Making Housing Vouchers Easier and Faster for Tenants and Landlords

The Housing Choice Voucher Program, often referred to as “Section 8,” is a well-intended and often successful program that provides people with a rent subsidy for available housing in the market without waiting for new construction. Section 8 would benefit from some key reforms to improve and expand its efficiency, and thus its ability to contribute to providing housing to people who need it quickly. However, households are having to wait to qualify for the program, then qualify but can’t find a provider that takes vouchers, and are paying higher rents than they can afford according to the standard. Meanwhile, while holding their voucher, other households are qualified on a waitlist for vouchers.

Reforms to the program could include:

• Qualify participants on current cost burden, not just income;
• Provide immediate cash assistance to households that qualify in their current housing arrangement;
• End the current inspection requirements; and
• Create an incentive program to repair older, lower rent housing.

Long waiting lists

The Housing Choice Voucher (HCV) Program, more commonly known as the “Section 8 Program,” is a housing intervention intended to provide a monthly housing subsidy to qualified households who rent housing in private, market rate housing units. While the program has had success in housing people, it is faced with long waiting lists and when people qualify for a voucher, they often can’t find housing in the market because prices are too high even with a voucher.

A household must qualify for a voucher based on income compared to local Area Median Income (AMI) standards established by the Department of Housing and Urban Development and must be able to find a unit that charges Fair Market Rent (FMR).

For example, in King County Washington, a single person earning 40 percent of the local AMI of $68,880 would be able to pay up to $1,601 in rent. If a qualified resident found a one-bedroom apartment for $1,260 monthly rent, she would qualify for $727.00 in rental assistance.

On their website, the King County Housing Authority (KCHA) explains how this works:

“Tenant-based Section 8 vouchers help approximately 11,400 households with low incomes rent homes on the private market. With a voucher, tenants pay at least 28 percent, but generally not more than 40 percent, of their household income for rent and utilities. KCHA pays the difference between the tenant’s portion of the rent and the amount requested by the landlord.”

So while the example cited is not typical the subsidy can be significant and lower rent costs below the normative standard of 30 percent of income before taxes. In some cases, though, the payment might be higher but still shields the resident from some of the costs above the 30 percent standard.

Part of the intent of the program is to encourage people of lower incomes to live in areas with higher rent encouraging “geographic choice.” The advantage in terms of cost for the Public Housing Agencies, called PHAs, is a savings on capital costs from construction and operating costs. Does the subsidy seem like a lot? Well, if local governments put their foot on the supply chain with regulation, prices go up and thus, so do subsidies.

Many people qualified for assistance can’t get it

While many people get assistance, there are also many more who may qualify but simply can’t enter the program because it doesn’t have enough money. The KCHA has almost 2,000 people on a closed waiting list — they are not accepting any new applications. And when people do have vouchers they often can’t find a place to use them because rents are too high; KCHA noted in a 2018 report that it took 240 days of looking to find a unit in 2018.

And what is the demand beyond the closed waiting list? It isn’t easy to say, but most local governments measure housing price problems based on cost burden using census data. Cost burden is defined as monthly housing costs above the normative standard of 30 percent. A report by the Regional Affordable Housing Task Force suggested that there are 156,000 cost burdened households in King County, not surprisingly the most cost burden is at the lowest levels of income.

In a study of issues on the private provider side of the program, a HUD study found that many providers don’t want to participate or find participating a challenge. Taking a voucher might provide a more secure stream of income for smaller, providers with few units and a more hands on approach. But many of these providers who often have the lowest rents and older, less well-maintained buildings are skeptical of the program.

“We find that most nonparticipants rejected the program not because of a lack of market fit but because of negative experiences with the program. These experiences generally consist of the following dynamics: (1) inspections, (2) a general frustration with the bureaucratic aspects of participation, and (3) a tenant conflict.”[ASAR6] In addition, lease terms are often only 3 months, while most regular leases run as long as 12. The uncertainty of voucher income is a big disincentive for housing providers.

Ideas for Section 8 reform

Here’s a broad outline of the kinds of reforms that can make Section 9 work better:

Enable cost-burdened households to qualify, not just those with low absolute incomes. Clearly if a household is cost burdened it is paying rent somewhere in a market rate unit of housing. It is grossly inefficient for a family to qualify for the voucher, keep paying a large portion in rent, and then have to find a qualifying unit.

Facilitate direct deposit. Upon establishing cost burden using a recent rent receipt and pay stub, deposit the difference between qualifying Fair Market Rent and the level of subsidy immediately into the households bank account for use in paying current rent; This can work on a phone app or online. Along with this change should come at least a 12-month commitment for the subsidy to support longer leases.

End the current inspection regime. The inspection program is discouraging participation, adds time to the process of qualifying willing providers.

Incentivize the repair of older buildings. The HUD study found that most of the willing participants operate housing units on the margins of the rental housing market. Often the lower rents in those units derive from deferred maintenance. The program shouldn’t inspect buildings and then wait for compliance; it should invest in those buildings as an incentive.

Conclusion

For the program to build on its success — and for many households work their way out of the program — it must focus on providing immediate assistance to the most obvious households in need, those with the highest existing cost burden. Part of this must include some program that uses resources to expand potential qualifying inventory by improving lower cost housing for qualifying households.