Freddie Mac is rolling out a plan to incentivize landlords to keep rents affordable on the properties for years to come. From an article in the Wall Street Journal:
The move could open up a new approach to creating and preserving middle-class housing. It uses market incentives rather than government subsidies to persuade real-estate companies to preserve units for the middle of the rental market, an area of concern for policy makers in recent years…
The initiative will offer lower interest rates to landlords who agree to rent the majority of units in a building at levels affordable to tenants making 80% or less of the area’s median income, a range that typically includes nurses, teachers and police officers. The units must remain affordable for the term of the loan, typically about a decade.
To start, Freddie will back up to $500 million of loans to Bridge Investment Group, a Salt Lake City-based landlord with roughly 30,000 apartments around the country. Bridge has identified 38 metropolitan areas for investment.
It will be interesting to see if this moves the needle on the issue of housing affordability. It is nice to see a market-based ‘carrot’ offered as opposed to the regulatory ‘sticks’ that are being considered in many municipalities around the country.