This DCHA Update Changes Everything for DC Investors
Nest DC
More or less under the radar, the DC Housing Authority recently enacted a huge change that affects Washington, DC investors and residents. The update gets DCHA in compliance with HUD regulations. The timeline to make these changes was urgent, as a recent audit called out noncompliance and negligence that put DCHA at risk of losing its federal funding. The changes that went into effect July 1st, 2023 are non-negotiable per HUD, and have a big impact on DC’s housing landscape.
What’s New Under the DC Housing Authority Updates in 2023
If you are an investor or developer familiar with working with residents who use DCHA housing vouchers, you have likely planned new construction, strategized around, or forecasted your cashflow around DCHA’s maximum neighborhood rents. As of July 1st, 2023, those no longer exist.
Nationwide, the rental amount that the federal government allots per property is meant to be based on market prices. That price is called “rent reasonable”. It means that if your 4-bedroom rowhome in Burleith is in line with the market at $6,200, DCHA will, theoretically, pay you that amount. Before this change, rents that high were unlikely to be subsidized by the governement. But, what you could count on is that if you had a three-bedroom property in Eckington, for example, you were guaranteed about $4,000.
Moving forward, DCHA does not guarantee a specific rental amount based on property size and location. What they pay is based on actual market value, which will be determined by AffordableHousing.com, the online rental platform they are now contracting with.
Let those changes sink in.
Yes, this is a big deal. Yes, it may drastically change the profitability (or even viability) of your portfolio if your numbers are based on the rental amounts that used to be all but guaranteed.
DCHA did not make a public announcement for investors to prepare for this change. They quietly held a series of small meetings (which we miraculously got word of and attended) where they previewed the new process and collected feedback. Based on participation at those meetings, they created this FAQ, available on the DCHA website.
Key Take-Aways from the DCHA Process Update
Understandably, the negative feedback to this (from those who are aware of it) has been overwhelming. While it’s hard to understand how these changes incentivize more property owners to get involved with the program, we’re also glad to see DCHA, which has been accused of setting the market and raising rent ceilings, get into shape and clean up its process. We think these changes merit a much larger conversation about housing accessibility and whether or not the Housing Choice Voucher Program supports it.
To get into the weeds of the good and the bad, we brought together real estate agent + investor, Tim Robinson, real estate coach + investor, Lisa Tilstra, and our own Lydia La Motta on an episode of REI Concierge. Listen to this informative podcast episode for all the details on the DCHA changes, what we think is most important to understand, and how they affect you.
We’d love to hear your thoughts! What are your key take-aways about the DCHA changes that took effect on July 1st, 2023? What does this change for you? Comment below!
