Freddie Mac is launching a new program to help keep rents down.
The initiative will offer owners who cap rent increases for the duration of their loans lower-cost financing, according to the Wall Street Journal. It works similar to rent control but is a voluntary program.
Freddie Mac plans to announce the program on Tuesday and launch it immediately. The firm will provide mezzanine debt to owners at below market cost, which could be appealing to real estate investors facing a rental market that has been slowing down.
Owners who get the loans are required to make at least 50 percent of their units affordable for houses making the local median income or less, and they have to limit rent increases on 80 percent of the units.
The company started offering low-cost loans for owners who agree to cap rent increases this spring, but the new program will apply more broadly because it applies to investors that do not have an explicit focus on affordable housing, according to Freddie Mac executive vice president David Brickman.
“You’re taking some of the opportunity to hit a home run off the table,” he told the Journal, “but arguably making it more likely you can hit a single or a double.” [WSJ] – Eddie Small