Habitat For Humanity

Via Crooked Timber:

It seems that owners of Habitat For Humanity-built homes in Virginia are being squeezed by rising property taxes. In a nutshell: the owners are faced with property tax bills that are greater than their mortgage payments. From the Post article:

In recent months, Habitat for Humanity of Northern Virginia has launched a campaign to persuade localities to provide tax relief for their homeowners. It is arguing that the Habitat homes shouldn?t be assessed at market rates because deed restrictions prevent their owners from selling the homes for profit or getting home equity loans until the 20-year mortgages are paid. If Habitat homeowners sell their homes before 20 years are up, they must sell them back to Habitat for the amount they cost ? $80,000 to $120,000 in most cases, Cleveland said, which is the restricted value.

Crooked Timber-ite Belle Waring asks:

Perhaps someone can help me out here; why put this onerous restriction on the deed? I can sort of see that the nature of the charitable donation would be altered if it essentially became a cash gift rather than a house. And I suppose it makes some sense to restrict immediate sale. But 20 years? This seems to deprive the recipients of one of the main benefits of homeownership: capital appreciation. What would be wrong with letting this woman sell and buy another, cheaper house elsewhere in the area, rather than petitioning the local government for tax abatement? She and her family would be just as ?housed.? On the other hand, she would seem to have a good case that her house is not actually worth the assessed price, since she can?t sell it for that amount. Thoughts?

I agree with her — sort of. I do think the twenty year restriction is a bit too, well, restrictive. I understand what HH is trying to avoid — someone getting a brand new house, then simply selling it and taking the cash to move to a small apartment — but why not set the restriction at five or ten years? HH protects their initial investment and their program’s integrity, and the owners aren’t quite so hamstrung.