A new survey from the National Multifamily Housing Council (NMHC) delves into the impact that building codes are having on rental housing development and affordability.
Nearly 9 in 10 NMHC survey respondents agreed or strongly agreed that building code requirements are impacting the cost and viability of construction projects. While certain building codes and standards play critical roles in the development of multifamily housing, additional layers are hampering rental providers.
Sixty-eight percent of respondents agreed or strongly agreed that mechanical/electrical codes posed significant compliance challenges, followed by energy performance and efficiency, 66%; electrification/net-zero emissions, 63%; and fire protection, 61%. In addition, 54% and 51% of respondents agreed or strongly agreed that codes and standards related to sustainability/green building and accessibility, respectively, caused them significant challenges.
The survey follows up on joint research from the NMHC and the National Association of Home Builders in 2022 that found that regulations imposed by all levels of government accounted for an average of 40.6% of multifamily development costs.
“At a time when we are confronting deep housing affordability challenges, lawmakers should be doing all they can to reduce costs and implement policies that make it easier and more efficient to build new housing and broaden housing supply,” said NMHC president Sharon Wilson Géno. “The current interest rate environment, soaring insurance costs, and rapidly increasing state and local taxes are making it increasingly difficult to build and preserve rental housing communities.”
Of the survey respondents who reported challenges, 92% agreed or strongly agreed that they could be attributed to a variation in code requirements or interpretation between jurisdictions. An example includes the interpretation of fire codes that could differ depending on an individual fire marshal. In addition, 82% agreed or strongly agreed that interpretability, or codes being difficult to interpret, was another source of significant challenges.
According to the NMHC, multifamily developers are impacted by 15 international model codes and dozens of industry standards. When asked about the extent to which they agreed that a set of specific code/standard requirements posed a significant concern for their business, 70% agreed or strongly agreed that they were likely to report concerns with electric vehicle requirements as well as conflicting or uncertain accessibility requirements.
The NMHC noted policy efforts are in the works to propose that jurisdictions adopt the latest energy code editions and/or developments with certain financing sources use the latest editions, regardless of the code editions currently required. “These energy code initiatives are largely driven by climate change goals but may not appropriately balance aggressive energy-efficiency requirements with housing affordability needs,” stated the survey.In response to these efforts, 49% of respondents agreed or strongly agreed that their business would be less likely to develop, build, or invest in a development where the latest energy code edition is required.
“We encourage lawmakers at all levels of government to work with rental housing providers to consider policy solutions that lead to the creation of new housing and lowers costs for renters,” added Wilson Géno.
