Affordable housing is a great solution for the increasing issue of homelessness. The solution itself is a great opportunity for the investors. For a real estate business owner, affordable housing has a lot of potential to grow as a business.
Here the 5 main reasons why:
1. Lack of Affordable Housing
Though there are long lists of people willing to occupy a place to live under affordable housing, the number of such houses is very low in comparison.
The biggest challenge is to entertain all those individuals and families who are on the waiting list since long. More and more investors are needed for affordable housing to fulfil this need.
2. House Allocation Policies
The affordable housing is aimed for those who can’t afford a house of their own due to high property prices. The policy requires paying 30% of the eligible individual’s income as house rent. But many private housing authorities are introducing new policies that prefer those individuals who are living in a certain area for some time now. This leaves the more needy people close to homelessness. The reason behind such policies is that the number of housing facilities is less than that of people. More affordable housing is needed therefore, to address the housing needs of all needy individuals.
3. The Bedroom Tax
In order to entertain maximum families and individuals, the number of rooms in an apartment is assigned per two persons. If someone is having an extra room, this means he/she has to pay extra tax for that. The rule is made so smaller families can move to smaller apartments. Why is it a problem then? The reason is that some families actually need a spare room, for example, a divorced parent who has their child only over a weekend can’t claim to have an extra room unless they pay extra tax for that. With their income already at the lower end of income scales, they can’t afford extra tax.
If the number of affordable housing is increased, more people can have an affordable house. And such cases can also be entertained without charging additional taxes, if there is enough room for everyone.
4. Labour Mobility
Due to inability to pay house rents, low income people, mostly the labour force is moving to other areas where they can make both ends meet with a shelter to hide in.
Many areas are already facing the workforce shortage issues due to labour mobility.
If more affordable housing will be introduced, more people can be entertained. The labour mobility can also be decreased by providing them an environment where they can afford to live.
5. Rising Rents
The money obtained through affordable rents is used to build more affordable housing facilities. Since the housing available is not enough to entertain all the people, the current house rents are being increased. This is undermining the concept of affordable housing. To address the objective of affordable housing in its true sense, more affordable housing is needed.
To address these concerns, we need more investors in affordable housing so more and more people could be entertained. And the tenants are already willing to move to affordable housing. Thus there is a lot of potential for affordable housing for investors as well as the tenants.