Some affordable-housing developers have 30-year federal tax credits hit that mark in the next five years. After that, landlords can charge whatever rent they want.
NEW YORK – The United States is at risk of losing about 200,000 affordable housing units over the next five years, as government protections end at hundreds of rental properties and landlords become free to set their own rents.
The federal government relies on a 30-year tax credit as its main program to encourage developers to build affordable housing, and a wave of agreements that helped low-income renters is set to expire. Once that happens, it gives apartment owners the option to charge market rate for their units instead of continuing with the government program.
In this case, many landlords are expected to drop out of the program since the U.S. just saw one of the highest periods of rent growth in history.
By 2033, some 100,000 units of tax-credit housing could expire each year unless owners opt to secure longer affordability agreements or obtain new subsidies, according to Peter Lawrence, director of public policy and government relations at the Novogradac accounting firm, which specializes in tax credits.
Some owners of tax-credit buildings have found ways to keep rents down. Many are nonprofits and obtain new tax credits or other local funds to maintain building operations for many more years.
In Florida, for example, many expiring buildings have already taken on additional subsidies to keep tenants locked into lower rents for longer periods, according to an analysis of tax-credit properties by the Shimberg Center for Housing Studies at the University of Florida.
Source: Wall Street Journal (07/10/23) Parker, Will
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