Permanently affordable housing
If you're an affordable-housing group that's managed to scrape together grants to sell homes to low- or moderate-income workers, you might want those homes to always stay in the hands of your target audience. But state law isn't ideally set up for such a move, said Jim Kelly, an assistant professor at the University of Baltimore School of Law.
That's poised to change.
Under bills that passed the Maryland House and Senate recently, affordable-housing groups will get the right to repurchase such homes whenever the owners decide to sell. Right now, the options available to enforce that right have a time limit -- 15 years for a ground lease (after that, it becomes a redeemable ground rent) and 30 years for a deed restriction, Kelly said.
The new legislation "makes sure that long-term resale restriction agreements between a subsidized homeowner and the group that wants to protect that subsidy ... [are] clear, fair and enforceable," said Kelly, chairman of the policy committee at the Maryland Asset Building and Community Development Network. "And it's really been the 'enforceable' part that has been the most obvious problem under current law."
"They're getting a very good deal, moving into a home they couldn't afford otherwise," he added. "We wanted to be very clear that ... people would be free to make a promise to pass the good deal on."
What terms the buyer and affordable-housing group agree to upfront is left up to them, he said. When buyers later sell, they could get back everything they invested in the home plus a share of any appreciation, for instance.
What the legislation does specify is that groups' right to repurchase only lasts 120 days after owners notify them of the intent to sell -- sellers can't be indefinitely hung up by hemming and hawing. The groups must also register with the state Department of Assessments and Taxation, so there's a point of contact for owners who have lost track of where their benefactors/future buyers are.
Thoughts?
Kelly says affordable-housing activists in Garrett County are particularly happy about the legislation. They want to get started on a development project for worker housing in an area where prices are high thanks to Deep Creek Lake's attraction to affluent outsiders.
"In a relatively high-land-value, low-wage-base economy, you really have an ideal situation for a community land trust to think very long-term," he said.
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Comments
Thanks for this post. Permanent affordable is such a great topic and an important concept.
Posted by: Affordable Apartments Orange County NY | April 9, 2010 9:43 AM
Not sure I understand the ins and outs of it all, but something needs to be done to avoid a world where all but the affluent are consigned to trailer parks.
A few other countries, but not many, have schemes that allow lower income families to own, and hence maintain a sense of self-worth and pride, whereas it's much more common to have rental subsidy schemes. In Singapore, a range is set on the income of purchasers of certain homes or apartments both initially when the owners sell. Of course, in any market a housing bubble will put pressure on such schemes. But the idea is that the owners will take better care of the property if they own than in subsidized rent schemes.
Posted by: lisa | April 11, 2010 5:38 AM
Thank you for this information. Making affordable housing permanent might allow low- and middle-income families to buy their own houses without fear of the state law suddenly turning around if the real estate market suddenly encounters a speed bump again.
Posted by: real estate Hanoi | April 26, 2010 3:18 AM