Chapter 4. Offer Grants and Loans to Homeowners and Small Landlords Who Lack Resources to Keep Their Properties Up to Code

By making grants and loans available to homeowners or small, “mom and pop” landlords who lack the money to keep their properties up to code, municipalities can improve the housing stock condition, eliminate blight, and revitalize neighborhoods

Home Repair and Rental Rehabilitation Assistance: Financial assistance to owners who lack the money to bring properties up to code

For property owners who don’t have enough money to bring their properties up to code, it is important to offer financial assistance that will allow them to make needed repairs so that they can keep their properties inhabitable and occupied. A Temple University study reviewed all houses that received home repair grants in Philadelphia from 1995 to 2000 and determined that far less than 1% of houses that received repair help were abandoned in 2000—less than one quarter of the typical abandonment rates of houses that did not receive assistance.(36) Home repair loans, deferred loans due upon sale or transfer, and grants are the most common financial assistance programs offered to property owners. In addition, the nonprofit organizations Habitat for Humanity and Rebuilding Together offer rehabilitation and repair services in many areas.

What does it do?

Loan, grant, and tax abatement programs can give owners the resources they need to bring their homes up to code. When homeowners are cited for substantial violations, they should be given an opportunity to prove that they are unable to fund needed repairs and, where possible, should be offered financial assistance to help them do so.

How do we pay for it?

Home repair loans and grants are typically funded through U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) and HOME funds, which can be used for home repairs. Community development corporations and nonprofits such as Habitat for Humanity and Rebuilding Together may also be able to provide crucial repairs for low-income homeowners.

What types of property are covered?

To ensure that primary residences do not become abandoned, the majority of grants and loans are provided to homeowners. Financial assistance can also be provided to owners of investment properties and to landlords.

What challenges will it solve?

Studies have shown that where property owners do not have the resources to fix serious problems, such as cracks in the walls or holes in the roof, they are likely to abandon the homes in as little as five years.(37) A repair grant can prevent abandonment and keep a property inhabitable and occupied.

Where does it apply?

Any county or municipality may provide home repair loans or grants to property owners.

How does it work? What is needed to use this law effectively?

The municipality must determine whether property owners who have serious violations are able and willing to take loans to repair the violations. If so, a revolving loan fund with low interest rates may be the least expensive way to provide financial assistance. When owners do not have the credit scores or the willingness to finance repairs, counties and municipalities may explore grants or deferred loans payable on the transfer of a property. Such loans can be forgiven over time.

Pre-screening and training contractors will help develop the workforce to provide repairs and will allow a municipality to negotiate flat rates for services.

Contacting Habitat for Humanity and Rebuilding Together, to take advantage of the resources those nonprofits offer, is also an important step.

What policies and practices will increase our chances of successfully using this tool?

To achieve high impact, targeted repair assistance is essential. Local governments can choose to target to a specific population, such as homeowners who have substantial code violations. Local governments can also choose to target funds to a specific neighborhood, thereby making a significant contribution to its revitalization. For instance, to create and sustain mixed-income neighborhoods and allow owners to remain in their homes and take advantage of new amenities, a municipality could target home repair dollars to areas that are attracting significant private investment.

Another option worth considering to help cover the costs of repair is a tax abatement to owners who have incomes at or below 150% of the poverty level. The goal is to offer an incentive for owners straining to invest $5,000, for example, to keep their homes livable. Owners should be required to document the material and labor expenses for home repairs and improvements.

What legal documents will we need?

The legal documents differ, depending on the type of financial assistance offered.

Who is using the tool now?

Philadelphia’s Basic Systems Repair Program (BSRP) is the city’s primary home repair program. For an average cost of $6,911 per home, BSRP provides free emergency repairs to electrical, plumbing, and roofing systems. The Philadelphia Housing Development Corporation (PHDC), a government-related nonprofit, administers BSRP with funding from federal Community Development Block Grants, the state of Pennsylvania, and Philadelphia’s Housing Trust Fund. The program has two tiers: Tier I covers emergency repairs up to $3,500, and Tier II covers more extensive repairs, with a maximum cost of $17,500. To be eligible, a household must prove that its income is no higher than 150 percent of the federal poverty line ($30,972 for a household of four). Prequalified contractors are sent to homes to complete needed work at below-market prices. The city also offers three loan programs for home rehabilitation: Phil Loans, Phil-Plus Loans, and Mini-Phil Loans. Loan programs are less effective than grants at addressing home repair needs, because owners must have adequate credit to qualify, income to pay back the loans, and confidence in their properties’ value to warrant a major investment.

How can we combine this with other strategies?

Most of the tools in this manual focus on taking action against property owners who choose to leave their vacant properties in disrepair. Home repair and rental rehabilitation assistance is a tool focusing on good owners who lack the resources to maintain their properties. By combining “carrots” and “sticks,” local governments can have the most success improving their properties, reducing abandonment, and eliminating blight.


36. Blight Free Philadelphia: A Public-Private Strategy to Create and Enhance Neighborhood Value, Research for Democracy (2001), reported that of the almost 12,000 houses that received grants from 1995 to 2000, only 117 were found to have been abandoned by 2000.

37. Barbara Wilson, “These Old Houses: 2001” (issued by the U.S. Census Bureau, February 2004).