‘Flats’:A New Resource

Increasing costs of home ownership have demonstrably forced more employed young persons, especially those aged 21 to 28, to remain in rental housing. This is particularly true in major cities, such as this nation’s capital which now has a rental vacancy rate of less than 2% and a sharply rising pattern of increasing monthly rents.

The current rental market seemingly presents a no-win situation for young persons with reasonably good incomes, particularly when it is recognized that costs for construction, land and financing remain high, while tax benefits face erosion. Thus, the prospect is for even higher rents for newly constructed rental units--even though they be in investor-owned condo units in buildings that failed to attract owner-occupants.

“I see no other prospect than that the cost of rental housing to the user-consumer will escalate in relative and absolute terms,” said veteran property management executive Irving Kriegsfeld, whose professional credentials span more than 30 years in several states.

But Kriegsfeld refuses to be pessimistic about the future of rental housing for moderate-income Americans. He recently told a Lamba Alpha Society (land economics) meeting here that the most promising means of producing reasonably priced rental units for young persons and aging Americans is a program that he euphemistically describes as “adaptation of under-utilized space to rental units.” Kriegsfeld contends that local and national studies have shown that many older single-family houses can comfortably accommodate a separate second dwelling unit within or adjacent to the structure.

These units have been called “granny flats,” “echo apartments,” “accessory apartments” or “mother-in-law units.”

My own mother’s family called the accessory apartment an “economic lifesaver” for my grandmother. She managed to maintain a modest life style as a widow for 20 years through the conversion to an apartment of the upstairs of the single-family house in Williamsport, Pa., in which she raised six daughters. The rent supplemented the modest income of an unmarried daughter, and enabled my grandmother and my aunt to live without the need for family charity. However, nephews and sons-in-law were occasionally commandeered into doing routine maintenance chores.

Kriegsfeld and others advocated relaxed local zoning to permit apartment conversions in single-family houses. He cited financial and mutual self-help benefits of accessory apartment to owners and tenants, such as lesser costs of production/creation, relatively easy financing by using a paid-for house as collateral and minimal increases in assessments and operation costs.

The owner gets cash flow, some of which is tax sheltered, enhanced value of the house, added safety and security protection--and assistance with tasks around the house if the tenant is willing to contribute some work in return for a below-market rent.

My nephew, who lives in nearby Arlington, Va., says this works out from the tenant perspective in terms of moderate rent, surveillance of the premises when tenant is absent, cooperative arrangements for deliveries, repair services and shopping assistance during illnesses.

But Justin Hinders, a member of Lambda Alpha and, like Kriegsfeld, also a veteran realtor, takes issue. Hinders contends that such conversions to rental units weakens the zoning stability of single-family neighborhoods and creates possible problems in overcrowded streets if too many tenants on a block have too many cars without off-street parking. Hinders also insisted that lending institutions are often unwilling to make loans for such conversions.

A more centrist position was taken by Joseph C. Murray, also a realtor and member of Lambda Alpha. Murray said that local regulations are needed to put a cap on the number of “granny conversions” allowed in a block or precinct. And he added that only homeowners over age 65 should be permitted to make the changes to provide rental units on their premises.

Longtime Washington residents are aware that suburban areas have been reluctant to legally permit “granny conversions” but it is also widely known that there are many “undeclared” rental units in basements of expensive Georgetown houses.