What lessons can the U.S. learn from housing programs, policies, or regulatory frameworks in other countries? Are there specific tools in use (e.g., covered bonds, full recourse loans, prepayment penalties, etc.) that we should consider adopting or using on a larger scale?
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For affordable multifamily housing, we should explore the effectiveness and cost-effectiveness of having the government rely more heavily on trusted partners, mostly nonprofits but potentially also other public and private owners with the right mission alignment. Various European models are worth exploring, but the UK's approach perhaps best captures the big idea.
Under our current programs, value built in part with subsidies is lost when properties deteriorate, are sold for up market rentals, or condos, while every property has separate financing, regulatory agreements, reserve funds, and the like. As a result, even the strongest sponsors are capital poor at the enterprise level. In the UK, in contrast, housing associations with public subsidy support are given much more flexibility to buy, sell, and redeploy assets; to raise and retire capital at the enterprise or property level; and to respond to the needs of their properties and residents. Indeed, UK housing associations raise much of their enterprise level capital in the transparent US markets. Universal income-based rental assistance opens the market to low-income people.
Much is different here in terms of markets, residents, and history, and we do not have universal vouchers, but the core idea of having the government choose trusted partners and empower them to scale up and achieve agreed-upon goals rather than control them by micro-regulation is a powerful idea worth borrowing and adapting to our context.
Bill Kelly is President and Co-Founder of Stewards of Affordable Housing for the Future (SAHF).
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