Posted on: 03rd Feb, 2009 07:50 am
Within a residential Homeowners Association the municipality has required a restriction against leasing; all dwellings must be owner occupied. Wether it proves to be a legal restriction or even constitutional I am charged with providing an opinion, as an Appraiser, as to the question of a value reduction with such a restriction. I'm convinced there is a value reduction but find no supporting data or similar circumstances. Any help?
Is this a HOA restriction or a municipality restriction? That is somewhat unclear? You may have a case if it is a municipality. However, if it is an HOA restriction, it could be very possible that it is legitimate and can be legally enforced. Also, the issue was probably put to a vote at your most recent HOA meeting, if you failed to attend, you didn't get to voice your opinion and cast your vote.
On the point of your post, I would imagine that there is only a value reduction if the market area is predominantly rentals. Otherwise, it may become a positive impact on value. This is actually a common restriction here in the Atlanta area and for the most part it has been pretty well received. The common perception is that a subdivision that is all owner occupied will typically be better maintained and it is also easier on the HOA to enforce other bylaws or restrictions. Take for example, some developments have such requirements as what side of the house your trash can may be kept or how high your grass can be kept. And giving notices and fines to renters has not been very successful.
On the point of your post, I would imagine that there is only a value reduction if the market area is predominantly rentals. Otherwise, it may become a positive impact on value. This is actually a common restriction here in the Atlanta area and for the most part it has been pretty well received. The common perception is that a subdivision that is all owner occupied will typically be better maintained and it is also easier on the HOA to enforce other bylaws or restrictions. Take for example, some developments have such requirements as what side of the house your trash can may be kept or how high your grass can be kept. And giving notices and fines to renters has not been very successful.