Last modified on October 31st, 2023
By Marc Frenkiel
In the world of affordable housing property management, staying ahead of regulatory changes and operational challenges is crucial. But this is easier said than done in a constantly changing regulatory landscape, which naturally trickles down and affects operational efficiency.
According to the AppFolio 2023 State of Affordable Housing report, operational efficiency is at the forefront of affordable housing property managers’ concerns, with 75% of survey respondents identifying it as their biggest challenge. The Housing Opportunity Through Modernization Act (HOTMA) brings significant changes, which may feel overwhelming for many in the industry. To help assuage concerns and point affordable property managers in the right direction, AppFolio hosted an educational session featuring Bettey Neau and Serenity Lay from renowned affordable housing consultancy TheoPRO.
Here are some of the top takeaways from the webinar.
Top challenges in affordable housing
Affordable housing property managers face several challenges, mentioned in the 2023 State of Affordable Housing report by AppFolio. They highlight several key challenges:
Managing affordable housing properties is complex due to various regulations and revenue limitations. This includes dealing with rent caps and supply chain issues, resulting in rising repair costs.
Staffing and recruiting
Staffing for affordable housing properties is more complicated than for conventional multifamily properties. Finding individuals with experience in affordable housing programs is essential, especially for layered properties.
While technology can solve some problems, selecting the right technology for specific business needs can be challenging. Questions about future growth and scaling operations are crucial.
Affordable housing is subject to numerous rules and regulations, making compliance a significant challenge. While in the long term the new HOTMA regulations will streamline administrative processes around certifications, income verification, and income calculations, learning them and incorporating them into your workflows could complicate operational challenges in the short term. The right technology partner, along with a trusted third-party affordable housing expert, can help you navigate through many of these challenges.
HOTMA: Streamlining administrative processes
Signed into law in 2016 with an original effective date of January 1st, 2024, HOTMA aims to reduce the burden of compliance paperwork and overall efforts for affordable housing property managers, while aligning HUD rules with changing economic conditions. A recent HOTMA Supplemental Notice from HUD provides implementation guidance and includes additional changes to occupancy rules. It also gives property managers an additional year to become fully compliant — by January 1st, 2025. The reason for this extension is that HUD has not yet released the final code for software companies to incorporate into their platforms. It’s important to note that HOTMA implementation for LIHTC properties is dependent on state-specific housing finance authorities’ final implementation of HOTMA. LIHTC property managers will have to follow the implementation schedule set by their HFA.
While numerous — the supplemental notice is 112 pages long — some of the changes include:
- A reduction in the number of pay stubs required for employment verification
- A shift to using the current balance for checking account values, rather than a six-month average
- A redefinition of assets, where certain personal property is no longer considered an asset unless it exceeds $50,000
Staying ahead of the HOTMA curve
To stay ahead of the HOTMA curve, knowledge is crucial. Property managers should:
Partner with the right software vendors
Collaborate with vendors who are updating their systems to align with HOTMA rules and affordable housing requirements. Look for a technology partner that will:
- Implement 203A MAT Guide once approved by HUD
- Update key forms, such as the 50059 and Tenant Income Certification
- Engage with consultants and state agencies to ensure full and proper compliance with the guidelines provided under the HOTMA rules and regulations
Implement and communicate changes to residents and team members
Educate residents about the changes HOTMA will bring and how they may be impacted, and provide resources for them to stay informed. Likewise, make sure your employees are well-educated on all things HOTMA. HUD will soon be providing webinars and live Q&As for residents and property managers, so be on the lookout for those. You’ll be able to find them under the “Implementation Guidance” section of HUD’s HOTMA page.
Review and update policies and forms
Proactively integrate HOTMA changes into your operations. Regularly review and update critical policies and forms to remain compliant.
Affordable housing property management faces a host of challenges, with HOTMA bringing significant regulatory changes. However, staying informed, partnering with the right consultants, and leveraging technology solutions will be crucial in ensuring smooth operations in the ever-evolving landscape of affordable housing property management. Check out the recording of the live session here for more insights and strategies to help you thrive in the future of affordable housing.