The Housing Loophole That Lets Wealthy Investors Raise Rents on Poor Tenants

[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?

[Moosepoop]

1. I agree with your comments.

Here's a post from earlier this morning by Dennis Donovan:
https://www.democraticunderground.com/100220024655

[Johnny2X2X]

2. They even took over the trailer parks

Last edited Thu Feb 13, 2025, 01:47 PM - Edit history (1)

Trailer parks have even less rules about rent and other revenue streams.

So these investment groups started buying trailer parks en masse in the last decade or so. They doubled and tripled lot rent, increased fees, and in many cases instituted fines for everything under the sun to generate even more money. So you've got people who have a mortgage for their trailer and are now paying $500+ a month for lot rent when it was just half that a few years ago. And they've added trash, water, and sewer fees. And the same groups also own companies that move trailers, so they jacked up those costs too so people are stuck where they are, without an end in sight to the increasing prices.

It's sickening, you've got people in trailer parks now who are paying more between their trailer payment, lot fees, and other fees than they would if they owned a home on their own property.

And the fines, my god, you have to read about them to believe them. $25 for leaving your trash container out too long on the day of pickup, $50 for too long of grass, $35 for not picking your dog's mess up on your own lot. Fines for too many cars if you have visitors. On and on.

[KPN]

3. Yes. I heard or read that just in the last week somewhere, not sure where. Thanks for the reminder.