In recent years, a scenario of high rates has been experienced in both Chile and the United States, where the 30-year rate has reached levels ofIn Chile as well as in the United States, where the 30-year rate has reached levels of USD + 7%, which had not been seen for more than 10 years. This situation impacted the real estate market. Thus, we saw that sales decreased by 23.37% during 2022, according to the Census Bureau, and new housing starts fell by 24.06% for the same period. This has favored the rental market, which according to Zillow, experienced an 11.17% increase in rental rates during 2022.

These events resulted in a tightening of housing affordability, which, according to the latest estimates from Freddie Mac, totaled 3.8 million households in the United States.

Faced with this situation, we observed an aggressive federal government, which increased programs aimed at facilitating access to housing. Specifically, we can mention the "Housing Choice Voucher Program Section 8, which by 2022 was increased by 17.8%.

The Section 8 Housing Program in the United States

Created in 1974 by the U.S. Department of Housing and Urban Development (HUD), This program is the primary means by which the federal government assists low-income families, seniors and persons with disabilities to obtain housing in the private market.

How does it work? When an applicant qualifies for a voucherWhen an applicant qualifies for a voucher, HUD pays between 70% and 100% of the rent directly to the landlord, and the Public Housing Agency (PHA) is the entity in charge of administering it.

Who may apply? Families and individuals whose annual income does not exceed 51% of the median income of the county or area where they wish to live (as published by HUD) may apply. The program is intended for U.S. citizens and certain specified categories of immigrants. PHA must award 75% of vouchers to applicants whose income does not exceed 30% of the area median income.

What is its scope? In the past year, this program reached 30 billion, helping to pay rents for about 2.3 million households. This is equivalent to 35% of the total housing stock in Chile.

From the perspective of the investor seeking a return on real estate income, this program presents a number of benefits:

• Constant collection of rents with low risk of default.
• Annual property inspections.
• Rapid tenant placement.
• Constant tenant base; average waiting period to qualify for the program is 28 months.
• Low turnover and delinquency.
• Tenants are incentivized to pay their share of the rent to remain in the program.
• Improved quality of life for many disadvantaged families, while improving neighborhood conditions.
• Contribution to the reduction of the housing deficit through a positive relationship between the public and private sectors, by encouraging investment in housing and increasing the supply for those who have access to this benefit.

Although this type of investment is not risk-free, in times of uncertainty in the real estate market, it is a good option, through the association of experienced managers.

This is precisely why, through our Fynsa Upper Renta Residencial US I Investment Fund, we have taken a position in this type of niche in the rental market.

At the local level, the DS 19 subsidy program may sound more familiar, which, although it subsidizes the sale of housing instead of rent, fulfills the same objective of reducing the housing deficit. Here we have also taken a position, through our Fynsa Desarrollo Inmobiliario IV Investment Fund.

We invite you to learn more about these and other funds at www.fynsa.com

José Pedro Márquez

Senior Real Estate Portfolio Manager - Fynsa AGF