Housing Preservation: Federal Programs, State Tools, and Land Trusts

Housing preservation is the work of keeping existing affordable rental homes affordable, rather than letting them be lost when subsidies expire, buildings deteriorate, or owners convert to market-rate rents. It covers the federal programs that finance rehabilitation, the state and local laws that give tenants and nonprofits a chance to buy at-risk buildings, and the private and philanthropic capital that fills the gaps. The United States has more than six million federally subsidized rental units, and the affordability of many of them depends on programs with built-in expiration dates.¹ When those dates arrive, preservation is what stands between a tenant and a rent increase they cannot absorb.

Why Preservation Instead of New Construction

Saving an existing affordable unit is generally cheaper and faster than building a new one. Rehabilitation typically does not require rezoning or new permits.² A Los Angeles County pilot found that acquiring and rehabilitating existing housing was 47 percent cheaper than new construction.³ In Washington State, the average cost to build one new multifamily unit between 2015 and 2022 was over $307,000, and renovating existing housing was described as almost always more financially feasible.⁴

Preservation also keeps tenants in their neighborhoods. It avoids the displacement that comes with losing subsidized housing in gentrifying areas, works within existing land-use patterns, sidesteps the community opposition that greets new development, and creates an opening to retrofit older buildings for energy efficiency.⁵ One limitation is straightforward: preservation keeps existing homes affordable, but it does not add to the total supply, and in most major markets the shortage is real.

What Puts Affordable Housing at Risk

Sixty-four percent of the 4.9 million federally subsidized rental homes are more than 20 years old.⁶ The threats to that stock fall into two broad categories.

The first is expiring subsidies. Most affordable housing carries a time-limited affordability restriction tied to a tax-credit compliance period, a government-backed mortgage, or a rental assistance contract. When those limits run out, there is no guarantee the housing stays affordable. Over one million subsidized units have affordability restrictions set to expire within a decade, including more than 590,000 project-based rental assistance units, over 450,000 LIHTC units, and 120,000 HOME-financed units.⁷

The second is physical deterioration. Aging buildings need capital investment that often does not arrive. Public housing shows this most sharply. HUD’s own budget documents place the deferred maintenance backlog at nearly $60 billion, with annual capital needs exceeding $4 billion.⁸ A 2025 report by the 10 Year Roadmap for Public Housing Sustainability and PAHRC put the number even higher, at $169.1 billion to fully preserve the nation’s roughly 899,000 public housing units — an average of about $188,000 per unit.⁹ Over half of public housing units were built before 1970, and the capital fund formula currently provides an average of only $3,500 per unit against an estimated $15,000 per unit needed to resolve health hazards like mold, lead paint, and fire-safety deficiencies.

Federal Preservation Programs

Low-Income Housing Tax Credit

LIHTC is the largest source of financing for affordable rental housing in the country. Properties built with tax credits generally carry rent restrictions for 30 years. From 2024 through 2035, roughly 845,000 units are scheduled to hit the end of that period — about a third of all homes with active LIHTC subsidies — and nearly 500,000 of them reach the 30-year mark by the end of this decade.¹⁰¹¹

A second exit route is the “qualified contract” process, which lets owners seek release from affordability restrictions after just 15 years. If no qualified buyer purchases the property within a year, the owner can convert to market rents. The National Council of State Housing Agencies estimates that about 10,000 units per year leave the program this way.¹⁰ Some housing finance agencies now require new LIHTC applicants to waive their qualified-contract rights.¹²

On the preservation side, 47 states prioritize preservation projects in their Qualified Allocation Plans, the documents that govern how tax credits are distributed.¹³ Owners of aging LIHTC properties can apply for new 4 percent tax credits to rehabilitate, which requires committing to a fresh affordability period. Some states demand longer affordability terms than the federal 30-year floor: California and Nevada require 50 years, Utah requires 99, and Vermont requires perpetual affordability.¹¹

Project-Based Section 8

Project-Based Rental Assistance provides about 1.3 million affordable housing units through Housing Assistance Payments contracts between HUD and private owners.¹⁴ When those contracts expire, owners may opt out by giving one year’s notice to HUD and tenants and then converting to market-rate housing.¹⁵ Nearly 98,500 units, or 29 percent of the PBRA stock, had contracts set to expire within a five-year window as of recent data.¹⁶

HUD uses two main tools to keep owners in the program. Mark-to-Market restructures debt for FHA-insured properties where subsidized rents exceed local market levels, in exchange for a 30-year affordability commitment.¹⁷ Mark-Up-to-Market runs in the other direction: where contract rents are below market, it lets owners raise rents up to 150 percent of fair market rent as an incentive to renew, with a minimum five-year contract.¹⁶ When an owner does leave, eligible tenants receive “enhanced vouchers” that cover the difference between 30 percent of their income and the new market rent, so they can stay in their units.¹⁵

Rental Assistance Demonstration

RAD lets public housing authorities and owners of certain older HUD-assisted properties convert their federal assistance to long-term Section 8 contracts. The conversion opens access to private capital and tax credits for rehabilitation that traditional public housing funding cannot provide.

As of November 2024, RAD had converted over 178,000 public housing units and approximately 45,800 privately assisted units, and facilitated $20 billion in construction investment in public housing alone.¹⁸¹⁹ A HUD survey found that 87 percent of public housing authorities reported improved asset management after conversion, and a study of New York State properties found no evidence of increased evictions or exits from subsidized housing in the two years after conversion.²⁰ The FY24 Appropriations Act extended the conversion deadline to September 30, 2029.

The current congressional cap allows for 455,000 public housing unit conversions, with about 82,000 slots remaining as of late 2024.¹⁸ Average per-unit investment for RAD conversions exceeded $250,000 by 2023, up from $55,000 in the program’s early years.⁹

USDA Rural Rental Housing

Preservation is not a city problem alone. The USDA’s Section 515 program has supported over 533,000 rural rental homes since 1963 and currently underpins roughly 400,000 units across 13,000 properties in 87 percent of U.S. counties.²¹ No new Section 515 loans have been issued since 2011, and loans for 90 percent of remaining Section 515 homes will mature by 2045. When a loan matures, the owner has no obligation to keep the housing affordable.

The people affected are largely elderly, disabled, or both — more than 60 percent of Section 515 tenants — and had an average household income of about $16,000 in 2023.²¹ An estimated $5.6 billion in repairs is needed across the remaining portfolio. USDA runs a Multifamily Housing Preservation and Revitalization pilot to restructure loans and fund repairs, and a Section 521 decoupling initiative that lets rental assistance continue in exchange for long-term affordability commitments.²²

State and Local Preservation Tools

Right of First Refusal

At least 11 states give tenants, nonprofits, or government agencies the right to purchase an affordable property before it can be sold on the open market: California, Colorado, Maine, Maryland, Massachusetts, Michigan, New Jersey, Oregon, Rhode Island, Texas, and Washington.²³

California’s version is among the most developed. Owners of assisted housing developments with expiring affordability restrictions must notify the state Department of Housing and Community Development and registered “Qualified Entities” — tenant associations, nonprofits, housing authorities, and mission-driven developers. A 270-day offer period locks out other buyers. If a Qualified Entity makes a bona fide offer during that window, the owner must either accept it or record a new regulatory agreement maintaining affordability for at least 30 more years.²⁴ Massachusetts pairs a right of first offer to the state with a follow-on right of first refusal if the owner moves toward a third-party sale; between 2009 and 2019, this framework preserved 1,640 units across 14 transactions.²³

Tenant Opportunity to Purchase

Washington, D.C., pioneered the tenant-side version of this right in 1980 with the Tenant Opportunity to Purchase Act, which gives tenants a right of first refusal when their landlord decides to sell. Between 2006 and 2020, TOPA was credited with preserving over 16,000 housing units.³ In practice, about 95 percent of sales involving a registered tenant association result in an assignment of purchase rights rather than direct tenant ownership, meaning properties typically stay as rentals under a new mission-driven buyer.²⁵

Data and Monitoring

Knowing which properties are at risk is a prerequisite for preserving them. The National Housing Preservation Database, maintained by PAHRC and the National Low Income Housing Coalition, integrates data from multiple federal databases into a single inventory of federally assisted housing, and more than 5,000 stakeholders use it to identify properties approaching the end of their subsidy contracts.²⁶ New York City maintains the Subsidized Housing Information Project, which tracks roughly 235,000 subsidized units, and California requires a mandatory 10-year analysis of at-risk properties.¹³

Naturally Occurring Affordable Housing

An estimated 75 percent of the nation’s affordable housing carries no government subsidy at all. It rents at affordable levels because the buildings are older, smaller, or in lower-cost markets — with no formal affordability restriction attached. Small multifamily buildings of five to 49 units account for 17 percent of U.S. housing stock and house roughly 8.2 million families.³ There is no subsidy to renew and no compliance period to extend; when a neighborhood gentrifies, nothing stops an owner from raising rents.

Local NOAH programs combine money with recorded affordability covenants. Salt Lake City offers owners low-interest loans and grants of up to $75,000 per unit for repairs in exchange for a 15-year restrictive-use agreement.²⁷ San Francisco’s Small Sites Program provides acquisition and rehabilitation loans for small buildings to keep them affordable long-term.³ Chicago’s Preservation Compact, hosted by the Community Investment Corporation since 2007, uses data tools to identify at-risk properties and has helped develop financing for 1-to-4-unit buildings and mezzanine loans for mixed-income properties.²⁸

Community Land Trusts

Community land trusts offer a structural approach to permanent affordability. A CLT is a nonprofit that acquires land and holds it in trust, typically under a 99-year renewable ground lease. Residents own their homes but not the underlying land, and resale restrictions cap the equity they can capture, keeping prices affordable for the next buyer indefinitely.²⁹

As of 2016, there were approximately 225 CLTs in 46 states and the District of Columbia, managing roughly 12,000 homeownership units and an estimated 25,000 rental units.²⁹ The Grounded Solutions Network, the national support organization for these models, now counts over 200 members across 40 states.³⁰ During the foreclosure crisis, CLT residents were 10 times less likely to be in foreclosure proceedings than private-market homeowners.

Nonprofits and CDFIs

Much of the day-to-day work of preservation is done by nonprofit developers and community development financial institutions. National intermediaries like Enterprise Community Partners, LISC, and NeighborWorks America channel capital from corporations, philanthropy, and government programs to local nonprofits and community development corporations, along with technical assistance and bridge financing.³¹ Specialized lenders play a direct role as well: the Community Preservation Corporation in New York has financed over 130,000 units with $7 billion in investment, and Chicago’s Community Investment Corporation has financed the rehabilitation of 39,000 units through a revolving loan pool.¹³

Federal Legislation to Watch

Several bills in the 119th Congress touch preservation directly. The 21st Century ROAD to Housing Act passed the Senate Banking Committee unanimously (24-0) in July 2025 and is awaiting a Senate floor vote.³² Its preservation-related provisions include the Whole-Home Repairs Act (a pilot for grants and forgivable loans for repairs in affordable units), the PRICE Act (grants to preserve manufactured housing), and the Rural Housing Service Reform Act (which would let USDA rental assistance contracts continue past mortgage maturity). The bill also reauthorizes and modernizes the HOME Investment Partnerships Program for the first time in over 30 years.³³

The Affordable Housing Credit Improvement Act of 2025, with over 100 bipartisan House cosponsors and 41 Senate cosponsors, would increase annual LIHTC allocations by 50 percent, lower the bond-financing threshold from 50 to 25 percent of project costs, and provide basis boosts for properties serving extremely low-income tenants and underserved populations. The tax-credit consulting firm Novogradac estimates the bill would enable the development or preservation of nearly 1.6 million additional affordable homes over 10 years.³⁴

These efforts are running into a tight fiscal environment. The 2025 President’s Budget requested $3.2 billion for public housing capital fund formula grants against tens of billions in identified needs.⁸ As of mid-2025, the House of Representatives proposed a budget with a 44 percent cut to HUD’s total funding, and layoffs at the department have raised questions about its capacity to administer existing preservation programs.²⁰ Between 35 and 62 percent of LIHTC-financed units in a recent decade were preservation deals rather than new construction, a sign of how much of the available financing is already going toward keeping what exists.⁷

1
Lincoln Institute of Land Policy. Preservation of Subsidized Housing
2
Local Housing Solutions. Balancing the Preservation of Existing Affordable Housing With New Construction
3
Nonprofit Quarterly. How to Preserve Existing Affordable Housing: The Value of Human Scale
4
MRSC. Naturally Occurring Affordable Housing
5
Urban Institute. Preserving Affordable Housing: What Works
6
National Low Income Housing Coalition. New Report Highlights Significant Preservation Risks Threatening Affordable Homes With Expiring Subsidies
7
Lincoln Institute of Land Policy. Preservation of Subsidized Housing
8
HUD. 2025 Congressional Justifications – Public Housing Fund
9
Public Enterprise. The $169 Billion Challenge: Preserving America’s Public Housing
10
Federal Reserve Bank of Chicago. LIHTC Affordability Requirement Expirations and Implications for the Supply of Guaranteed Affordable Housing
11
Bipartisan Policy Center. Preserving LIHTC Housing
12
National Housing Law Project. LIHTC Preservation and Compliance
13
National Housing Conference. Affordable Rental Housing Preservation Policies and Funding Strategies
14
HUD. 2025 Congressional Justifications – PBRA
15
HUD. Multifamily Section 8 Contract Renewal
16
National Low Income Housing Coalition. Project-Based Rental Assistance
17
HUD. Mark-to-Market Program Evaluation
18
National Low Income Housing Coalition. Rental Assistance Demonstration
19
HUD. Multifamily Recapitalization
20
Taylor & Francis Online. RAD Program Outcomes
21
PBS NewsHour. A Successful USDA Program That Has Supported More Than 533,000 Affordable Rental Homes in Rural America Is Being Phased Out
22
USDA Rural Development. Multifamily Housing Programs
23
Virginia Housing Commission. Right of First Refusal Presentation
24
California HCD. Guide to Affordable Housing Preservation Laws
25
D.C. Policy Center. TOPA’s Promise and Pitfalls in D.C.
26
National Low Income Housing Coalition. New National Housing Preservation Database Data Released
27
Salt Lake City. Naturally Occurring Affordable Housing Preservation Program
28
Housing Partnership Network. Preserving Cook County’s Affordable Housing Stock: CIC’s Preservation Compact
29
Case Western Reserve University. Community Land Trusts
30
Robert Wood Johnson Foundation. Scaling Community-Owned Real Estate for Affordable Housing
31
Joint Center for Housing Studies, Harvard University. Nonprofit Housing Organizations
32
U.S. Senate Committee on Banking, Housing, and Urban Affairs. The Facts: The 21st Century ROAD to Housing Act
33
U.S. Senate Committee on Banking, Housing, and Urban Affairs. ROAD to Housing Act of 2025 Section by Section
34
Enterprise Community Partners. Affordable Housing Credit Improvement Act of 2025