North Haven suffers from an extreme lack of affordable homes and land for sale. In our efforts to address that problem—and to preserve the affordability of housing for year-round residents today and long into the future—North Haven Sustainable Housing (NHSH) frequently uses “affordability covenants.”
An affordability covenant is specific language included in the deed to a property that restricts the resale of the property in specific ways. Housing organizations—like NHSH—can add these covenants to the deeds of the properties they sell in order to restrict the future resale price and to restrict the sale of the property to certain qualified buyers. In the case of NHSH, our affordability covenants require all future buyers of the properties we sell to be year-round residents of the island with a low or moderate income. The covenant can also restrict the amount a property’s sale price can increase.
Covenants are placed on the property as a part of the deed. In most cases, they remain in effect through multiple sales, enforced in law but overseen by North Haven Sustainable Housing’s board.
Depending on the type of property and sale, North Haven Sustainable Housing may use different limitations to try to restrict the future resale price of the property. For example, a covenant may allow the property to increase in value based on a yearly percentage or a percentage of the consumer price index. This is in contrast to a typical sale, in which a house sells for the highest price the market will bear. If a homeowner receives a substantial subsidy when purchasing their home, based on a discount offered by the cooperating seller or by investments made by North Haven Sustainable Housing, the intent of covenant language is to pass along that same discount to a future buyer. Homeowners may improve their homes and add value to them, which they may realize at a resale, but there may be, in some cases, a process to ensure improvements won’t degrade the value of the home or make it unlivable for a future owner.
Covenant language may vary, depending on the project, the purchase price of the home, and the condition of the home at the time of purchase.