POLICY MAKERS

The manufactured housing industry is strictly regulated by federal and state agencies.

On the federal level, the US Department of Housing and Urban Development (HUD) oversees the design and construction of today’s manufactured homes. HUD mandates all manufactured homes must meet stringent building code requirements.

Here in South Carolina, the SC Manufactured Housing Board, a division of the SC Department of Labor, Licensing and Regulation (LLR), is the state agency enforcing a wide range of rules and regulations that dealers, installers, builders and contractors must adhere to.

South Carolina law gives the MHISC a seat on the SC Manufactured Housing Board as well as the SC Building Code Council, which oversees the building code for modular and site-built homes in our state.

Repeated studies show manufactured homes appreciate under the same circumstances as site-built homes when they are in a good location and are properly maintained.

A study by Michigan University showed appreciation rates on manufactured homes have been around 5- percent each year since the early 1980’s. Also, manufactured homes, like site-built homes, can be viewed as an investment. Manufactured homeowners can build equity just like owners of site-built homes.

A study by East Carolina University showed manufactured homes appreciate at comparable rates as site-built homes when taxed as real property, and, with proper upkeep, maintenance and pride in ownership, manufactured homes can appreciate just as much if not more than site-built homes.

For these studies and others, click here.

A study done by researchers in the Department of Planning at East Carolina University has shown manufactured homes that are taxed as real property show appreciation in value, and thus provide greater tax revenue. However, when counties use outdated methods that assess the value of a manufactured home as personal property (like a car), the value of the home depreciates. Counties that use modern methods for assessment can realize increased tax revenue.

While the old method of assessing manufactured homes may have worked thirty years ago, it does not reflect the reality of modern manufactured homes. Today’s manufactured homes are built to a strict federal construction code, and are often indistinguishable from site-built homes. The home will often appreciate in market value, particularly when a home is combined with land and assessed as a single piece of real estate, a procedure known as “detitling.”

The East Carolina University study shows local governments that are not taxing manufactured homes as real property are losing money which could be put to good use.

South Carolina law provides a method for owners to combine their manufactured home and land as one piece of real estate.

Home purchasers often get a better loan rate when the home is “de-titled.” Cities and counties also benefit from the convenience of combined tax bills and improved assessment values.

The process involves “retiring” the state-issued title. State law provides a uniform procedure for de-titling manufactured homes.

Homebuyers who work with attorneys familiar with manufactured home closings often find the process a smooth one.

For details, refer to SC Code of Laws, Title 56, Chapter 19, Section 500. 56-19-500

Many people are confused by the different terms that apply to factory-built homes. Here is a quick explanation:

Manufactured Homes
Homes built to HUD’s federal building code and construction standards designed for all manufactured homes sold in the US. These standards are sometimes referred to as the “HUD Code.”

Mobile Homes
Homes built on a chassis prior to the advent of the “HUD Code,” typically those built prior to 1976, are referred to as “mobile homes.” State and federal law makes a distinction between modern day manufactured homes and their predecessor, the mobile home.

Modular Homes
These homes are also built in a factory, but to the International Residential Code, the same building code used in the construction of site-built homes in South Carolina. Modular homes can be built either off-frame or on-frame. There is no legal distinction between them. Both are taxed the same, have zoning parity with site-built homes, and are regulated by the same state regulatory program.

Learn more here.

South Carolina’s sales tax laws are designed to create parity between the way manufactured and site-built homes are taxed. Homebuyers pay no sales tax when they buy a site-built home, but builders are taxed on the raw materials that go into the home.

The sales tax formula for manufactured homes (found in SC CODE 12-36-2110-B) is as follows:

5% on first $6,000 plus 2% on the remainder.

For example, for a new $50,000 home:

$6,000   x  5%         = $300
$44,000 x  2%         = $880
______________________________
$50,000                   = $1,180

There are two energy savings incentives impacting that can benefit consumers.

1. If the home buyer purchases an “Energy Efficient” rated home, only the first $6,000 is subject to 5% state sales tax, for a total of $300.
2. If the home buyer purchases an “Energy Star” rated home, all state sales taxes are waved.

To qualify for these options, homes must be certified to insulation standards substantially above the minimum required by the building code.

NOTE: This tax incentive has been a successful one. In 1992 5% of manufactured homes sold in South Carolina met the energy standards. Today, that number is over 70%. Homeowners not only enjoy lower energy bills, but utilities benefit from a reduction in their “peak load” production requirements.

City and county officials and civic leaders are taking a second look at manufactured homes as a source of economic growth and local government funding.

Manufactured homes have an impact on property tax collections in several ways including:

Industry and Employment

Of course industry and large commercial properties are the key to a strong property tax base for a city or county.

Ask any corporate official: Affordable “workforce housing” is now a key factor that major companies evaluate in deciding where to place factories, distribution centers and other high employment facilities. Manufactured homes are the only source of affordable workforce housing unsubsidized by government tax dollars.  

Supporting the Local Economy and Businesses

Shopping centers, grocery and clothing stores, office buildings, as well as professional providers such as doctors and pharmacies are also key sources of property tax revenue and license fees.  A single manufactured home subdivision or community can be a huge boost for existing businesses and drive the construction of more tax-producing properties.

Because of the affordability of their houses, manufactured home owners have more disposable dollars than other families with the same income. That is a boost for every business in the area.

Manufactured Home Communities

Most manufactured homes serve as single-family houses.  But manufactured home rental communities make their own unique contribution to local government.  The land itself is taxed at a higher commercial rate.  That small area also is a “dense” source of personal property tax because of the concentration of automobiles and homes  in a small area.

Efficient Delivery of Services

A town with less vacant lots is more efficient. Municipalities large and small are using manufactured homes as “urban infill.”  Zoning policies that do not push affordable homes into outlying areas avoid expensive infrastructure expansion.

Proper Assessment Methodologies

Repeated university studies show that manufactured homes appreciate under the same circum- stances as site-built homes: when the home is properly maintained and in a good location. The Manufactured Housing Institute of SC can work with local assessors to implement modern appraisal methodology that will produce better values for property tax purposes.