New York, October 21:

One of the last redoubts of cheap housing in the booming environment of Manhattan has been sold to a property company for $5.4 billion, in the largest residential deal in American history.

The sale of 110 blocks of flats in lower Manhattan marks the end of a fierce battle for ownership of the area, known as Stuyvesant Town and Peter Cooper Village. The area, whose 11,232 apartments are largely rent controlled and populated by working class Manhattanites, is seen as a crucial element of New York’s diversity.

Tishman Speyer Properties, which controls some of the city’s best-known landmarks such as the Chrysler Building and the Rockefeller Center, was the highest bidder, fighting off a $4.5 billion offer from tenants, who fear the flats will gradually be turned into luxury accommodation. The insurance company MetLife built Stuyv-esant Town and Peter Coo-per Village in the 1940s wi-th state help, in return for an agreement to keep the rents at below market levels — typically half the cost of uncontrolled rents. Tho-usands of returning second world war veterans were housed there with core wo-rkers such as teachers, nur-ses and service workers.

The neighbourhood has a postwar other-worldliness, sandwiched between the high-rise opulence of mid-town Manhattan, and the fashionable East Village. On an island in which one-bedroom flats can sell for more than $1 million, the concentration of cheap rented homes is increasingly unusual, and, its tenants argue, essential. But MetLife rejected their pleas.

Flats will now be rent controlled until the occupant leaves or dies, or until rent and income thresholds are reached. Tishman Speyer’s president, Jerry Speyer, said, “No one sho-uld be concerned about a sudden or dramatic shift in this neighbourhood’s mak-e-up, character or charm.”

The availability of housing for lower-paid families in Manhattan has drastically declined in the past 10 years. “We have a housing emergency in New York city today. We have got to create new units and preserve the affordable ones we already have,” said Daniel Garodnick, a city councillor who helped prepare the tenants’ bid.