Is a rent-to-own program an ‘unacceptable’ option?
Posted On May 19, 2021
The landlord of a four-bedroom apartment building in north central Florida may be eligible for rent- to-own programs to keep its units affordable, but the legislation that could allow them to go forward is being challenged by some landlords.
The bill would require any rental property that has been rented for more than three months to be re-sold.
It also would create a new property tax incentive program to support renters.
The legislation, approved by the Legislature’s Finance Committee on Tuesday, would also allow landlords to opt out of paying a 10 percent state sales tax.
That’s an option that some Florida landlords have expressed concern about in the past.
However, the legislation also includes some protections for renters.
In addition to eliminating the 10 percent tax, the bill also provides protections for low-income renters who have been evicted or otherwise forced out of their homes.
It would also make the program voluntary for any landlords who rent out their properties.
The bills passed the committee but was not referred to the Senate Finance Committee for a final vote.
The Legislature is scheduled to take up a bill Tuesday that would expand the use of a state program to help low- and moderate-income Floridians get out of a rental property.
The program, called a lease-to/rent program, was created by the Florida Housing Development Authority in 2007.
Under the program, landlords rent out properties to renters and offer to pay rent for the first month.
The agency, which administers the program under a state law called the Renters Rights Act, says it offers several incentives to help landlords reduce their costs.
The first is a $1,000 reduction in rent after the first year.
Incentives could include cash grants, reduced property taxes, a reduction in the rent rate or the elimination of fees for new rental properties.
A second incentive is a 30 percent rent reduction after five years of renting a property.
In this case, landlords can offer to reduce their rental rate by 30 percent and have a chance to receive up to a 30-percent rent reduction for every additional year of renting.
The third incentive is the property owner’s right to keep their property, which is based on a percentage of the value of the property.
For example, a home worth $400,000 is valued at $1.2 million and would be eligible to have a lease to it.
The owner would also be allowed to reduce the rental rate if it has fallen by 30 per cent in the last five years.
A fourth incentive is to reduce rent by $300 or less.
The amount is dependent on the size of the landlord’s property and is based upon the amount of taxable income the property has.
In addition to the lease-for-rent program and the property tax incentives, there are also a number of other benefits that could be offered to renters.
A renter could receive $500 in state benefits like cash grants and reduced property tax.
A new landlord could be eligible, under certain circumstances, to have the renter pay the owner’s mortgage interest on the property instead of the rent that the renters pays.
The property owner could also be able to sell the property to a new owner for a lower price than the new owner’s property would normally pay.
A fifth incentive is that the property could be used to rehabilitate a property and provide housing to a family.
For the most part, the program is designed to help people who are at a lower income level and are looking to move to a city.
The state has been able to offer this assistance through the Low Income Housing Assistance Program.
Other incentives would be based on the length of time the tenant has been renting the property, whether the tenant is able to pay the property taxes or has other assets that could make the property affordable.
Some advocates have said that landlords who lease out properties could get a break in the legislation because the legislation would eliminate some of the incentives.
The Florida Association of Realtors is opposed to the legislation, and in a statement Tuesday, said it would be “extremely problematic” if the legislation were passed.
“We believe that a number in our membership who are members of the Florida Landlord Association and who support the Landlord Realtor Tax Exemption Act should not be able or willing to participate in any legislation that would allow the eviction of any property owners who have made a positive investment in the property,” the statement read.
The association is a statewide group of about 400 property owners and tenants who represent more than 500,000 Florida residents.
In an interview with the Orlando Sentinel, association President Mike Cisneros said that while the association was “a bit confused” by the bill, it supports the program as long as it’s voluntary.
“If they’re looking to help folks, we welcome them,” Cisners said.
The Association of Landlords of Florida is one of the state’s largest and oldest landlord groups.
It has more than 2,700 members statewide, according to its website.