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March 13, 2023

Solutions to the rise of Corporate Ownership of Affordable Housing Units

By faithtriggs

In Part 3 of our blog series on Corporate Investors Purchasing Affordable Homes, we discuss possible solutions and strategies to address this issue.

There is no one solution that will solve the problem of corporate ownership of affordable housing units. A combination of policy change on the local, state, and federal levels will help, and the expansion of programs that support current or prospective homeowners can mitigate some of the impact.

In December 2022 HUD Secretary Marcia Fudge’s remarks during a quarterly meeting of the Office of Policy Development & Research (PD&R) to specifically address the challenges as well as create solutions stated: “Institutional investors have access to resources that make them impossible to compete with. This is especially true for minority first-time homebuyers, who already face institutional barriers.” Fudge added: “HUD has taken steps to ensure that our defaulted assets will land in the hands of non-profits or individual owners, but this is a much bigger problem that will take everyone coming together to figure out how to sustain housing that people can afford.”

The silver-lining is that government, local jurisdictions, non-profits and community groups are collaborating across the country to create and implement solutions that will give homeowners and first-time homebuyers a fighting chance to participate in creating generational wealth.

Locally, Mecklenburg County followed up on its initial meeting from the Spring of 2022 by having staff report back on possible solutions this past November. Actions they plan to pursue including keeping the issue in the forefront along with the following:

  • Buy land and offer it at less than fair market value for affordable housing with the right terms & conditions
  • Expand affordable housing programs & need-based rental assistance
  • Allocate public funds for legal representation for certain qualifying tenants facing unsafe situations, predatory leasing practices, excessive fees
  • Add actions for de-incentivizing corporate landlord homeownership to the legislative agenda
  • Support grassroots community education campaign
  • Engage homeowners’ associations to update bylaws to cap single family rental properties in communities

Additionally, the Commissioners approved $500,000 as part of an education campaign to ensure that the community understands the implications of institutional investing on their communities and what they should consider when they decide to sell their homes.

During a recent panel discussion at the Habitat on the Hill 2023 Advocacy for Impact Conference in Washington, D.C., panelists shared some of the ways they hoped to lessen the impact of institutional investor purchases including:

  • Creating acquisition funds for the public purchase of properties
  • Improving tax incentives for affordable development
  • Improving land use policies with bonuses for building and preserving of affordable housing
  • Additional owner occupancy requirements and renter protections
  • Expanding the use of HUD Note Funds where non-profits can purchase these notes as another source of available housing at discounted prices
  • Sellers not having to pay Real Estate Excise Taxes when land is sold to non-profits
  • Implementing new and updated rezoning codes to expand opportunities for more affordable housing
  • Provide/expand Right of First Refusal (ROFR) for non-profits working to expand affordable housing
  • Expanded and expedient access to Vacant, Abandoned Tax Delinquent (VAT) properties

Ultimately, continued dialogue with your state and federal representatives about expanding the abilities of local and municipal governments to regulate corporate activity in real estate markets could contribute to the solution. A system-wide restructuring of residential real estate markets that prioritizes the well-being of low- to mid-income individuals over the financial interest of large corporations must be considered, balancing free-market competition and the housing needs of working families and individuals still hoping to achieve the American Dream of homeownership.

To hear more about the challenges to affordable housing and homeownership, join us on Tuesday, March 14, 2023 at 6 p.m. at CPCC’s Dale F. Halton Theater for the Habitat Charlotte Region annual Building Futures Affordable Housing Symposium. This year’s keynote speaker is pathfinder, community curator and storyteller Mia Birdsong, author of How We Show Up: Reclaiming Family, Friendship and Community.

To register for this free event, click here.

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