Affordable Housing Bill Ends Key Financing Option for New Projects After 2025, Boosts Tenant Protections

This legislation, titled the Save Affordable Housing Act of 2025, makes targeted but significant changes to the Low-Income Housing Tax Credit (LIHTC) program. At its core, the bill aims to tweak how affordable housing properties can exit their commitment to low-income tenants, with a focus on strengthening long-term affordability.

Closing the Exit Door: The Qualified Contract Option

The biggest change for the future of affordable housing development is the repeal of the “qualified contract option.” This option previously allowed owners of LIHTC properties, after a certain period (usually 15 years), to request a purchase offer from a third party at a designated price. If no qualified buyer stepped forward, the owner could then convert the low-income units to market-rate housing. The bill ends this option for any project that receives its housing credit allocation after January 1, 2025 (SEC. 2).

What does this mean in the real world? For developers planning new LIHTC projects, this removes a significant financial exit strategy that provided some flexibility after the initial 15-year compliance period. It essentially locks in the long-term affordability commitment for the property, making it harder for owners to convert units to market rate later on. While this is great news for tenants seeking long-term stability, it could make securing financing for new projects slightly tougher, as investors often rely on clear exit strategies.

Factoring Rent Restrictions into Property Value

For existing LIHTC projects—the ones already built and operating—the bill introduces a new rule for how their value is calculated if they undergo a review. If a developer submits a formal request to the housing credit agency related to the existing rules, the agency must now determine the fair market value of the property. Crucially, when determining the value of the low-income portion, they must factor in the rent restrictions required to keep those units affordable throughout the entire credit period (SEC. 2).

Think of it this way: If you own a duplex and one side is legally required to rent for $800 a month for the next 15 years, you can’t value it the same as the side that can charge $2,500 a month. This change ensures that when these properties are valued for sale or refinancing, the long-term commitment to affordable rents is financially recognized. For tenants in existing units, this is a win, as it legally reinforces the value of their rent protections. For the state housing credit agencies, however, this means a new administrative burden, as they will need new rules from the Secretary to perform these complex, restricted-value appraisals.

The Implementation Catch

While the changes for new projects are effective immediately upon the bill’s enactment, the rules for existing projects—the ones requiring the new fair market value determination—rely entirely on the Secretary (of the Treasury) writing the necessary rules. Until those rules are written and implemented, the housing agencies can’t fully execute this new valuation method. This creates a period of uncertainty where the intent of the law is clear—protecting long-term affordability—but the mechanism for achieving it is still being developed.