Housing

Pass-through limitation tax credit; report; penalty. Establishes, for taxable years 2026 through 2030, a tax credit for owners of qualified rental property, as defined by the bill, in an amount equal to a percentage of any qualifying tax increase in real property tax on such qualified rental property. The bill requires a taxpayer to certify that there are limitations on rent increases for any qualified rental property to be eligible for the credit. Under the bill, the Department of Taxation is required to develop guidelines for the administration of the credit, including an application process for the credit. The bill requires the Department to audit no less than five percent of the qualified rental properties for which a credit is claimed in a taxable year. If, in the process of such audit, the Department determines that the owner of a qualified rental property that claimed a credit falsely certified compliance with any of the credit eligibility requirements, the credit is subject to recapture. The bill provides that any owner of a qualified rental property that knowingly makes a false statement in an application for the credit is guilty of a Class 3 misdemeanor. The bill instructs the Department to report on the utilization of the credit by November 1 of each year to the House Committee on Appropriations, House Committee on Finance, and Senate Committee on Finance and Appropriations.

Real property tax; partial exemption for repurposing underutilized structures for residential use; local incentives. Permits localities to provide partial real estate taxation exemptions for converted real property where such conversion establishes a residential structure that has set aside at least 30 percent of the structure for households with a per capita income at or below 80 percent of the locality's median income or where the building owner is subject to an agreement with the Commonwealth or the locality regarding the provision of affordable housing. Localities have discretion to determine (i) whether a converted building qualifies for the partial exemption, (ii) any additional restrictions and conditions, (iii) whether the exemption is the amount equal to the increase in assessed value or a percentage of such increase resulting from the repurposing of the structure, and (iv) the length of time the exemption will run with the land, not to exceed 15 years. The bill provides that, at any time a building for which its owner claims a partial exemption no longer meets the requirements to receive such exemption, the locality may recapture all or a portion of the exemption granted in the immediately preceding year. Further, if a building owner that claims an exemption as described by the bill sells the building for which he is claiming the exemption and, after the sale, the property no longer meets the requirements described by the bill, the purchaser shall be subject to a penalty. The building owner shall provide written notification of the partial exemption to the purchaser. The bill also permits localities to grant tax incentives or provide regulatory flexibility to qualifying converted real property.

Virginia Residential Landlord and Tenant Act; tenant remedies; early termination of rental agreement by military personnel. Removes the requirement that military personnel terminating a rental agreement due to identified permissible circumstances shall provide the landlord with a termination date that is no more than 60 days prior to the date of departure necessary to comply with the official orders or any supplemental instructions for interim training or duty prior to the transfer.

Virginia Residential Landlord and Tenant Act; landlord remedies; noncompliance with rental agreement; payment plan. Requires a landlord who owns more than four rental dwelling units or more than a 10 percent interest in more than four rental dwelling units, before terminating a rental agreement due to nonpayment of rent if the exact amount of rent owed is less than or equal to one month's rent plus any late charges contracted for in the rental agreement and as provided by law, to serve upon such tenant a written notice informing the tenant of the exact amount due and owed and offer the tenant a payment plan under which the tenant must pay the exact amount due and owed in equal monthly installments over a period of the lesser of six months or the time remaining under the rental agreement. The bill prohibits the landlord from charging any additional late fees during the payment plan period in connection with the unpaid rental amount for which the tenant entered into the payment plan so long as the tenant makes timely payments in accordance with the terms of the payment plan. The bill also outlines the remedies a landlord has if a tenant fails to pay the exact amount due and owed or enter into a payment plan within five days of receiving notice or if a tenant enters into a payment plan and after such plan becomes effective fails to pay rent when due or fails to make a payment under the terms of the agreed-upon payment plan. The bill has a delayed effective date of January 1, 2027.

Zoning; nonconforming uses; manufactured homes. Provides that a land owner or home owner may place a manufactured home that meets the current HUD manufactured housing code upon any open lot in a valid nonconforming mobile or manufactured home park regardless of whether a valid nonconforming manufactured home is currently located on such lot. The bill also provides that, for the purposes of determining whether a use has been continuous, an existing mobile or manufactured home shall be considered a valid nonconforming mobile or manufactured home regardless of whether such mobile or manufactured home has been occupied during the preceding two-year period.

Virginia Residential Landlord and Tenant Act; Manufactured Home Lot Rental Act; retaliatory conduct prohibited. Adds numerous actions to the list of prohibited retaliatory actions by a landlord against a tenant under the Virginia Residential Landlord and Tenant Act and Manufactured Home Lot Rental Act and specifies actions by a tenant for which a landlord may not retaliate. The bill modifies and expands the list of actions a landlord may take without violating the prohibition on retaliation. The bill allows a tenant, when the landlord has unlawfully retaliated, to recover actual damages and to assert retaliation as a defense in any action brought against him for possession. The bill has a delayed effective date of January 1, 2027.

Virginia Residential Landlord and Tenant Act; fire or casualty damage; termination by landlord. Requires a landlord, prior to giving a tenant 21 days' notice of his intention to terminate the rental agreement for a dwelling unit that has been damaged or destroyed by fire or casualty, to (i) make a reasonable effort to meet with the tenant to discuss reasonable alternatives and offer the tenant a substantially similar dwelling unit, if one is available, or (ii) determine that the damage was caused by the tenant's failure to maintain the dwelling unit in accordance with relevant law. Current law allows the landlord to terminate such agreement by giving the tenant 14 days' notice of his intention to terminate on the basis of the landlord's determination that such damage requires the removal of the tenant and that the use of the premises is substantially impaired. The bill requires the landlord, upon receiving a request from the tenant after the tenant has received such notice, to reevaluate the extent of damage and habitability of such dwelling unit unless the landlord has determined that the damage was caused by the tenant's failure to maintain the dwelling unit. The bill has a delayed effective date of January 1, 2027.

Affordable housing; religious organizations and other nonprofit tax-exempt properties. Allows for the administrative approval of development and construction of housing on land owned by property tax-exempt religious organizations or certain property tax-exempt nonprofit organizations and provides that zoning ordinances shall allow the by-right development and construction of housing on real property owned by such organizations. The bill provides that the review of such developments be completed pursuant to general law and states that localities shall not require a special exception, special use permit, conditional use permit, rezoning, or any discretionary review or approval process. The bill requires that at least 60 percent of the housing development's total units be for affordable housing and that the housing development remain affordable for at least 30 years. The bill also provides that all such housing is subject to local real property taxation following completion, unless explicitly exempted by the locality. The bill has a delayed effective date of September 1, 2026. This bill was incorporated into SB 388.

Housing for local employees; grants for homeownership and workforce housing alternatives. Eliminates the maximum amount a locality may provide (i) to employees of the locality, employees of the school board, and employees of constitutional officers for homeownership grants to purchase primary residences in the locality and (ii) to school division personnel for residential housing assistance grants to provide affordable workforce housing alternatives. The bill also eliminates the requirement that such grants adhere to the Virginia Housing and Development Authority regional sales price and household income limitation guidelines. Current law imposes a maximum grant amount of $25,000 for individual grants per employee, as well as a maximum lifetime cumulative amount of $25,000 per employee. This bill is identical to HB 164.

Department of Housing and Community Development; administration of Urban Public-Private Partnership Redevelopment grant program; report. Directs the Department of Housing and Community Development to review and develop criteria and guidelines for the administration of the Urban Public-Private Partnership Redevelopment grant program in consultation with the Virginia Association of Counties, the Virginia First Cities Coalition, the Virginia Municipal League, and the Virginia Economic Developers Association. The bill requires such criteria to include (i) award prioritization for (a) localities experiencing an above average and high level of fiscal stress as designated by the Commission on Local Government in its most recent Report on Comparative Revenue Capacity, Revenue Effort, and Fiscal Stress of Virginia's Cities and Counties and (b) localities experiencing a significant decrease in commercial real estate assessments and (ii) the amount and type of local matches with consideration of both monetary and non-monetary contribution requirements. The bill requires the Director of the Department to report the Department's findings to the Chairs of the Senate Committee on Finance and Appropriations, the Senate Committee on General Laws and Technology, the House Committee on Appropriations, and the House Committee on General Laws no later than November 1, 2026.