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12.3: Institutional Arrangements for Building Infrastructure

  • Page ID
    21182
  • Buildings may be owned by occupants (or residents) or investors of various kinds. As shown in Table 12.2.2, nearly 30% of US housing units are owned by investors and rented to occupants.

    Ownership of buildings commonly changes over the building lifetime. Initially, buildings may be constructed with the intent of re-sale upon completion of construction, as with residential developers. Active real estate markets aid in the transfer of ownership during the lifetime of buildings. Opportunities to gain tax advantages through rapid depreciation of buildings can motivate relatively frequent building sales. With or without ownership changes, buildings typically undergo renovations and changes in function during their lifetime.

    Lending institutions often make loans using real estate as collateral. In the event of default on the loans, the lending institution can foreclose and gain possession of the property. During construction of buildings, the value of buildings is problematic, so lending institutions typically charge more for construction loans than for mortgage loans secured by a complete building’s collateral.

    Building management can be undertaken by a variety of parties, including owners, occupants or contractors. Automated aids for building management are typically less sophisticated than aids for other infrastructure systems, reflecting in part the diverse ownership of the building infrastructure.