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US Congress: Neguse, Beyer, Walorski introduce affordable housing legislation

Rep. Joe Neguse (D-CO), along with Reps. Don Beyer (D-VA) and Jackie Walorski (R-IN) and Sens. Ron Wyden (D-OR) and Todd Young (R-IN),  introduced bipartisan bicameral legislation to protect the 30-year affordability commitment of housing financed by the Low-Income Housing Tax Credit (Housing Credit).

Currently, Housing Credit properties are subject to a minimum 30-year affordability period. As the law currently stands, owners are permitted to pursue a Qualified Contract, which most often results in the ability for properties to convert to market rate after just 15 years. The Save Affordable Housing Act would prevent the premature loss of affordable housing and ensure that Housing Credit properties remains affordable for at least 30 years, as Congress intended, thereby fulfilling the program’s commitment to serve low-income Americans.

“Across Colorado’s 2nd district, securing affordable housing is a critical priority for many of my constituents. As our communities expand and grow, far too many are being priced out of our city limits and are being forced to live farther away from work,” said Neguse. “The Save Affordable Housing Act will ensure our commitment to affordable housing are preserved for Americans across the country and I’m proud to lead on this bipartisan effort in the U.S. House.”

“The point of Low Income Housing Tax Credit is to build and sustain desperately needed affordable housing for the long term,” said Beyer. “The Save Affordable Housing Act would ensure that the credits do just that, and I hope that we will see this legislation advance soon.”

“The Low Income Housing Tax Credit has proven to be a critical tool for spurring investment in affordable rental housing and providing stability for low-income Americans, including veterans, seniors, and those with special needs,” said Walorski. “By maintaining the availability of affordable rental units, this bipartisan bill will ensure the program continues to give workers and families a better opportunity to achieve the American Dream.”

“The lack of affordable housing is at crisis levels in communities all over America. At a time when we desperately need to build new affordable housing, we’re losing thousands of units per year to this loophole,” said Wyden. “Saving existing affordable housing units is essential to any effort to address our housing crisis. This is a no-brainer.”

“I recently helped introduce legislation that will strengthen the Low-Income Housing Tax Credit (LIHTC), which empowers the private sector to increase the supply of affordable housing. Today we are taking an additional step to strengthen this program,” said Young. “I look forward to working with all stakeholders to provide more safe and affordable housing options for Hoosiers.”

“Enterprise strongly supports The Save Affordable Housing Act and applauds Senators Wyden and Young and Representatives Neguse, Beyer, and Walorski for their commitment to strengthening the Housing Credit program and ensuring that Housing Credit properties remain affordable for at least 30 years as Congress intended,” said Scott Hoekman, President and CEO of the Enterprise Housing Credit Investments. “The Housing Credit is our nation’s most successful tool for financing the production and preservation of affordable rental housing and The Save Affordable Housing Act would prevent the premature loss of critical affordable homes by closing the Qualified Contract loophole. This important proposal would strengthen how the Housing Credit serves communities nationwide in dire need of affordable housing.”

“The National Council of State Housing Agencies commends Senators Wyden and Young and Representatives Neguse, Beyer, and Walorski for their leadership in preventing the premature termination of Housing Credit affordability requirements,,” said Stockton Williams, Executive Director of the National Council of State Housing Agencies. “Our country is faced with a severe shortage of affordable housing, and we cannot allow developments that have received federal resources, and in exchange pledged to remain affordable for at least 30 years, to be lost before the end of their commitments.”

“The National Housing Trust strongly supports the Save Affordable Housing Act, an essential piece of legislation to preserve irreplaceable affordable rental housing serving low-income families,” said Priya Jayachandran, President and CEO of the National Housing Trust. “We are thrilled that Senators Wyden and Young and Representatives Neguse, Beyer, and Walorski are introducing this bill, which will ensure that properties financed with the Low-Income Housing Tax Credit remain affordable for at least 30 years. Correcting the qualified contract price will allow mission-driven nonprofits to maintain the affordability of Housing Credit properties for the long-term as Congress intended. Preserving existing affordable housing is cost-effective and critically important given the nation’s rental housing affordability crisis.”

Source: Augusta Free Press

State Calls Suppliers for Affordable Homes

Construction and building material suppliers have been invited to bid in the multi-billion-shilling affordable housing scheme set for national roll-out.

A State Department of Public Works notice said bidders must quote prices based on locally procured construction and building materials that will be delivered to government construction sites for the next two years.

“Interested candidates for the supply of building and construction materials must forward their sealed bids via Supplies Branch Tenders where winning bidders will sign framework agreements for a period of two years from the date of signing the contracts,” it read.

The notice, published last week, comes hardly a week after Treasury Secretary Henry Rotich allocated Sh10.5 billion towards the government fronted projects that will see Sh1 billion spent on affordable housing.

A further Sh1 billion is planned for low-cost social housing schemes and Sh2.3 billion will be spent on public servants’ mortgage scheme while police and prison housing projects have received Sh1 billion.

Mr Rotich said Sh5 billion would go to the National Housing Development Fund with all projects set for implementation across all major towns in Kenya.

The notice said interested contractors must submit bids by July 10.

Earlier, State Department of Housing PS Charles Hinga said he intended to change the norm in government where payments for made deliveries were delayed by ensuring prompt payment.

This, he said would help reduce costs of the housing units to be built on part of the 7,000 acres of government land identified and set aside in all the 47 counties.

Contractors, however, remain averse to participating in government tenders as they are still owed about Sh400 billion by both county and the national governments, which President Uhuru Kenyatta promised will be cleared by month-end.

Source: businessdailyafrica

Abuja housing show to attract over 20,000 participants from 15 countries

All is now set for the 13th edition of Africa’s biggest expo – Abuja International Housing Show – scheduled to take place in July. The expectations for this year’s edition are very high as over 20, 000 participants have confirmed participation, the organisers said in a statement.

 

The expectations for this year’s edition are very high as over 20, 000 participants have confirmed participation, the organisers said in a statement. ADVERTISEMENT As the biggest platform for product exhibition, over 400 local and international exhibitors are expected to showcase their latest products and innovations to their clients and buyers who are ever attracted by the incomparably cheap bargains available at the show. Participants, according to the statement, will cut across at least 15 countries including USA, UK, UAE, South Africa, Kenya, Ghana, India and China. There will also be a high level delegation of international diplomats and foreign ministers of works and housing including Ghana’s Samuel Atta Akyea.

Abuja International Housing Show is a choice destination for those seeking relevant and up-to-date information about housing, construction, mortgage, investments and real estate management. There will be at least 30 local and international speakers who will be sharing their knowledge and experience around this year’s theme, ‘Driving Sustainable Housing Finance Models In The Midst of Global Uncertainty’, a testament to how it continues to be an invaluable experience for building professionals in Nigeria and across the globe.

High rents are stopping young people moving away from small towns for better-paid work, report finds

Rising rents mean young people are now less likely to move away from small towns to better paying-parts of the country compared to 20 years ago, according to a report.

The number of 25 to 34-year-olds starting a new job and moving home over the course of a year fell by almost half, from 30,000 to 18,000, between 1997 and 2018.

The Resolution Foundation think tank’s report found that any salary increases young people might benefit from by moving to bigger cities are being wiped out by high housing costs.

This is because wages in higher-paying parts of the country have not kept up with rents. Private rents have risen by almost 90 per cent in the UK’s highest-paying local authority areas, while rents have increased by just over 70 per cent among the lowest-paying local authority areas.

While previous generations enjoyed a significant increase in living standards by moving to cities like London and Manchester or regional hubs like Leeds and Bristol to develop their careers, now this is no longer the case.

In 1997, after housing costs were deducted from salaries, private renters moving from a low-paying area such as East Devon to a mid-paying area such as Bristol would see a 16 per cent rise in earnings. Today the financial gain would be just 1 per cent.

Moving from low-paying area to a high-paying area, such as Croydon, would have been worth a 26 per cent rise in earnings after rent in 1997 compared to a fall of 3 per cent today. Likewise, moving from Sunderland to York in 1997 see a 6 per cent rise in earnings after rent, but would now result in a 24 per cent drop in earnings.

The report warned noted that lower job mobility can “stunt young people’s pay and career prospects”. It said that this was also making it more difficult for firms to fill skills gaps and for workers to develop new skills.

“Young people today are often stereotyped as being footloose when it comes to work,” said Lindsay Judge, senior policy analyst at Resolution. “But in fact they are moving around for new job opportunities far less frequently than they used to.

“A key reason why people move around for work is the lure of a bigger salary. But increasingly those pay gains are being swallowed up by high housing costs.”

She added:  “For young people in particular, there are real advantages to moving when it comes to trying new roles and developing skills – and housing should not be a barrier that prevents them doing this.”

Traditionally, workers living in rented homes have moved around more than those who own their homes. But despite far more young people living in private rented accommodation today compared to twenty years ago, fewer now choose to move.

Rhys Robert Harper, 24, a parliamentary researcher, said he was moving back to Glasgow despite better pay and career prospects in London because of the cost of renting.

“For the past year I’ve been spending half my income renting an ex-council flat in south London with three other people,” he said. “I’ve found renting in London a miserable and soul-sucking experience.

“The conditions in the flat are shocking and the rent is extortionate. When I first moved in there was mould and dried food all up the walls.”

Mr Harper’s current job is coming to an end and after receiving job offers in both London and Glasgow, he decided to move back to Glasgow where he studied.

“Even though my pay and career prospects are better in London, I would need to spend 50 per cent of my net monthly income renting a room. But in Glasgow I’ll be spending about 25 per cent of my net monthly income renting an entire flat.

“It was a trade-off between getting a better job or having better living standards and looking after my mental health. It’s night and day really.”

Hannah Slater, the policy and public affairs manager at Generation Rent, said the report shows that for many young people “private renting is not about flexibility and career mobility, but because they have no other option”.

“In fact, unaffordable private rents are actively preventing young people from having the mobility to seize career opportunities,” she added. “For a society with fair access to opportunities for young people, we need to bring down rents in cities and decentralise our economy with better jobs across the country.”

The Resolution Foundation, an independent think-tank focussed on improving living standards for low and middle income families, analysed official earnings data from the Office for National Statistics going back to 1997. This was cross referenced against statistics on rental payments collated by the Department for Work and Pensions and Hometrack, a property market analytics company.

The report came as the Affordable Housing Commission released research revealing that one in five households across England are facing housing affordability problems.

In the private rented sector, four out of 10 of all those in the bottom half of incomes are paying more than 40 per cent of their household income in rent, the report said.

2020 Democrats Offer Up Affordable Housing Plans Amid Surging Prices

If you listen carefully, you’ll hear something unusual on the presidential campaign trail this year. Democratic candidates are talking a lot about the lack of affordable housing, an issue that rarely, if ever, comes up in an election. They’re trying to tap into a growing national concern, as well as a potential voting bloc.

Several of the candidates have offered extensive plans that they say would address the housing shortage that is affecting millions of low and middle income voters. They’ve proposed everything from refundable tax credits for overburdened renters, to spending billions of dollars on new affordable housing. They’ve also raised the issue as a prime example of racial and income inequality, another focus of the Democratic campaigns.

“It is not acceptable that, in communities throughout the country, wealthy developers are gentrifying neighborhoods and forcing working families out of the homes and apartments where they have lived their entire lives,” Vermont Sen. Bernie Sanders, an independent who’s running for the Democratic nomination, wrote recently in the Las Vegas Sun.

And California Sen. Kamala Harris was met with cheers at a gathering of housing advocates in Washington, D.C. earlier this year when she said, “The right to housing should be understood to be a fundamental right, a human right, a civil right.”

All of this is music to the ears of Diane Yentel, executive director of the National Low Income Housing Coalition.

“We’ve seen candidates talking more about the crisis and the solutions than we have I think in entire presidential campaigns in history,” she says.

Yentel says in the past, she and other advocates would listen to presidential debates and town halls waiting for the candidates to say anything about the affordable housing shortage, “and just sort of hang on for any word even remotely related to housing. Like, oh, he said ‘community’ or he said ‘house.'”

But until this year, she says they never heard about housing policy or possible solutions.

An aerial view of homes under construction at a housing development on January 31, 2019 in Petaluma, Calif. As housing prices surge around the country, Democratic presidential candidates are offering plans to address the shortage of affordable homes and apartments.

Yentel thinks it’s a reflection of the severity of the problem. Rents around the country have been rising faster than wages and almost half of all renters now have to spend more than 30 percent of their incomes on housing. About 11 million of those households spend more than 50 percent of their incomes on rent. Low-income families feel the most pain, but the problem has also started to creep up into the middle class.

“For voters who are in the rental housing market, the cost of housing is as big an economic stressor as virtually anything else,” says Democratic pollster Geoff Garin, whose polling has found housing costs are an issue in every region of the country, as well as in cities, rural areas and suburbs.

And, he says, the concern is growing. When Garin asked voters in 2016 if they thought housing affordability was a problem where they lived, 39 percent said it was a fairly serious or very serious problem. This year, that number is 60 percent.

“That’s quite a change over the course of one election cycle,” he says.

Perhaps of more interest to candidates, 75 percent of all voters this year say they would be more likely to vote for someone who has a plan to make housing more affordable, which may explain why candidates are lining up to offer plans.

“People are experiencing an affordable housing crisis whether they’re Republican or Democrat, whether they live in a red community or a blue community, and whether they’re middle class or they’re working poor, whether they’re white or black,” says Julian Castro, who was the secretary of Housing and Urban Development under President Obama and announced his housing plan this week. He says it would not only address the lack of affordable housing, but would effectively eliminate homelessness in eight years.

Castro would provide housing vouchers to all families who need help. Right now, only one in four families eligible for housing assistance gets it. He would also increase government spending on new affordable housing by tens of billions of dollars a year and provide a refundable tax credit to the millions of low- and moderate-income renters who have to spend more than 30 percent of their incomes on housing.

Among the other proposals:

  • Massachusetts Sen. Elizabeth Warren would also provide a refundable tax credit for overburdened renters. She also calls for a $500 billion federal investment over the next ten years in new affordable housing. She says her plan would create three million new units and lower rents by ten percent. Warren would also give grants to first-time homebuyers who live in areas where black families were once excluded. “Everybody who lives or lived in a formerly red-lined district can get some housing assistance now to be able to buy a home,” Warren told attendees at the She the People Presidential Forum in Houston this spring.
  • New Jersey Sen. Cory Booker would provide financial incentives to encourage local governments to get rid of zoning laws that limit the construction of affordable housing. He would also provide a renter’s tax credit, legal assistance for tenants facing eviction and protect against housing discrimination, something he’s made part of his personal appeal. “When I was a baby, my parents tried to move us into a neighborhood with great public schools, but realtors wouldn’t sell us a home because of the color of our skin,” Booker recounts in an online campaign video.
  • Sen. Kamala Harris has also introduce a plan for a renters’ tax credit of up to $6,000 for families making $100,000 or less.
  • New York Sen. Kirsten Gillibrand has signed on to both the Harris and Warren plans, which have been introduced as legislation.

One challenge for Democrats is finding a way to pay for their ambitious and costly plans. Warren and Castro have both said they would repeal some of the tax breaks enacted two years ago for corporations and higher-income individuals.

President Trump has argued that those tax cuts are helping the economy, which in turn helps all Americans. The administration has said it hopes to increase the supply of affordable housing by providing tax incentives for construction in economically distressed areas, called Opportunity Zones, and by eliminating restrictive zoning laws.

Another challenge for Democrats is getting low-income renters out to vote. They’re generally younger and more transient, and tend not to turn out as much as wealthier homeowners.

That’s a concern for Charise Genas of Boston, who was at a candidate forum in Washington, DC this week sponsored by the Poor People’s Campaign.

“I even pulled my kids by their ears saying, ‘You’re voting,’ and they tell me ‘Ma, my vote don’t count.’ I say ‘That’s a lie, Every vote counts,” says Genas.

She thinks the lack of affordable housing is the number one issue for many voters this year, including herself. Genas says her grown children currently have their own places to live, but “they’re saying, ‘Ma, I might have to come home because the rent is so high.'”

Source: NPR

Florida Governor announces plan to provide $140m for new affordable housing

Gov. Ron DeSantis on Thursday announced a plan to provide $140 million for new affordable housing in areas hit hard by Hurricane Irma in 2017.

DeSantis announced an agreement between the state Department of Economic Opportunity and the Florida Housing Finance Corp. during an appearance in Marathon.

Housing developers and public housing authorities will be able to apply for the funding, which must address unmet needs in areas identified as “most-impacted and distressed” by the federal government.

“This has been a problem in recent years anyways, but the recent storms, Irma and (Hurricane) Michael, have exacerbated the problem,” DeSantis said. “This will be an important step in the recovery process.”

15,000 FAMILIES REGISTER

The money will be provided through the Rebuild Florida Workforce Housing Program, a partnership of the Department of Economic Opportunity and the U.S. Department of Housing and Urban Development that was launched last year.

DeSantis said 15,000 families have registered for the program.

Hurricane Irma made initial landfall in Monroe County, which includes Marathon and areas such as Key West.

Monroe County is expected to get about $35 million of the funding, said Department of Economic Opportunity Executive Director Ken Lawson.

Source: Florida Courier

Amazon Will Match Employee Affordable Housing Donations

Amazon this month became the latest in a string of high-profile tech companies to pledge new support for affordable housing, promising to donate money to several nonprofits and to match employees’ contributions to a variety of affordable housing projects.

The online retailer announced its housing plans last week in a statement, saying that it had made initial donations totaling $8 million to housing nonprofits based in the Seattle and Arlington, Virginia, areas. Amazon gave the money to two organizations — Plymouth Housing and the Arlington Community Foundation — that it said aim to “improve the quality of life for the most vulnerable residents by increasing access to additional housing units for families.”

Additionally, Amazon also revealed that through Sept. 30 it will match employee donations to a number of different nonprofits that “address housing and homelessness in both regions.”

Amazon is based in Seattle and plans to open its much-touted HQ2 office in Arlington, Virginia. After the company announced that it would set up shop in Virginia, home prices in the surrounding area skyrocketed.

The new Building Opportunity Fund is among the causes to which Amazon employees can donate and have their contributions matched, a company spokesperson confirmed to Inman. The fund is a project of Bellwether Housing, which describes itself as Seattle’s largest nonprofit provider of affordable housing, and aims to raise $9 million from a pool of investors. That money will then be used to build 750 homes in the Seattle area by 2022.

Bellwether Housing, along with advocacy group Tech 4 Housing, unveiled details of the Building Opportunity Fund this week during an event on Amazon’s Seattle campus, according to GeekWire. And in an email to GeekWire, Tech 4 Housing Director Ethan Goodman said the new fund will allow “regular people with a little bit of money” to invest in the Seattle region’s housing.

“We hope that tech workers will be a large part of this campaign, and that investing can serve as one path towards deeper engagement on housing issues,” Goodman added.

Amazon’s promise to match investments in the fund is not the first time the online retailer has promised to funnel money into housing initiatives. The company’s statement notes that since 2016 it has pledged more than $130 million to fight homelessness and poverty. Amazon also joined other large tech firms and industry figures this month in donating to build homeless housing.

But Amazon’s latest donations and matching pledge also comes amid a slew of efforts from tech companies to fund housing in pricy cities with large technology industries. Earlier this year, for example, Microsoft promised to spend $500 million on affordable housing in the Seattle area. And this week, Google said it will invest $1 billion in housing in the Bay Area.

These efforts largely come in response to soaring housing costs in cities such as San Francisco and Seattle that have priced out many middle and lower wage earners. Though the prices are the result of complicated economic conditions, many have argued that the basic issue is a lack of housing supply in the face of growing populations and salaries.

Source: Inman

Three Times Citizens Mobilised to put Affordable Housing on the Political Agenda

From Amsterdam to Manila, Ljubljana to Wellington, the rapid growth of property prices in cities is shutting many people out of home ownership and driving up inequality. There are plenty of ways for governments to deliver more affordable housing, including house-building programmes, taxation, planning and land use regulations. Yet their responses often fall short: government definitions of “affordable” homes aren’t affordable for most, help-to-buy subsidies cause prices to rise further and efforts to boost housing supply fall short of targets.

One notable failure occurred in April 2019, when the New Zealand government backtracked on a proposed capital gains tax aimed at tempering speculation in the housing market. New Zealand has a strong case for action: house prices are the third most expensive in the world, the homelessness rate is the highest in the OECD and a quarter of children live below the poverty line – typically in poorly-insulated and overcrowded housing.

But the opposition deemed the tax to be an assault on the “Kiwi way of life”, the media backlash was unyielding, and New Zealand Prime Minister Jacinda Ardern promised never to pass the policy, while in leadership.

The politics of affordable housing

Failures like this are usually explained by a lack of “political will”. But this excuse simply sidesteps the biggest challenge for politicians: building consensus behind major reforms for the public good. All too often, government decisions to act (or not) are more about maintaining economic and political stability – preferably until the next election. Unless citizens lead strong campaigns to demand action, such reforms will remain in the “too hard” box.

The lack of affordable housing is not a crisis for everyone. Property owners have benefited significantly from the rapid growth in prices, creating highly unequal benefits across class, race and generational divides. Investing in housing is also a cultural norm: many Western cultures see it is as good financial sense to get on the property ladder early, and eventually sell at a much higher price to realise a healthy financial return.

This means that many Western countries have a large cohort of voters who are counting on house price growth – even when that shuts people out of the housing market altogether.

Making change happen

Yet in cities around the world, movements led by citizens are building power to counter these challenges. Here are three examples that show how support can be mobilised, when governments are slow to act.

1. Organising grassroots movements in Berlin

Grassroots movements have a long history in cities, and a recent case from Berlin is instructive. Berlin has a high proportion of renters (85%), and until the mid-2000s, it had a large stock of publicly-owned housing. After public housing was sold off to private investors in the mid-2000s, tenants faced rapid rent increases and significant issues with maintenance and repair.

Private companies bought public housing on a large scale – the largest landlord, Deutsche Wohnen, owns around 110,000 units in Berlin. Initial efforts by tenants associations to oppose this were no match for the scale of the problem, so they co-ordinated to form the civic movement Deutsche Wohnen & Co. Enteignen (“Expropriate Deuts

The movement demands a referendum that could ultimately allow the municipality to renationalise housing belonging to landlords with more than 3,000 units. This directly confronts the powerful real estate sector, and has great potential to mobilise popular support in a city where renters are the majority. At the time of publication, their petition had more than 77,000 signatures.

2. Building coalitions with technical professions – planners in 1960s New York

Coalitions are the basic unit of urban politics. Building alliances around common agendas is a powerful way to mobilise resources, knowledge and political support. This even extends to professionals like architects and planners, who have historically engaged with communities to advocate for change.

The Urban Underground is a prominent movement that developed from New York’s Department of City Planning in the late 1960s. City planners realised that the profession had been co-opted into regeneration schemes that systematically pushed out black populations and the poor. Protests by local communities and professionals shone a light on these darker aspects of city planning.

Today, some planners are just as complicit in systems that profit real estate developers while causing gentrification and displacement. But with their experience in the system, planning professionals have the power to form a link between the diverse groups affected by unaffordable housing.

3. Demanding system change with a Green New Deal

The last strategy takes inspiration from the US New Deal, which overhauled the economy and social services in the 1930s. The Green New Deal draws from this approach by demanding fundamental changes to the economic system and building support around a vision for the future to resolve trade-offs between economic, social and environmental policies.

The Green New Deal bundles climate action with green jobs, affordable housing and economic justice. Linking climate action to housing might seem unexpected, but in fact it’s central to goals of economic and social justice. It could also be a genius move to wrap housing into the growing political momentum behind climate agendas.

Each of these movements show how change can happen, even when governments are reluctant to take political risks. When communities build support around a vision for housing that works for all – including indigenous populations, people of colour and people living in poverty – they can forge a path for governments to follow.

Source: theconversation

Spain Is Latest Battleground for Global Affordable Housing

The effort by Spain’s Socialist government to control apartment rents in one of the developed world’s more buoyant real estate markets is off to a rocky start.

In May, two months after imposing a battery of rent-suppression measures for new leases, rents rose at a 7.5% annual pace, according to property website Idealista.com, which supplies data to Spain’s central bank. That was an acceleration from 6.6% in March when the measures were enacted.

The new rules for privately owned apartments in Spain’s $5.8 trillion home market were meant in part to counteract speculation and conversion into Airbnb-type rentals. Tourist flats now exceed a quarter of the sunny, beach-filled Andalucia market and total 18% in Catalonia, the region of Barcelona, Spain’s most visited city and a foreign-investor magnet, according to property website Fotocasa.

From Berlin to New York, governments are wrestling with how to keep tenants from being priced out of their neighborhoods. Fingers point at stagnant wage growth, moribund government support, international buyers and surging purchase prices. These are some of the hallmarks of 21st century urban housing markets, and they are proving to be an unprecedented challenge for governments struggling to fix them with regulations.

N.Y. Adopts Sweeping Tenant Protections on Rents, Evictions

Berlin is going even further than Spain, with plans to freeze rents for five years and give tenants the opportunity to demand reductions if rents are determined to be too high. German real estate stocks slid after the program was announced.

Similar measures are being contemplated across Europe and the world. In New York, state legislators just completed the biggest rewrite of rent regulations in decades, eliminating most tools landlords have used to raise regulated rents.

In Spain, the new rules limit annual rent increases for five years to the inflation rate, currently 0.8%. That’s not happy news for landlords, although after that period is over they can raise, or lower, them as they wish, in a new contract. The prices quoted by Idealista reflect what landlords are asking for in new contracts.

Berlin Plans Five-Year Rent Freeze Over Housing-Crunch Anger

Spain’s housing secretary Helena Beunza says rental rates will begin moderating as the state creates more affordable housing, and when new contracts kick in with the five-year caps, up from three years previously. The government is also devising new public-private partnerships and reference prices for tax deductions for landlords who don’t overcharge, she said in an interview. The new cap is seven years for institutional owners like Blackstone Group LP, which bought Spanish homes when the market was plagued by overbuilding.

“The big institutional investors are specialists, they’re opportunistic and will focus on where the outlook and conditions are most favorable,” said Joe Lovrics, who runs Citigroup Inc.’s Iberia markets desk in Madrid. “They look at these rules and say: ‘If this is permanent, we’ll look elsewhere.”’

In fact, the Development Ministry in Madrid plans more regulations. Economists are divided on whether the limits will backfire.

While some insist they will restrain hikes indefinitely, many say landlords will react by starting new contracts at higher initial rents, or converting more property into short-term Airbnb-type rentals, eliminating supply for permanent residents and driving up rents.

More Rules

“It’s a classic economics problem, but it doesn’t have a classic supply-and-demand solution,” said Alejandro Inurrieta, an economist who is writing a book on the country’s rental market. “In fact, the problem of runaway rents stems more from escalating home prices than people realize.”

In the Madrid region, for example, economists like Inurrieta say the 34% increase in home prices over the past three years is more to blame for the 33% hike in free-market rents. That’s because landlords push for returns to keep pace with the sales market, Inurrieta says. Would-be buyers are also forced into renting by the higher purchase prices.

Spain is a peculiar market within Europe, with one of the highest levels of owner occupancy, and with more than 95% of rental units owned by individuals, rather than institutions.

“It would be a revolution if this worked in Spain,” Inurrieta said of the new regulations. “There is so much under-the-table money here, and so many amateur landlords that don’t have to adhere to any strategic plan with investors.”

Market Experiment

Spain’s real estate crash almost a decade ago depressed rents and values, although the attractiveness for investors improved with the turnaround. The average gross return of 4% in 2018, according to Spain’s Development Ministry, compares favorably with the benchmark German bond yielding less than 0%. Spain’s IBEX 35 index ended last year at its lowest annual level since 2012.

Property investors typically expect that as long as there’s population growth, and a relatively free market, home purchases and rentals can beat inflation over the long term — an assertion that will be tested with new rent-cap rules.

Some economists argue that purchase prices have surged so much faster than consumer prices in many developed markets because often the two aren’t structurally linked. For example, home prices, a perennial worry for middle-class urban families, are absent from the consumer basket in many of the world’s consumer price inflation data. Instead, rental costs are typically used.

In Spain, for example, rental housing has just a 3% weighting in consumer inflation, whereas the average family spends about 30% of its income on rent and even more buying a home.

Since Spain’s property crash, banks have rarely financed 100% of a purchase. That’s one factor increasing demand for rentals. So is 35% youth unemployment. Yet, there are many dynamics that are seen across the globe in job-rich cities with scant vacant land.

“This isn’t just Spain, it’s most big markets,” Citigroup’s Lovrics said. “Look at Seattle, which was very affordable years ago, and now it’s just for high net worth.”

Source: news.yahoo

On Rent Subsidies and Affordable Housing

Both Sen. Cory Booker and the Journal overlook the most direct public response to the affordable-housing crisis—the government building more rental units.

Regarding your editorial “Cory Booker Wants to Pay Your Rent” (June 13): Both Sen. Cory Booker and the Journal overlook the most direct public response to the affordable-housing crisis—have the government build more rental units. Dramatic failures like Pruitt-Igoe have given public housing a bad reputation in the U.S., yet overseas successes including Sweden and Singapore’s housing programs show what can be accomplished by the direct construction of new housing by the public sector to alleviate a housing crisis.

A key difference between the U.S. and public-housing efforts in Sweden and Singapore is that public housing there has been open to all residents, leading to mixed-income neighborhoods instead of impoverished ghettos. In both countries renters have long had the option of buying their flats, becoming homeowners. These residential projects also included various on-site services from retail to day care.

Many will cry “socialism,” but both Sweden and Singapore have thriving market-economies that rank high in the Heritage Foundation’s 2019 Index of Economic Freedom: Sweden is No. 19, while Singapore is No. 2, just behind Hong Kong at No. 1, a city-state that also has an impressive public-housing program.

These overseas public-housing case studies are not without issues—but just as Hong Kong’s MTR runs trains much better than New York’s MTA—these examples show how mass affordable housing can be built and run well by the public sector.

Benjamin Turon

Sen. Booker’s affordable-housing plan is a good start. I would go further. I would provide either a tax break or preferably a housing allowance to everyone who cannot afford market rent with 20%-25% of their income. That was the standard for federal housing programs until David Stockman’s Omnibus Budget Reconciliation Act.

How can our wealthy country do nothing when over half a million were homeless on a given night in 2018? Why should we provide housing assistance by lottery allocation? We don’t do that for health care or food assistance. How can we do nothing when middle-income families cannot find a place to live within a reasonable commute to work?

In Scotland, affordable housing is a human right. The city of Vienna provides decent housing for every resident. In Singapore, 82% of the population lives in high-quality public housing with amenities.

A few amendments to President Nixon’s Section 8 program could make housing available to everyone who needs assistance, while stimulating the economy, saving on the costs of homeless shelters and more. Safeguards could limit rents, and good regulations would set standards. The Section 8 program was most effective when Carla Hills was HUD Secretary in the Ford Administration.

Source: wsj

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