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[Revised] Key Lawmaker’s Bill Would Raise Rents on Poor While Lowering Them for Better-Off Households

September 24, 2014 at 10:54 AM

A new bill from Rep. Randy Neugebauer (R-TX), chair of the House Financial Services Committee’s Housing and Insurance Subcommittee, would raise rents on some of the nation’s poorest families.  The bill apparently intends the rent increases to balance the possible cost of allowing the Department of Housing and Urban Development (HUD) to lower rents for families with somewhat higher incomes.  The rent increases could cause hardship — and even homelessness — for vulnerable families.

Today, families that receive rental assistance through Housing Choice Vouchers, public housing, and other HUD programs generally pay rent equal to 30 percent of their income, the maximum share that’s considered affordable.  State and local housing agencies can charge the lowest-income families a “minimum rent” of up to $50 a month.  Agencies also must allow public housing residents to pay a “flat rent” of their unit’s estimated market value, even if it’s less than 30 percent of their income (which is typically only for the highest-income residents).

The Neugebauer bill would raise minimum rents, requiring agencies to charge voucher holders and public housing residents at least $50.  The bill would also eliminate the cap on minimum rents, allowing agencies to raise rents for a large share of assisted families.  Private owners who receive direct HUD subsidies through programs such as Section 8 Project-Based Rental Assistance would have to collect rents of at least $50 a month — up from $25 — and HUD could raise this minimum without limit.

Housing agencies could choose whether to raise public housing and voucher minimums above $50, but many would likely do so, in part to cope with tight budgets in coming years.  Of the 39 agencies granted discretion through HUD’s “Moving to Work” demonstration to set rents outside the regular rules, more than a dozen have minimums above $50 and several have set them at $200 or higher.

As we’ve explained, many affected families would struggle to pay higher minimum rents.  Technically, housing agencies and owners must exempt families from minimum rents if they would cause the families hardship, but this requirement is poorly designed and places the burden on vulnerable families to apply for exemptions.  A 2010 study found that most agencies exempted less than 1 percent of the families subject to minimum rents.

The bill’s other provision would allow HUD to lower flat rents for some public housing residents.  In January, Congress established new standards intended to prevent housing agencies from setting flat rents below market levels, but some agencies have complained that the standards go too far and require above-market rents.  The Neugebauer bill would give HUD discretion to set flat rent standards, including authority to permit lower rents than the January law requires.  The lower rents may more accurately reflect local market rents.  But since families paying flat rents can opt instead to pay 30 percent of their income, this change isn’t needed to make their homes affordable.

The Neugebauer bill gets its priorities backwards.  The top priority of the nation’s rental assistance programs should be to help the neediest families afford housing.  Some adjustment to flat rents may be warranted but, if so, Congress should enact it without adding to the struggles of the most vulnerable rental assistance recipients.


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