RICHMOND, VA — The Virginia House of Delegates has taken significant steps toward empowering local governments with unprecedented authority over the sale of affordable housing properties through HB4, a bill introduced by Delegate Elizabeth Bennett-Parker. Prefiled on November 17, 2025, and offered on January 14, 2026, the legislation amends the Code of Virginia by adding a new Chapter 13 to Title 36, encompassing sections 36-176 through 36-180. This measure focuses on the preservation of publicly supported housing, imposing detailed notice requirements, rights of first refusal, and civil penalties on property owners.

Publicly supported housing, as defined in the bill, includes any building or structure with at least 10 rental units subject to affordability restrictions and benefiting from a wide array of federal and state programs. These programs encompass Section 8 of the United States Housing Act of 1937, the Federal Low-Income Housing Tax Credit Program, Section 101 of the Housing and Urban Development Act of 1965, Section 202 of the Housing Act of 1959, the Below Market Interest Rate program under Section 221(d)(3) and (5) of the National Housing Act, Section 236 of the National Housing Act, Sections 515 and 538 of the Housing Act of 1949, tax-exempt private activity mortgage revenue bonds, the Community Development Block Grant Program, the HOME Investment Partnership Program, the National Housing Trust Fund, the Virginia Housing Trust Fund, and the Virginia housing opportunity tax credit.

Under HB4, localities may adopt ordinances mandating that owners provide written notice at least 24 months prior to the termination of any affordability restriction. Termination includes expiration, nonrenewal, or prepayment of related contracts or mortgages without replacement restrictions. This notice must be delivered to the locality, all tenants, and any tenant association, detailing the owner’s intentions—whether to allow termination, convert to nonresidential use, negotiate renewal, or sell to a third-party buyer. For multiple terminations within one year, a single notice suffices if issued 24 months before the earliest date.

Owners face strict compliance verification, submitting proof within 30 days, with localities able to contest within 60 days. Failure to comply incurs civil penalties up to $5,000 per violation. For properties scheduled for termination with less than 24 months remaining upon ordinance enactment, owners have 90 days to notify.

The bill introduces a right of first refusal mechanism, allowing localities or their qualified designees—such as nonprofits, for-profits, public housing authorities, or tenant associations—to intervene in sales occurring within two years of termination. Qualified designees must commit to preserving affordability for at least 15 years. Localities can record a notice of this right in land records, which must include property descriptions, exemptions, offer acknowledgment requirements, and expiration 24 months post-termination.

Upon receiving a bona fide third-party offer, owners must notify the locality or designee within five business days, providing offer details. The locality or designee then has 30 days to match the offer on identical terms, potentially adjusting earnest money to at least four percent of the purchase price or the third-party amount, whichever is less, with refund provisions. Owners are obligated to accept the matching offer. Exemptions apply if no prior notice was recorded, the third-party buyer extends affordability for a locality-specified period up to 30 years, the transfer is not a sale, more than 24 months have passed since termination, or the offer predates a reasonable period after ordinance adoption.

Sales definitions exclude transfers to affiliates, partial owners, family members, foreclosure purchasers, deeds in lieu of foreclosure where restrictions are subordinate, or eminent domain takings. Provisions subordinate to local funding agreements or federal tax credit rights. Enforcement allows civil actions for violations, with courts empowered to award punitive damages, injunctions, and attorney fees to prevailing localities or designees.

Legislatively, HB4 progressed through the House General Laws Committee. On January 22, 2026, a subcommittee recommended reporting the bill with a 7-3 vote. It advanced further, was read a second time, engrossed, and passed the House. Referred to the Senate Committee on General Laws and Technology, it appeared on the docket for March 4, 2026. Localities with populations exceeding 3,500 adopting such ordinances must submit annual reports to the Department of Housing and Community Development.

This framework places substantial regulatory burdens on owners of subsidized multifamily properties, requiring extensive documentation and potentially delaying market transactions. By mandating acceptance of government-matched offers, the bill alters traditional property conveyance dynamics, prioritizing preservation over owner autonomy in timing and buyer selection. As the measure moves to the Senate amid ongoing housing debates, its implications for investment in Virginia’s rental market remain a focal point, particularly for properties tied to long-standing federal subsidies now facing affordability expiration risks.