its exception, mortgage securitization and special servicing, distressed debt markets, rent stabilization, and foreclosure law. The breakdown of the assumptions of fictitious capital reveals new challenges and opportunities for tenant activism and policy to intervene in preserving rent-regulated housing. The paper focuses on how this financialization of housing not only serves as a moment for the increasing role of financial actors and imperatives, but also how it drives tenant activism and policy to engage legal-financial practices to redefine the tenant-landlord relationship and to tie financial expectations more closely to the material reality of tenants and communities.