Similar to the concept of rent control, Freddie Mac announced a new program to incentivize rental property owners to ease their continuous rent hikes. The mortgage giant is offering discounted financing to owners who agree to cap rent increases for the life of their loans. Owners who take part in the program must limit rent increases on 80 percent of their units. “Maybe there’s a way we can help change incentives,” says David Brickman, an executive vice president at Freddie Mac. “We can provide an economic basis for private, profit-oriented developers to pursue a strategy where they didn’t raise rents by quite as much.”
Owners also must agree to make at least 50 percent of their units affordable to those earning the local median income or less.
The program, now available across the country, is voluntary. Freddie Mac officials say they will check rents on an annual basis to make sure participating property owners are complying with the program’s rules. Those who are in violation will be assessed a penalty fee until they return rents to a level that Freddie deems compliant.
The announcement comes on the heels of a recent rental market report which showed that average apartment rents reached an all-time high in July. The national average rent climbed to a record high of $1,409 in July, up 2.8 percent year over year, the rental listing service noted.
Freddie Mac also announced another program Tuesday to keep more housing affordable to low- or middle-income families. The program, which is being piloted in Atlanta and the Florida cities of Orlando and Tallahassee, provides $7.8 million to The Promises Homes Company, which owns and operates single-family rental units. The organization will use the money to purchase 117 properties and turn them into affordable housing units for low-income families.