Real Estate

HUD proposes raising rent for people receiving federal housing subsidies

HUD Secretary Ben Carson touting “Making Affordable Housing Work Act”

Claiming that the current system of providing federal housing subsidies to low-income renters is “convoluted” and “unsustainable,” the Department of Housing and Urban Development is proposing sweeping reforms to its housing assistance programs.

HUD announced on Wednesday that it will seek to introduce the “Making Affordable Housing Work Act” in Congress, which HUD claims will provide renters with a “simpler, less invasive and more transparent” system of rent payments and puts HUD’s rental assistance programs on a “more fiscally sustainable path.”

In a call with reporters, HUD Secretary Ben Carson said that the way HUD provides housing subsidies right now is not working. “The current system isn’t working very well,” Carson said. “Doing nothing is not an option.”

As for what HUD is proposing, the main tenet of the proposal is raising the rent on roughly half of those who currently receive housing subsidies.

According to HUD, approximately 4.7 million families currently receive federal housing subsidies in order to gain access affordable, quality housing and pay their rents. Of those families, more than half are currently headed by senior citizens or a person living with a disability. 

HUD’s rent reforms will not increase the rents paid by qualifying households that are currently receiving assistance because they are comprised of elderly persons or persons with disabilities.

But the rest of those more than 2 million people would see their rents rise by as much 300% under HUD’s proposal.

According to HUD, Congress requires HUD-assisted households to provide 30% of their adjusted income toward rent while the government makes up the difference, up to a maximum amount.

Under HUD’s proposal, that amount would increase to 35% of their net income, which basically means that the amount they’d be required to pay would increase threefold.

This how HUD describes other pieces of the plan:

This approach, with its complicated set of income certification requirements, imposes substantial administrative burdens on PHAs and owners and may suppress residents’ earned income.

HUD is proposing a simplified structure of ‘core rents’ that offers a more transparent and predictable rent calculation that streamlines program administration for PHAs and owners and is easier for both landlords and tenants to understand.

Under this core rent proposal, PHAs and owners would only be required to verify income every three years rather than annually. This would substantially ease the administrative burden on PHAs, owners, and residents and would effectively encourage increased earned income without adversely impacting a household’s rent for up to three years. 

HUD will also create a menu of ‘choice rents’ that PHAs and owners may implement to promote greater flexibility, local control, and self-sufficiency for non-elderly/non-disabled households.

“The system we currently use to calculate a family’s rental assistance is broken and holds back the very people we’re supposed to be helping,” Carson said in a statement. 

“HUD-assisted households are now required to surrender a long list of personal information, and any new income they earn is ‘taxed’ every year in the form of a rent increase,” Carson continued. “Today, we begin a necessary conversation about how we can provide meaningful, dignified assistance to those we serve without hurting them at the same time.”

As you might imagine, affordable housing advocates bemoaned the proposal.

In a lengthy statement, the National Low Income Housing Coalition explained the bill’s changes and its potential impact.

“The bill would also increase rents for households with high medical or child care expenses by eliminating income deductions, the impact of which would disproportionately fall on seniors, people with disabilities and families with kids,” the NLIHC said. “The bill provides the HUD secretary with the authority to impose even higher rents through alternative rent structures and de facto time limits. And the proposal allows housing providers to broadly impose work requirements, without any resources to help people gain the skills they need for well-paying jobs.”

Diane Yentel, president and CEO of the NLIHC, added: ““Despite claims that these harmful proposals will increase “self-sufficiency,” rent hikes, de facto time limits, and arbitrary work requirements will only leave more people without stable housing, making it harder for them to climb the economic ladder. Proposing these changes under the guise of saving the government money, just months after giving massive tax breaks to wealthy people and corporations, is the height of cruel hypocrisy.”

To read HUD’s proposal in full, click here.

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