Edward Dever’s Post

WA needs more housing. Should it limit rent hikes, too? The relationship between property taxes and rent control is complex. Property taxes are typically paid by the property owner, who may attempt to recoup the cost through rent payments. Rent control, on the other hand, seeks to limit the amount by which landlords can increase rent. This can lead to a situation where property owners' ability to offset the impact of property taxes through rent increases is constrained by rent control regulations. As a result, some argue that rent control can lead to reduced real estate tax revenue, particularly in areas with a high percentage of rental properties, as it limits the ability of landlords to adjust rents in response to property tax changes The interplay between property taxes and rent control involves economic, social, and political considerations. While property taxes can influence rental costs, the impact of rent control regulations on the ability of property owners to pass on tax-related expenses to tenants is an important factor to consider in understanding the overall relationship between these two aspects. https://lnkd.in/g-TXyheq

What Will Biden's Rent Cap Proposal Mean for Investors and the Housing Market? President Joe Biden recently unveiled a bold plan that could significantly impact the real estate landscape: corporate landlords must cap annual rent increases at 5% for the next two years or risk losing valuable tax credits. This proposal, aimed at landlords owning over 50 units, is part of a broader strategy to address the severe housing affordability crisis gripping the nation. Some key highlights from the plan include: - Limiting rent hikes to 5% annually for two years to maintain depreciation deductions. - Special exceptions for new constructions or significantly rehabilitated units. - A push to sell federal land in Nevada for affordable housing development. Given the current environment, where rents have surged by 26% since early 2020 and many households are cost-burdened, this proposal could be a game-changer. However, there are important questions to consider: 1. Impact on Investments: How will capping rent increases affect the return on investment for corporate landlords? Could this lead to reduced incentives for property improvements or new developments? 2. Market Dynamics: With a potential cap in place, might we see a shift in how rental prices are set? Will this encourage more ethical practices among landlords or push some to exit the rental market altogether? 3. Long-term Effects: In the long run, will this policy help stabilize the rental market and make housing more affordable, or could it inadvertently exacerbate the housing shortage by discouraging new investments? 4. Affordability vs. Supply: While the proposal aims to make housing more affordable, could it also lead to a decrease in the quality and quantity of available rental units? How can we balance these competing priorities? These are critical considerations for investors, policymakers, and stakeholders in the real estate sector. It's essential to weigh the potential benefits against the possible unintended consequences to ensure a balanced approach to tackling the housing crisis. I’d love to hear your thoughts! How do you think this policy will shape the future of real estate investments and the housing market? Will it help or hurt in the long run?

At the NAR Policy Forum in Washington, D.C. on Thursday, Feb. 8, lawmakers discussed several ways to increase housing affordability and how to go about doing that. They dialed in on three proposed acts: the More Homes on the Market Act, Yes in My Backyard Act and Neighborhood Homes Investment Act. The More Homes on the Market Act would increase capital gains tax exclusion and incentivize longtime homeowners to sell. This would ensure homeowners can keep more of their investment when selling – single filers would have a $500,000 exclusion, while couples would have a $1 million exclusion. The Yes In My Backyard Act, which aims to increase the production of affordable housing, encourages localities to cut burdensome regulations. One result of this act would be allowing single-room occupancy development in multi-family housing areas. The Neighborhood Homes Investment Act would help support construction financing. Each $1 billion in Neighborhood Homes investments could result in: 25,000 homes built or rehabbed, $4.25 billion of total development activity, 33,393 jobs in construction and related industries, $1.82 billion in wages and salaries, $1.25 billion in federal, state and local tax revenues and fees, https://lnkd.in/ebEsDXsb

🚨 Breaking News: Biden Administration Proposes Cap on Apartment Rent Growth 🚨 The Biden administration has put forward a proposal to Congress, aiming to cap apartment rent growth at 5%. It’s intended to address the rising cost of living and provide relief to renters across the nation. Key Points: Nationwide Impact: If approved, this cap would affect approximately 20 million apartment units nationwide, offering much-needed stability for renters. Proposal Details: The legislation would apply to landlords with more than 50 units in their portfolio and would be in effect through 2026. Tied to Federal Tax Breaks: Landlords who comply with the measure would continue to receive federal tax advantages, including faster depreciation write-offs. Those who do not comply could lose these benefits, creating a strong incentive for landlords to limit rent increases. Additional Measures: The proposal also includes a call to repurpose some public land for affordable housing projects and allocate $325 million in grants from the Department of Housing and Urban Development to build 6,500 new housing units. President Biden stated, “Families deserve housing that’s affordable — it’s part of the American Dream. Rent is too high and buying a home is out of reach for too many working families and young Americans, after decades of failure to build enough homes.” In my humble opinion this proposal is dead on arrival! More importantly, removing tax incentives and penalizing the people who create the housing will only lead to less housing supply. They are focusing on the symptom and not the cause… If you want more affordable housing, both for sale and rentals you need more inventory. More supply means more options and lower prices.  What are your thoughts on this proposed rent cap? Do you think it will help alleviate the housing crisis or will it create new challenges? Share your comments and let’s discuss!

President Biden recently introduced a plan to address housing affordability and security in America that includes legislation giving corporate landlords a choice to either cap rent increases on existing units at 5% or risk losing federal tax breaks. Rent regulation is one tool to help more families afford their homes. Research shows that capping annual rent increases work best in combination with other measures like: > Ensuring annual rent increase limits remain in place between renters to discourage landlords from pushing out existing renters to increase the rent > Improving housing stability for all renters by expanding just cause evictions protections to cover all renters Learn more: https://bit.ly/3WdpY5k

What’s better than rent control? Landlords competing for tenants—not the other way around! How do you get competition between landlords? Not by making it less attractive to supply accommodation, but by making it less attractive *not* to—by taxing vacant lots and unoccupied dwellings. A “vacancy tax” applies not only to what real-estate agents call vacancies (properties advertised for rent), but also to unoccupied properties that are not on the rental market. To avoid the tax, the owners need to find occupants. In the case of vacant lots, that requires building. In the case of undeveloped subdivisions, it requires prompt development—not “drip-feeding” the market. What would property owners think of this? Consider: * If you’re a property investor, you’re betting on growth in the economy’s capacity to pay rent and service mortgages. So you need your fellow investors to be generating economic activity on their land—not just hoarding it. And you can’t have one rule for your fellow investors and another one for you! * A vacancy tax on residential property is good for commercial property owners because it keeps nearby residential properties populated with prospective customers and workers. And it’s good for homeowners with variable-rate mortgages because it’s anti-inflationary, making the central bank less likely to raise interest rates and more likely to lower them. (And of course the tax doesn’t apply to your home, which by definition is not vacant.) * A vacancy tax on commercial property is good for residential property owners because it keeps nearby commercial properties populated with employers and service-providers. It’s good even if you’re a commercial property owner because it keeps nearby commercial properties populated with complementary businesses that will attract foot traffic to *your* property! * A vacancy tax is not meant to be paid. It’s meant to be avoided! * A vacancy tax is good for general taxpayers because the *avoidance* of it requires economic activity, which expands the bases of other taxes, allowing their rates to be lower. (And of course a vacancy tax is good for real-estate agents because it generates more rental-management fees or—if owners decide to sell rather than let—sales commissions.) For all these reasons, the benefit of a vacancy tax for tenants need not come at the expense of owners. It can come out of economic growth, which is also good for owners. (HT: David Llewellyn-Smith.) https://lnkd.in/g6XmXfdU

In New York State, a pivotal housing deal is nearing finalization, designed to tackle the intensifying housing crisis by enabling new home construction and tightening eviction regulations. Anticipated by a coalition of landlords, tenants, builders, and their allies, the deal faces delays due to disputes over eviction limits and developer tax incentives. Governor Kathy Hochul, striving for a compromise, highlighted the negotiation's sensitivity, stating, "We feel we’re in the homestretch," but acknowledged the precarious balance, likening it to a "game of Jenga." A key issue is the "good cause eviction" bill, which aims to restrict landlords' eviction powers and control rent hikes, guaranteeing lease renewals. Landlords argue for tax concessions to offset rising costs and favor rent hikes for renovations on stabilized apartments. In parallel, labor unions and tenant advocates push for equitable wages and affordable housing commitments linked to new tax benefits. The proposed legislation seeks to mitigate New York City's dire affordability crisis, stimulate new apartment developments, and offer stability to low-income renters. The cessation of a prior tax break has slowed building, deepening the housing shortfall. The ongoing discussions also contemplate measures to lift Manhattan's housing density caps, transform vacant offices into housing, and expand eviction prevention aids to upstate tenants. Despite negotiation challenges and past compromises failing, there's a guarded hope for enacting a comprehensive housing strategy to address critical state-wide issues. Assembly Speaker Carl E. Heastie described the negotiation complexity, saying, "It’s like a circle of dominoes, they all kind of affect each other," indicating the interconnected nature of the deliberations. Jim Whelan, President of the Real Estate Board of New York, expressed a commitment to "advancing policies that create much more rental housing," while tenant advocate Cea Weaver voiced concerns about the negotiation's direction, particularly opposing any trade-offs that would undermine tenant protections. This housing deal represents a significant effort to address New York's housing crisis, balancing the interests and demands of a diverse array of stakeholders. #NYHousingDeal #GoodCauseEviction #AffordableHousing #NewYorkHousingCrisis #TaxBreaksForDevelopers #TenantRights #LandlordLobby #ConstructionUnions #HousingShortage #EvictionPrevention

Rent Increase Caps in Washington Pending Passage The Washington State House just passed House Bill 2114. If passed by the Senate, it will limit rent increases to 7% per year. This would only apply to existing tenants who renew their leases. There are exemptions. New buildings have a 10 Year exemption. Owner occupied multi-unit properties do as well. What will be the unintended consequences? There are always some. Maybe lease renewals get turned down more often. Maybe investors choose not to purchase rental properties, so supply goes down. A 7% increase is not low and is actually higher than average current increases. #rentalproperty #mortgageadvisor #kingcountyrealestate #snohomishcountyrealestate https://lnkd.in/gjQFRsae

President Biden is taking action to make renting more affordable for millions of Americans. Today, President Biden is announcing new actions to lower housing costs, including: Calling on Congress to pass legislation giving corporate landlords a choice to either cap rent increases on existing units at 5% or risk losing current valuable federal tax breaks; Repurposing public land sustainably to enable as many as 15,000 additional affordable housing units to be built in Nevada; and Rehabilitating distressed housing, building more affordable housing, and revitalizing neighborhoods, including in Las Vegas, Nevada.

A huge moment for New York real estate and the largest legislative housing deal in, perhaps, decades. We will need to see the legislative language before drawing final conclusions. There appear to be plenty of pro-development elements to the deal, with a significantly watered-down version of Good Cause Eviction as the price to be paid. Of course, as I've previously posted, the danger with even a watered-down Good Cause is that legislators can come back in future years and tighten the screws, as occurred with rent stabilization - but again, let's see legislative language and evaluate everything in context. ———————- “Hochul on Monday announced the “parameters of a conceptual agreement” that would revive a property tax break for rental projects in New York City and to ramp up eviction protections. The pact incensed some real estate interests and made tenant advocates unhappy as soon as the details were leaked Friday afternoon. The deal includes a version of “good cause eviction” and replaces the property tax break 421a. It also extends by six years the construction deadline for projects under the previous 421a program, which expired in 2022. The good cause eviction terms appear to include significant concessions by proponents, who have tried for several years to enact a far-reaching version of the policy. During a press conference Monday afternoon, the governor did not refer to good cause by name, instead saying that tenant protections against “price gouging” would be included. The original bill, proposed in 2019, would have given tenants the ability to challenge evictions that are the result of “unreasonable” rent increases, which it defined as more than 3 percent or 1.5 times the regional inflation rate, whichever is higher. The proposal moving forward, based on news reports and reactions from tenant advocacy groups, appears to set that limit at 10 percent, or the consumer price index plus 5 percentage points, whichever is lower. It excludes higher-priced units — apartments where the rent is 245 percent of the fair market rent — and buildings where the owner’s portfolio includes 10 units or fewer. New construction is exempt from good cause for 30 years, and the policy allows municipalities outside New York City to opt out, according to City & State.”