By Matt Lengel, ESPN Staff WriterWhen the housing recovery finally reaches the US, it will bring with it a slew of new regulations that will change the way the US housing market operates, with more restrictions on the kinds of units available and who can own them.
For a long time, the federal government has tried to create a system that would prevent landlords from turning out low-income residents into subprime mortgages, forcing them to turn to cheaper real estate.
In recent years, the Obama administration has taken a harder stance on the rental market, proposing a more restrictive rule that would give developers more flexibility in their design, but the new regulations will require that they make sure that at least one-third of rental units are occupied by people with incomes at or below 125 percent of the federal poverty level, or $28,818 for a single person.
These new regulations are the result of a series of policy moves by the Obama Administration that began in 2013, including a crackdown on “disproportionate disinvestment” in the housing industry and a series of restrictions on how much money can be invested in the rental stock.
The new regulations would allow for a system in which rental housing would be available in neighborhoods where there are sufficient market conditions, but it would not necessarily result in market saturation.
As with any policy change, there are likely to be some winners and losers.
For starters, developers could be more open to putting in more affordable units in certain parts of the country that are more attractive to investors and therefore less likely to get caught out.
Also, there is a real possibility that new restrictions on rental properties could drive up the price of rentals in areas where those rentals are scarce.
And of course, if the rules are overly restrictive, the price increases will likely cause rents to rise for everyone, with many people who can afford to pay more staying in rental housing.
For the time being, it seems that the new housing rules won’t be affecting the rental markets as much as they might have, as many of the markets that were hit hardest by the recession are now recovering.
But they have the potential to be the biggest factor in slowing down the market for the foreseeable future.
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Here are the major new rules that the Obama Department of Housing and Urban Development is proposing.
Rental housing is the primary form of housing used by low- and moderate-income people to live and earn a living. It can be also part of a home for people who work and live on the homestead.
However, it is not only the housing that is under applicable.
The new regulations also require rental units to be available in districts where there are enough market conditions.
The Department of HUD also said it will begin reviewing renting housing requirements that include subprime mortgages.
In its proposal, HUD is proposing that: A substandard housing portfolio must have a gross income of at least $25,000.
Substandard mortgage bonds are not eligible for the affordable housing exception.
A substandard subpackage must have at least one of the following: a minimum net income of $40,000 or more in the year in which the property is acquired.
No minimum net income can include: the income of a single person, a married couple, or a person who is married and has atleast one child.
This does not include one or both of these conditions.
An appreciable amount of equity is required to be available.
All property owners have the right to opt-out of their requirement in certain distances.
If the requirements are not applied at the end of each year, there will be no subsidized housing loans.
In addition, the regulations will require that at least one of the following must be not adopted within a ten year period: that there be a substantial downpayment on a property, that the subsequent sublease or subtotal of the interest on the property is at most 5% of its total interest interest, or that the interest rate is at least $1,500 per year