Homeowner Associations Are Blocking Investor Purchases in Small Neighborhoods

Homeowner associations made up of neighborhood volunteers are using their power to thwart investor purchases of suburban housing, which they say make their communities less desirable and make it more difficult for local families to buy houses, Realtor.com reports. Associations are implementing new strategies such as placing a limit on the number of rental properties in some neighborhoods, or requiring that new rental tenants be approved by the association board prior to investment purchases.

Despite their efforts, homeowner associations have faced backlash from lawmakers in states like California, where associations are now prohibited from imposing some limits on long-term leases.

“The only real purpose of restricting rentals in a given community is to keep renters out, actions which in our view are both harmful and dangerous,” said David Howard, executive director of the National Rental Home Council, a landlord trade group.

During the past few years, the real-estate industry has worked to pass legislation in Tennessee, Georgia and Florida that prevents associations from retroactively banning investors once they have already bought and started renting out a house, though associations can still block future investor purchases with amendments in those same three states.

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