PROVIDENCE – Rep. Brian Newberry has sponsored two bills that aim to address Rhode Island’s housing crisis, with a plan to help first time homebuyers while also limiting corporate buyouts of the state’s limited housing stock.
The representative noted this week that the median price for a single-family home in Rhode Island hit a record high of $443,000 in July 2023, and most recently was reported to have risen to $450,000. He said that despite two significant housing packages that passed the General Assembly in 2022 and 2023, there is no relief in sight for the housing crisis in Rhode Island.
Rental unit vacancies in Rhode Island remain historically low, further driving up the cost of housing as owners can charge more due to limited inventory, said Newberry, who pointed out that nationally, single family homeownership rates have also declined, returning to 1980 levels.
In an effort to assist first time homebuyers, Newberry, a Republican who represents District 48 in North Smithfield and Burrillville, submitted legislation that would establish the Rhode Island First Time Homebuyer’s Savings Account Program. He said the program would be administered by the General Treasurer, similar to the 529 Education Savings Account program that allows individuals to save towards a college education.
The bill would allow an individual household to save up to $50,000 in contributions to the account, tax free; and up to $150,000 in interest and dividends earned, tax free, towards the purchase of a home, according to a release on the legislation. The account could only be used for the purchase of a home, and if an individual withdraws funds for any other use, then that amount would be taxed as income.
“The Rhode Island housing crisis continues to rage on despite two housing crisis legislative packages passed by the General Assembly,” Newberry said. “The main barriers to home ownership continue to include housing inventory and price. In an effort to try and help potential homeowners overcome the cost barrier, we think it is prudent to allow first time homeowners to save towards a down payment on a home. Fourteen states to date have passed legislation allowing first time homebuyers to save – including interest and dividends earned – tax free towards the purchase of a home. It is time for Rhode Island to offer the same for those trying to obtain a home of their own.”
A second bill by the northern Rhode Island legislator aims to tackle the problem from another angle by disincentivizing corporate buy up of Rhode Island’s limited housing stock.
Newberry noted that currently, in the United States, private equity backed corporations such as American Homes 4 Rent and Innovation Homes are buying up single family homes at an alarming rate. Rhode Island, meanwhile, is facing an unprecedented housing shortage, which is contributing to a dramatic increase in both rent and home prices.
To address the issues, he has sponsored, “The Real Estate Conveyance Tax,” which he says would alleviate some of the competition faced by first time homebuyers. The bill authorizes an additional tax at the rate of $6.90 for every $500 paid for the purchase of a single-family dwelling. This new tax would be levied against corporations/corporate entities with assets over $15 million. Should corporations/corporate entities decide to eat the additional cost brought on by this new tax, revenues from this tax would be added to the state’s Housing Production Fund to promote the construction and rehabilitation of more affordable housing units.
“This bill kills two birds with one stone,” said Newberry. “Our goal is to help first time homebuyers, by disincentivizing corporations interested in buying up our limited single-family housing stock. This win-win legislation also provides a potential bolster to the state’s only annual housing production funding stream. This is a concrete proposal to better the housing climate in Rhode Island.”
Accessory dwelling units (ADUs) are the answer.
It appears so long as the ADU fits within the envelope of an existing structure, it shall be permitted according to this newly adopted State zoning law. Am I reading this correctly?
This certainly would help out many who cannot afford current home prices and rental costs.
http://webserver.rilin.state.ri.us/PublicLaws/law22/law22440.htm
CHAPTER 440
2022 — H 7942 SUBSTITUTE B
Enacted 06/30/2022
A N A C T
RELATING TO TOWNS AND CITIES — ZONING ORDINANCES
Introduced By: Representatives Ackerman, and Shekarchi
Date Introduced: March 07, 2022
It is enacted by the General Assembly as follows:
SECTION 1. Sections 45-24-31 and 45-24-37 of the General Laws in Chapter 45-24
entitled “Zoning Ordinances” are hereby amended to read as follows:
SECTION 2. Chapter 45-24 of the General Laws entitled “Zoning Ordinances” are hereby
amended by adding thereto the following sections:
45-24-73. Consistent statewide treatment of accessory dwelling units required.
(a) Any municipality which that chooses to permit accessory dwelling units (ADUs) within
the municipality, shall not impose any excessive restrictions on accessory dwelling units (ADUs).
More specifically, a municipality which that permits ADUs shall not:
(1) Restrict tenants based on familial relationship or age unless such restriction is necessary
to comply with the terms of the federal subsidy related to affordability;
(2) Charge unique or unreasonable application fees for the creation of an ADU;
(3) Require infrastructure improvements, including, but not limited to, separate water or
sewer service lines or expanded septic system capacity,; provided, however, municipalities may
require modification required for compliance under state law or regulation;
(4) Discriminate against populations protected under state and federal fair housing laws;
(5) Impose unreasonable dimensional requirements on ADUs that effectively preclude their
development or utilization;
(6) Require a larger minimum lot size for a property with an ADU over that required for a
property without an ADU in the same zone;
(7) Require more than one parking space beyond what is already required for the primary
use; or
(8) Limit ADUs to lots with pre-existing preexisting homes; provided, a municipality shall
allow ADUs as part of applications for new primary dwelling units or subdivisions.
(b) To further enable the use of ADUs and to remove barriers to utilization, municipalities
may allow ADUs in primary or accessory structures that are lawfully established pre-existing
preexisting non-conforming through a special use permit and not require a variance,
notwithstanding any provision of this chapter to the contrary that would require a variance.
(c) Private restrictions on ADUs imposed by condominium associations, homeowner
associations, or similar residential property governing bodies, which conflict with the provisions
of this section or the definition of an ADU as set forth in § 45-24-31, shall be void as against public
policy. Provided, however, if ADU’s ADUs are allowed by condominium association covenants,
homeowner association covenants, or similar residential property governing bodies, they shall be
deemed in compliance with this subsection.
(d) The development of ADUs shall not be restricted by any locally adopted ordinance or
policy that places a limit or moratorium on the development of residential units in land zoned for
residential use.
The increase in rent is not due to an inventory shortage but is due to an increase in property taxes. People who own rental properties have to raise the rent every time the city/town raises property taxes. Rental owners are also passing on increases for water/sewer and maintenance cost which are increasing due to higher taxes. So as long as the state and towns continue to spend rents will continue to increase. So the program proposed which is flawed to begin with will fail.
Do you have any data to back that up? Because the basics of economics tell us that when supply goes down, price goes up. If you look at, for instance, the RI Housing data, you’ll see rents have outpaced inflation and tax increases, with rents up 20% since 2020. Have taxes gone up 20%? No they have not.