Naturally Occurring Affordable Housing and Why Preservation Matters

Naturally occurring affordable housing (NOAH) is rental housing that lower- and moderate-income households can afford even though no government program subsidizes it or caps its rents. It is usually older and modest: a 1970s garden apartment complex, a fourplex, a rented house. It stays affordable only as long as the market allows. A new owner, a renovation, or a rising neighborhood can push its rents beyond what current tenants can pay.

Preservation is the work of keeping existing affordable homes affordable and in decent condition. It applies to NOAH and to subsidized housing, whose rent restrictions usually end on a fixed date. Preservation matters because the homes being lost are often the cheapest and best-located ones a community has. Replacing them with new construction takes years and usually costs more.

What Counts as NOAH

NOAH has no single official definition. A 2017 publication from the Office of the Comptroller of the Currency (OCC), a federal bank regulator, described it as housing that meets federal affordability standards without public subsidy. Programs that fund NOAH write their own tests. Minnesota Housing’s NOAH loan program, for example, requires a property to:

• Have four or more rental units
• Be at least 20 years old
• Have rents in a majority of units affordable at or below 60% of state or area median income, whichever is greater
• Have no federal or state financing or tax credits that already restrict income or rent

Much NOAH got that way through filtering: as buildings age, they lose value relative to newer ones and become affordable to lower-income renters. NLIHC’s 2026 Gap report notes that most of the U.S. housing stock available to lower-income renters is older housing that filtered down from higher rents. It cites research finding that 23% of rentals affordable to very low-income renters in 2013 had been in higher rent categories in 1985.

Two kinds of at-risk affordable housing

Why NOAH Is at Risk

Slowing filtering and rising rents

According to NLIHC’s 2026 Gap report, filtering has slowed sharply since 2015 and has even reversed in some urban areas. Older buildings are getting more expensive because landlords have reason to renovate and upgrade them in markets where supply has lagged behind demand. When demand outruns supply, rents rise across the market, including in older buildings.

Acquisition and repositioning

Because no subsidy agreement restricts NOAH rents, a buyer can generally purchase a building, renovate units, and raise rents to match newer apartments. That is legal in most places, and it can bring needed repairs. But it can also cause displacement of existing tenants. The OCC’s 2017 publication on preservation described high demand for apartments leading investors to buy affordable rental properties and convert them to market-rate housing.

Aging buildings

NOAH’s low rents often reflect deferred maintenance. The Gap report warns that when rents at the bottom of the market fall too low, owners may neglect or abandon properties. Small buildings are especially exposed. The OCC’s 2017 publication noted that apartments in older, smaller buildings tend to rent for less, and that because of their age, many are in poor condition.

Expiring Affordability in Subsidized Housing

Most subsidized rental housing is affordable for a set term, not forever. When that term ends, the owner may be free to raise rents or sell. This is called expiring use.

The scale of the issue

NLIHC’s 2026 Advocates’ Guide estimates that about 5 million rental homes are supported by federal project-based subsidies, about 10% of the U.S. rental stock. The Low-Income Housing Tax Credit supports half of them, project-based Section 8 about 21%, and public housing about 18%. Analyzing 2025 data from the National Housing Preservation Database (NHPD), NLIHC found that restrictions are set to expire for 417,515 federally assisted homes over the following five years. That is 8.3% of the assisted stock. LIHTC accounts for 58% of those homes, and project-based Section 8 accounts for 20%.

NLIHC groups the risks into three kinds, drawing on research by Vincent Reina:

• Exit risk: restrictions expire, or an owner leaves early through mortgage prepayment, foreclosure, or a legal option.
• Depreciation risk: buildings wear out because restricted rents do not cover major repairs.
• Appropriations risk: rental assistance and operating subsidies depend on Congress funding them every year.

Tax credit properties: year 15 and year 30

LIHTC properties that received credits in 1990 or later must stay affordable for a 15-year compliance period plus an extended use period, for a federal minimum of 30 years. But federal law lets an owner, after year 14, ask the state agency to find a buyer who will keep the property affordable. The buyer must pay at least a price set by a statutory formula based on the property’s debt, investor equity, and cash distributions. NLIHC says that price is usually far above what the property is worth as affordable housing. If the agency cannot present such a qualified contract within one year, the restrictions end. Existing tenants then get three years of protection from eviction without good cause and from rent increases beyond LIHTC limits.

The 2024 Picture of Preservation report from NLIHC and the Public and Affordable Housing Research Corporation (PAHRC) estimates that 155,555 LIHTC homes awarded credits since 1990 lost their restrictions after 15 years, which suggests they may have left through this process. The National Council of State Housing Agencies (NCSHA) puts the number lost through qualified contracts at over 120,000 by the end of 2024. NLIHC reports that the pace of losses has slowed. Citing the National Housing Trust, it says at least 39 state agencies now require applicants to waive the qualified contract option and nine more award points for doing so. In December 2023, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac would make LIHTC equity investments only in projects that waive it.

Separately, the same report projected that restrictions will expire for 538,418 LIHTC units by 2034. Advocates also point to disputes over nonprofits’ right to buy properties after year 15. Federal law allows nonprofits, tenants, or government agencies to hold a right of first refusal at a minimum price equal to outstanding debt plus the taxes owed on the sale. NLIHC reports that some investor firms have challenged those rights in court.

Project-based Section 8

From 1974 to 1983, HUD helped develop more than 800,000 apartments under 20- to 40-year project-based rental assistance contracts. When those contracts began expiring in large numbers in the mid-1990s, Congress passed the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA). Under MAHRA:

• HUD must renew a housing assistance payments contract if the owner chooses to renew, subject to annual appropriations.
• Mark-to-Market restructures the mortgages of FHA-insured properties whose subsidized rents are above market, so they can operate at market rents.
• Mark-Up-to-Market raises rents to market levels in high-cost areas in exchange for renewals of at least five years.

Owners can also opt out. Federal law requires at least one year’s written notice to HUD and tenants before a contract ends. Tenants in buildings that leave the program are generally eligible for enhanced vouchers, which let them stay even if the new rent exceeds the local voucher payment standard. If an enhanced voucher holder moves out, though, the unit is no longer affordable to the next renter.

Other programs

A central risk for public housing is physical decline. NLIHC reports that, as of its 2024 analysis, 30% of public housing homes were in properties that failed their last federal inspection. The Rental Assistance Demonstration lets housing agencies convert public housing to long-term Section 8 contracts so they can borrow for repairs. In rural areas, an article in the OCC’s 2017 publication noted that rent restrictions and rental assistance in USDA Section 515 properties can end when a mortgage matures or is prepaid.

Expiration Does Not Always Mean Loss

Many owners renew or find new funding. Research reviewed in Reina’s 2018 paper finds that nonprofit owners have been more likely to renew than for-profit owners, and that properties in strong markets are more likely to opt out. The paper cites a 2015 Florida study finding that almost 21% of project-based rental assistance units whose subsidy ended became unaffordable. That is a significant share, but it is far from all of them. The risk is highest where market rents far exceed restricted rents and the owner is profit-motivated.

Preservation Tools and Funds

Data is a tool too. The NHPD, created by NLIHC and PAHRC, lists federally assisted properties, the subsidies attached to each, and when their restrictions are set to expire.

Debates and Trade-Offs

• Cost vs. growth. Reina’s review found evidence that preservation costs less per home than new construction. But preservation only keeps existing units affordable. It does not grow the total stock, and it draws on the same limited credits and loans.
• Limits of the cost evidence. Reina cautions that the properties in cost studies may not be representative. He also notes that rehabilitated buildings tend to cost more to operate than new ones.
• Depth and length of protection. Voluntary rent limits, like Freddie Mac’s, last no more than 10 years and are set at moderate-income rent levels. They are aimed at middle-income renters, not the lowest-income renters.
• Owners’ rights. The qualified contract is written into federal law, and owners who never waived it are entitled to use it. Critics, including NLIHC, call it a loophole and urge Congress to close it for future properties and revise the price formula.

The Bottom Line

Much of America’s affordable housing was never built as affordable housing. It is older, unsubsidized property that the market left behind, and the market can take it back. Subsidized housing is also time-limited, with hundreds of thousands of homes reaching the end of their restrictions in the next few years. Preservation keeps both kinds affordable, and the available evidence suggests it costs less than building new. It works best alongside new construction, not instead of it.