Employer-Assisted Housing

What Is Employer-Assisted Housing?

Employer-assisted housing (EAH) covers the ways an employer helps its workers afford a home, usually one close to work. Employers use it to recruit and keep staff in places where housing costs have pulled away from wages. The idea is old: company towns once housed whole workforces. Modern programs are usually smaller and more targeted.

How It Works

EAH programs fall into two broad groups.

Help for individual workers (demand side):

• Down payment and closing-cost help for homebuyers
• Forgivable loans, which are written off over time while the employee stays on the job
• Below-market or deferred-payment mortgages
• Homebuyer education and counseling
• Rental help, such as security deposits or rent subsidies

Help that adds housing (supply side):

• Building rental housing for employees, sometimes on land the employer owns
• Contributing cash or property to housing organizations
• Publicly backing new housing developments and zoning changes

Mortgage rules generally accommodate this kind of help. Fannie Mae’s Selling Guide, for instance, accepts employer assistance in the form of a grant, a repayable loan, a forgivable loan or a deferred-payment loan, subject to conditions.

Many employers do not run programs themselves. Nonprofits often administer EAH on their behalf, with support from state or local agencies. Some governments match employer contributions, and some states offer tax credits for employer gifts to housing organizations.

Employees should check how a housing benefit is taxed. IRS Publication 15-B describes one narrow exclusion from wages: lodging on the employer’s business premises that is provided for the employer’s convenience and that the employee must accept as a condition of the job.

Example

Some California school districts have worked with developers to build below-market rental housing for their employees, usually on surplus district land. A 2018 report published by the Terner Center found that three years after Santa Clara Unified School District completed an employee housing project, turnover among teachers living there had fallen to 8%, compared with 24% for the district overall.

Criticisms and Limitations

The National Housing Conference identifies several limits:

• Programs serve moderate-income workers much better than low-income workers, especially in expensive markets.
• Employers are generally more willing to help employees buy than rent, even though rental help may reach lower-wage staff better.
• Public matching funds can be cut when government budgets tighten.
• By bringing new buyers and investment into a neighborhood, programs could add to gentrification pressure.
• Some workers find housing near their workplace too close for comfort. Critics argue higher pay would give workers more choice.