BY CHARLES TASSELL ON JANUARY 25, 2023
The National Real Estate Investors Association issued the following statement on the Biden Administration’s recent announcement regarding renters and housing providers. Click here to read more.
The recent White House announcement regarding renters and housing providers is the largest overreach in recent history. It is an agenda driven effort meant to organize, unionize and politicize one-third of American residents. The effort is really addressing symptoms caused by federal policy and ignores centuries of state oversight of basic housing provider and renter laws, not to mention the 10th Amendment to the U.S. Constitution.
National REIA supports safe, quality and affordable housing and represents thousands of Americans investing in their communities providing housing options for their neighbors: the majority of rental housing in the U.S. The “inside the beltway” and “country club” approach to housing and a chronic federal hypocrisy on the issue is exactly why there is an ongoing supply problem, for example:
Anti-trust Rental Rate Setting:
The U.S. Department of Housing and Urban Development (HUD) REQUIRES local housing providers to develop their prices by developing a local price report of rents. In fact, HUD provides a Fair Market Rental Rate and has done so for years. The Feds set the rate for a majority of the rents in every neighborhood across the country!
Source of Income:
The White House acknowledges there is NO federal mandate or allowance, and yet intends to force a ban on the consideration of Source of Income – the real problem: housing providers do not want to participate in the 3,000 plus federal housing programs across the country because they are so poorly managed. Additionally, they each have their own set of rules and enforcement procedures – literally the first complaint about “patchwork” regulations the White House is stating is a problem!
Rather than follow the Justice Department’s rules on disability, HUD has created an issue of every pet becoming an emotional support animal and undercutting the validity of the truly disabled and their needs. HUD’s confusion in this area has increased difficulties across the country, generating false verification websites for Emotional Support Animals and placing them on the level of Trained and Certified Service Animals.
Regulations drive cost. The federal government has done more to increase the cost of housing, from recent interest rates hikes to new bans and requirements on everything from the quickly withdrawn gas stoves proposal, to types of furnaces, air conditioning systems, insulation, insurance, etc. Each new regulation increases the cost of housing and diminishes the likelihood of more investment in housing. Rehabbing of housing has become so expensive and time consuming, especially in some states, that housing is not re-capitalized and is ultimately lost, with new replacements becoming even more expensive. A reduction in housing development costs and associated regulations, and interest rates, not just for the millionaires who can qualify for ESG discounts but for neighborhood level developers and rehabbers would address the basic facet of supply shortage: straight from Economics 101.
Background Checks and Evictions are inexorably connected. Housing providers who cannot easily reach a solution with a problem renter will increase their barriers to entry with higher security deposits and more in-depth background checks in order to protect their asset. Understanding this tension is critical to addressing either side of the equation. This federal statement ignores the tension entirely, and the federal complicity by CFPB and HUD in complicating the issues.
While the White House stopped short of calling for National Rent Control and taking the first steps to nationalize housing, considering the backdrop of West Virginia vs. EPA in 2022, it seems the Federal government should focus on addressing its own problems before addressing state and local issues with more federal symptomatic failures. Housing has long term structural concerns that need serious dialogue and commitment to address, not utilizing questionable statistics to force an agenda; i.e. housing providers use the same rule of thumb as bankers regarding mortgages – no more than 30% of income can be allotted to housing cost. Stating otherwise conflates the issue with HUD funded programs that provide full housing support for the lowest income individuals, which are extrapolated and cited as a general housing burden. Individual business owners don’t make those type of decisions, only the government does that. It’s time for meaningful dialogue. We look forward to continuing to work with our 40,000+ members across the country to provide real solutions.
The National Real Estate Investors Association (National REIA) is a 501(c)6 non-profit association that has been representing the real estate investing industry for 35 years. With over 40,000 members and 120 local Chapters and affiliates, we are housing providers that help to rebuild communities, one house at a time. We thank our industry partner Home Depot for their support. To learn more visit www.nationalreia.org