The Housing Loophole That Lets Wealthy Investors Raise Rents on Poor Tenants [View all]

[KPN]

As the U.S. struggles with a housing shortage, investors continue to exploit a gap in an affordable housing law to raise rents on 115,000 apartments. Congress has repeatedly failed to act.

Four and a half years ago, a newly formed corporate entity purchased a low-income housing complex with 264 apartments in Phoenix. The property had received more than $4 million in federal tax credits and, in exchange, was supposed to remain affordable for decades. The company then used a legal loophole that stripped the affordability protections from the apartments. The maneuver appears to have been lucrative for the company, which bought the property for under $20 million and flipped it two years later for $63 million. Today, advertised rents there have gone up by around 50%.

Similar stories have been playing out across the country for years, as developers and real estate investors take advantage of an obscure section of the tax code known as the “qualified contract” provision. It allows owners of low-income rental properties that have received generous tax credits to raise rents far sooner than the law typically requires.
...
The loophole has remained open for decades despite widespread agreement among regulators and advocates about its harm. Congressional efforts to repeal the provision have failed — most recently in 2023 — though state reforms have trimmed its effects. ... The statute is part of the law defining the Low-Income Housing Tax Credit, which has become the primary catalyst for new affordable rental housing in the country. The program offers developers a tax subsidy worth potentially millions of dollars in exchange for keeping units affordable and renting them only to poor and working-class tenants.
...
Affordable housing proponents have long called for repealing the qualified contract provision. But congressional efforts to do so have fizzled, in part due to lobbying from developers and private equity firms with interests in low-income housing, according to a former congressional staffer involved in the repeal effort.

https://www.propublica.org/article/affordable-housing-investors-loophole-rent-tenants

More in the short read at link above.

Predatory capitalism has made us a wreck of a nation. How many fewer homeless would we have were it not for this alone? What hope is there for improvement with the gang of predatory capitalists now in control of the WH, Congress and the Supreme Court?