Resident-Centered Housing Practices Gain Momentum

After a volatile period in commercial real estate, many multifamily borrowers that seek to increase the stability and profitability of their apartment buildings have a new take on a business basic: customer service. New programs, practices and technologies that can enhance the resident experience through a holistic focus on renter needs are becoming more commonplace. Major industry actors like Freddie Mac have taken notice and are working to help usher these innovations along.

“We’ve learned through our ongoing conversations with our borrowers that the scope of what it means to provide high-quality housing is growing,” said Corey Aber, Freddie Mac Multifamily’s vice president of Mission, Policy & Strategy. “What makes a tenant base want to stay in their apartment? How do we build community? Are the basic needs of our residents being met, and how can we help if they aren’t? These are the questions landlords are asking, and Freddie Mac is using its platform to find and promote the answers.”

Resident-Centered Practices Improve Tenant Experience

Freddie Mac has identified and supported a number of resident-centered best practices that have spread across the market. An often-cited example is credit building. Freddie Mac was the first in the market to bring scale to this work. In late 2021, the company pioneered this work through a partnership with Esusu. The initiative provides borrowers with a free year of the on-time rent payment service and has since been expanded to include six additional credit-building vendors. As of September, more than 500,000 residents have been enrolled and nearly 70,000 renters now have a credit score for the first time as a result. Freddie Mac’s goal is to make on-time rent reporting and credit building an industry standard.

Freddie Mac has also highlighted the importance of freely available financial education, which the company provides through its free CreditSmart platform. In addition, the company identified the importance of other services like integrated on-site health and wellness including virtual health care options, and even child and after-school care. Freddie Mac encourages these practices through its Tenant Advancement Commitment affordability preservation offering.

The feedback has been positive. Industry leaders report that these programs deliver more stable properties with less turnover and economic benefits for both tenants and operators.

“Clearly there has been a need for a comprehensive focus on renters’ needs that goes beyond setting reasonable rents and typical property management activities,” Aber said. “Forward-looking owners and operators are accessing new services and programs that meet their residents where they are, helping foster a greater sense of home.”

New Lease Standards Level the Playing Field 

In furtherance of its resident-centered housing work, Freddie Mac Multifamily has also worked with Fannie Mae and the Federal Housing Finance Agency to create a standard set of minimum required residential lease protections. Starting in Q1 2025, nearly all new GSE loans will require a 5-day grace period for rent payments, a 30-day notice for rent increases and a 30-day notice of a lease expiration for renters.

Aber noted this announcement is a demonstration of how we can “raise the bar.” While most leading owner-operators already have these practices in place, there are many who do not. The goal is to support a baseline standard for everyone.

Pivotal Role Promoting Resident-Centered Housing Practices

Aber said that Freddie Mac has a continued responsibility to identify and promote resident-centered best practices in the multifamily market, and that the company sees its role as a catalyst to encourage owner-operators who have pioneered innovative programs to share ideas throughout the industry.

“We’ve had great success convening these groups to exchange ideas with each other,” Aber said. One group that has led the way is Freddie Mac’s Impact Sponsors, which facilitates connection between sponsors who are driving meaningful change in the multifamily industry.

“Freddie Mac is going to continue to incentivize leading-edge, resident-centered practices by supporting owner-operators who are really leaning into this business model and philosophy,” Aber said. “We’ve got a lot of work to do, and we’re excited about it.”

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