Rental Housing Assistance


Rental housing assistance makes rental housing more affordable to people with low incomes. The most widespread and widely researched form of rental housing assistance, the rent subsidy, is an evidence-based practice with proven success in preventing homelessness among extremely low-income households and in providing housing stability for people with histories of homelessness. Other forms of rental housing assistance are operating subsidies, which are project-specific, and flexible rental housing assistance, commonly used in Homelessness Prevention and Rapid Re-Housing programs.

Problem or Challenge:

In 2009, 7.1 million households in the U.S. had “worst case needs,” defined as having an income at or below 50 percent of area median income (AMI), not receiving government housing assistance, and paying more than one-half of their income for rent or living in severely inadequate conditions, or both.   More than 71 percent of all households with worst case needs are extremely low-income, meaning their incomes are at or below 30 percent of AMI.  People experiencing homelessness fall within this group, with most having incomes at or below 15 percent of AMI. (While AMI varies by region, 15 percent of AMI is, on average, about half the federal poverty level). 

Rates of homelessness are greater in places where rental vacancy rates are low and median rental costs are high relative to incomes (1). Conversely, rates of homelessness have been found to be lower in geographic areas in which a larger fraction of subsidized rental housing is targeted to very poor households (2). Studies have found that receiving a housing subsidy virtually eliminates the risk of homelessness among low-income families, and few families that exit a homelessness program with a housing subsidy become homeless a second time (3).

Solution:

Rental housing assistance reduces housing cost burdens by making rental housing more affordable to people with low incomes. There are three primary types of rental housing assistance:  1) rent subsidies; 2) operating subsidies; and 3) flexible rental housing assistance.  “Rental housing assistance,” as this term is used by USICH, includes but is not limited to the activities that are defined as “rental assistance” under HUD regulations related to the HEARTH Act.

Rent Subsidies

The most widespread and widely researched form of rental assistance is a rent subsidy, which covers the difference between the tenant’s rent contribution and the full cost of rent for the unit, with an adjustment for tenant-paid utilities. The federally-funded Housing Choice Voucher Program (commonly known as “Section 8”) is the largest rent subsidy program in the nation, assisting about two million households at any one time.  Through the program, households receive a “voucher” that can be used towards housing of their choice that meets Section 8 program requirements. Section 8 vouchers are administered by state and local public housing agencies (PHAs), which make monthly rent subsidy payments to landlords on behalf of tenants holding vouchers. The vouchers are not time limited as long as the recipient, unit, and landlord continue to meet program requirements, although annual renewals are subject to the availability of funds. 

In most cases, households pay 30 percent of their monthly income, after certain deductions, towards rent and the PHA subsidizes the difference between the tenant’s rent contribution and the total amount due to the landlord. Most PHAs impose a minimum monthly rent of up to $50 so even households with no reported income pay some rent. Additionally, some PHAs have Moving to Work (MTW) status, which gives them more flexibility in administering the program, and some have used that flexibility to implement alternate rent structures.

Most Section 8 vouchers are “tenant-based,” meaning the voucher is attached to a household that can use the voucher to rent any unit that passes Section 8 requirements and if the household moves to another unit, the voucher can be used in the new unit.  Up to 20% of a PHA’s vouchers can be “project-based.”  With a Project-Based Voucher (PBV) the subsidy is attached to a housing unit through a contract with the owner for a defined number of years.  While the tenant living in the unit may move, the voucher remains attached to the unit and the owner selects another tenant referred from the PHA’s waiting list. 

PHAs must ensure that 75% of households that they admit to the Housing Choice Voucher program each year are extremely low-income. Beyond that, PHAs may establish local preferences for selecting applicants from their waiting lists. For example, PHAs may give a preference to a family who is 1) homeless or living in substandard housing, 2) paying more than 50 percent of its income for rent, or 3) involuntarily displaced. Families that meet one or more of these local preferences move ahead of other families on the list who meet fewer or no preferences.  Each PHA has the discretion to establish local preferences to reflect the housing needs and priorities of its particular community.

Other federal rent subsidy programs are similar to Section 8 in many ways but targeted to specific populations.  Examples are Shelter Plus Care, targeted to homeless persons with disabilities, or rental assistance available under HUD’s Continuum of Care program; HUD-Veterans Affairs Supportive Housing (VASH), targeted to homeless Veterans; and Family Unification Program (FUP) vouchers, targeted to child welfare-involved families.  A number of states (including New Jersey, Connecticut, and Massachusetts) and some local communities have established their own rent subsidy programs, which may be comparable to Section 8, to help meet the need for vouchers. 

Rent subsidies are an evidence-based practice with proven success in preventing homelessness among extremely low-income households and in providing housing stability for people with histories of homelessness.  A rent subsidy also decreases the likelihood that a family will be doubled-up and living in crowded conditions (4). In every study that has examined the role of housing subsidies in housing stability among families, subsidized housing – with or without any additional services – has helped families to leave shelters and not return. 

Operating Subsidies

Operating subsidies make units within rental housing developments affordable by covering the difference between the rent charged to tenants (which may be a flat amount or based on a percentage of the tenant’s income) and the cost to the owner of operating the housing. Operating subsidies may be built into the cost of developing the housing by using capital to fund an operating reserve, or may be funded annually pursuant to an operating subsidy contract with a funder. This is the model for HUD’s public housing program, which serves approximately one million households at any one time.

Rent and operating subsidies are used successfully in many types of affordable housing for people experiencing or at risk of homelessness, including permanent supportive housing.  Tenant-based subsidies are used in scattered-site housing programs, including Housing First initiatives, and project-based rent and operating subsidies are commonly used in single-site housing projects.

Flexible Rental Assistance

Many communities use public and private funds to provide flexible rental assistance as part of their efforts to help individuals and families transition to permanent housing through Rapid Re-Housing programs or help them stay housed through Homelessness Prevention programs. These rental assistance strategies are considered flexible because they do not follow the same rules as HUD’s public housing and HCV programs. The assistance is usually tenant-based and frequently time limited – such as one-time help (e.g., payment of first month’s rent) or monthly subsidy payments over 2-24 months, depending on the needs of the household and the terms of the program.  The subsidy itself may be income-based, with the household paying a fixed percentage of their income for rent and the subsidy covering the rest, or may be structured as a flat subsidy based on the household’s rent or apartment size. The flat subsidy may be shallow (for example, covering only $100-200 per month) or deep (such as coverage of 70-80 percent of the rent). Whether income-based or flat, the subsidy may decline in steps based upon a fixed timeline or when the household has reached specific goals.

Common sources of flexible rental assistance are the Emergency Solutions Grant (ESG) program, the Federal HOME program (which can be used to provide tenant-based rental assistance for up to two years), Temporary Assistance for Needy Families (TANF) emergency assistance, city and county human service dollars, and philanthropy. Flexible rental assistance is not a substitute for the benefits of a rent subsidy for families that need long-term assistance, but it can be used to bridge a household’s receipt of a rent subsidy while they are on a waiting list. 

Flexible rental assistance has not been extensively studied to document impact. In one study, an ongoing, very shallow subsidy was shown to be extremely effective for maintaining housing stability for very low-income, cost burdened people with HIV or AIDS, when compared to a similar unsubsidized comparison group (5). In Michigan, families receiving rapid re-housing rental assistance were less likely to re-enter shelters than a comparison group of families exiting homeless shelters without rental assistance.

Implementation Steps/Tips:

  • Much remains to be learned about effective targeting approaches for rent subsidies.  Targeting rental assistance to households most at risk of becoming homeless is difficult because we do not know which at-risk households will become homeless unless they receive assistance. On the other hand, targeting rental assistance to households that have already become homeless can encourage people to enter shelters, because that becomes a way to access the limited, available assistance. Communities are experimenting with different ways of addressing these two dilemmas. Some examples include the following:

o   Targeting subsidies to homeless individuals and families with fixed incomes (such as SSI or SSDI) because of a disability, or to child welfare-involved families experiencing homelessness.

o   Using short-term rental assistance to transition households to permanent housing, and prioritizing permanent rental subsidies for families that continue to have challenges paying for housing independently after 12-18 months of short-term assistance.

o   Using project-based subsidies, for which PHAs can create separate wait lists, to provide assistance to a more targeted group such as homeless families or chronically homeless individuals.

  • Rental subsidies allow for “transition in place.”  In addition to enabling families to move directly from homelessness into permanent housing, rent subsidies can be used effectively in “transition in place” programs. The subsidies permit the families to stay in the same housing after the services transition away, resulting in a high level of housing retention (6).  As family incomes increase through employment or access to mainstream benefits, the amount of rental subsidy declines. If families earn enough to pay rent without assistance, they can stay in the same housing, without having to move.
  • Ensuring access to rental subsidies. Homeless families are less likely to have access to rental subsidies, compared to other low-income families who remain housed.  Assisting homeless households in navigating the application process for rent subsidies and finding a suitable housing unit can help to address this disadvantage. 

Outcomes/Results:

The impact of rent subsidies on housing stability has been extensively documented. In a New York City study, the rate of readmission to shelters for those who left shelters was much lower for those who obtained subsidized housing than for those who did not. Only 7.6 percent of those who went to subsidized housing came back to shelters within two years, compared with 13 percent of those who went back to their prior residence and 37 percent who went elsewhere (7). In the Welfare to Work Voucher evaluation, families eligible for welfare were randomly assigned to receive housing vouchers or not. Five years after random assignment, 12.5 percent of families who did not receive vouchers had been homeless during the previous year, compared to only 3.3 percent of those using a voucher, a reduction of 74 percent (8).

Contact Info for Follow-up: 

The National Alliance to End Homelessness has published two useful summaries of research related to the role of rental housing assistance in addressing family homelessness, including Ending Homelessness for Families: The Evidence for Affordable Housing and Housing Vouchers are Critical for Ending Family Homelessnesswww.endhomelessness.org

The Technical Assistance Collaborative has prepared a number of helpful summaries on the Section 8 rental subsidy program and the use of tenant-based and project-based vouchers in housing people with disabilities. www.tacinc.org

Information on the Section 8 Housing Choice Voucher Program is available from HUD at http://www.hud.gov

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Related Profiles:

Promising Practice:  Streamlining Access to Housing

Promising Practice:  Housing Stabilization Supports

Promising Practice:  Rapid Re-Housing

Promising Practice:  Permanent Supportive Housing

Promising Practice:  Housing First

Model Program:  HomeStart (Boston MA)

Model Program:  Project Independence (Alameda County CA)

References/Footnotes

 1. John Quigley, Steven Raphael, and Eugene Smolensky, “Homeless in America, Homeless in California.” The Review of Economics and Statistics 83(2), 2001, 37-51.

 2. Dick Early and Edger Olsen, “Subsidized Housing, Emergency Shelters, and Homelessness: An Empirical Investigation Using Data from the 1990 Census,” Advances in Economic Analysis and Policy 2(1), 2002, 1-34.

 3. Mills, G., Gubits, D., Orr, L., Long, D., Feins, J., Kaul, B., Wood, M., Amy Jones &  Associates, Cloudburst Consulting, & The QED Group, Effects of Housing Vouchers on Welfare Families. U.S. Department of Housing and Urban Development, 2007.

 4. Mills, G. et. al. 2007.

 5. Dansinger, Lisa K. and Richard Speiglman, “Homeless Prevention: the Effect of a Shallow Rent Subsidy on Housing Outcomes among People with HIV or AIDS,” AIDS and Behavior, Volume 11, Supplement 2, 128-139

 6. Jami Borodnyi, Evaluation of the Sound Families Initiative: How Are They Faring? Northwest Institute for Children and Families, University of Washington School of Social Work, January 2007.

 7. Yin-Ling, Irene Wong, Dennis P. Culhane, and Randall R. Kuhn. “Predictors of exit and reentry among family shelter users in New York City.” Social Service Review, 71, 1997, 441-462.

 8. Wood, Michelle, Jennifer Turnham, & Gregory Mills (2009).  Housing affordability and family well being: Results from the Housing Voucher Evaluation.  Housing Policy Debate, 19, 367-412.