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News » US » Home builders count the costs of regulations » published 10 Sep 2018

Home builders count the costs of regulations

Regulations account for nearly a third of the costs of constructing multi-family buildings, representatives from the National Association of Home Builders (NAHB) told Congress last week.

Lawson Companies chairman Steve Lawson testified on behalf of NAHB before the House Financial Services Subcommittee on Housing & Insurance. He said that overregulation of the housing industry is felt at every phase of the building process.

“It results from local, state and federal mandates,” said Lawson. “It includes the cost of applying for zoning and subdivision approval, environmental mitigation, and permit, hook-up, impact and other government fees paid by the builder. In many cases, these projects become financially infeasible and, therefore, are not built.”

Layers of excessive regulation translate into higherrents  reduced affordability for consumers and on average, account for almost one-third of a multifamily project’s development and building costs, according to the NAHB.

A new study by NAHB and National Multifamily Housing Council called Multifamily Cost of Regulation details how regulatory costs account for 32% of the cost of developing new properties.

The research shows that well over 90% of multi-family developers typically incur hard costs of fees paid to local governments, both when applying for zoning approval, and again when local jurisdictions authorize the construction of buildings. Furthermore, state and federal governments are increasingly becoming involved in the process and layering on additional levels of fees and regulations, said NAHB.

“Multi-family builders and developers are seeing strong demand, but there are headwinds that have impacted further development,” said Lawson. “Some developers have had difficulty getting projects off the ground due to regulatory burdens and neighborhood opposition in certain parts of the country.”

To help ease regulatory burdens and improve housing affordability, NAHB is urging policymakers to:

  • consider the cumulative effects of regulatory requirements to determine whether a new mandate is necessary to protect the health and safety of the public, or if it is simply a means to achieve a policy goal;
  • remove barriers to production of multi-family housing;
  • ensure that energy codes and standard are cost-effective, affordable and have a reasonable payback period of 10 years;
  • enact updates to Davis-Bacon wage determination policies to help builders construct more affordable housing;
  • call on the Trump administration to resolve issues related to lumber and steel tariffs; and
  • maintain and properly fund federal rental assistance and multi-family production programs to serve Americans with very low, or extremely low, incomes.

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This article was published on 10 Sep 2018 (last updated on 10 Sep 2018).

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