Affordable housing faces a shortfall as contracts expire
Many existing Section 8 developments have government contracts that are approaching expiration, which allow the landlords to increase rent at market rate, forcing the poor and middle class to either stay and pay or go elsewhere.
According to the National Housing Trust, about 75% of these units in New York and Massachusetts are close to expiration, and in California, Texas and Washington, 85-90% are nearing Section 8 conclusion by 2014.
This is a very serious problem, and development can only last for so long (land will run out). We need to create incentives for the existing landlords as well. So the question remains – what do we do to prevent Section 8 landlords from opting out of their contracts upon expiration?
According to the Tenants Union of Washington State, another problem facing tenants is prepayment. This offered landlords the option of receiving subsidies to help pay the balance of their mortgage so long as they keep rents affordable. However, once these contracts expire (some lasting 20 to 40 years), landlords can opt out and end promises of affordability.
Essentially, the poor and middle class are being used as a shelter for government help for a time period of fulfilling costs. After the prepayment period, tenants will face higher rent, or the owner can sell the property for profit, or tear it down to sell the land. The major problem is that many of these contracts were handed out 20 years ago. The time is up, and the expiration is not convenient while many continue a post recession struggle. What should be done?
We need to move toward offering long term incentives, rather than contract based subsidies. Legislators should seriously determine the effects of incentives upon expiration.
To stall the effects of housing contract expirations, development should be encouraged. Government needs to work with these developers and landlords to come to a reasonable agreement to create positive results for poor and middle class affordable housing.
We must listen directly to the demands of the poor and middle class, and the potential suppliers in the private market -- the developers. Affordable housing development will balance out the existing units that may move toward market rate rent. It will be a swift risk management approach, but something needs to be done for the long term.