Strengthen and Improve Rental Assistance Programs

Updated July 10, 2025
Navigation: Improve and Increase the Voucher Program | Expand the Allowable Uses of HAP to Help Families Lease Units | Fund and Streamline Public Housing

Improve and Increase the Voucher Program 

The Section 8 or Housing Choice Voucher (HCV) program — enacted in 1974 — is a critical rental- assistance program for low-income Americans. The HCV program includes both tenant-based rental assistance and project-based rental assistance. Unlike the public housing program, the rental subsidy in the HCV program is tied to the tenant (although project-based vouchers, or PBVs, require the tenant to live in a specific unit tied to assistance for at least one year). This allows families in the HCV program to use their rental assistance in the private rental market. Typically, tenants pay 30% of their income to landlords for their portion of the rent, while PHAs, through federal subsidies, pay the remainder. The Section 8 program also includes Project-Based Rental Assistance (PBRA), a program similar to project-based vouchers, but with different statutory and regulatory requirements. 

The HCV program is used by a broad spectrum of people, and 77% of the families on the program are extremely low-income. Tight rental markets nationwide make finding allowable units for the voucher program more difficult, which has impacted leasing. Furthermore, rising rental prices have increased the average per unit cost for a voucher household, increasing costs of the program. Keeping landlords in the voucher program, helping families use their vouchers to move to areas with access to quality services, like schools and jobs, and finding units for voucher recipients to lease all play a considerable role in the success of the HCV program. 

People in the HCV program typically have a source of income. Similar to the Public Housing program, 90% of voucher households have either wages as their major source of income (28%) or have other sources of major income that are not wages or welfare (42%). Just 4% of households in the voucher program have welfare as a major source of income. The average household income per year for voucher households is $17,835. Thirty-eight percent of voucher families have children, while 35% have a female head of household with children. Twenty-six percent of households in the program include an individual who has a disability, 48% of households are black, non-Hispanic, while 18% are Hispanic, and 30% are white, non-Hispanic. 

The HCV program has two primary accounts. The first is the Housing Assistance Payments (HAP) account, which is the portion of the subsidy that is paid to landlords as rental assistance. The second is the administrative fee account, which is the portion of voucher funding that is used for the costs of operating the program and for certain other eligible uses.  

Payment standards for the voucher program, which set the upper limit of the subsidy that the PHA will pay per voucher, are based on Fair Market Rents (FMRs). HUD calculates FMRs annually. In most instances, the FMR for an area is the amount that a program participant would need to pay the gross rent (shelter rent plus utilities) for a unit. The FMR is set such that it should be enough to rent approximately 40% of safe, decent units in a geographic area. Unfortunately, data used to determine FMRs frequently lags market rental prices and may make it harder for some families to use their vouchers. 

Recommendation: Continue developing new methods for calculating and improving FMRs, including collaborating with the Census Bureau to improve rental data collected in the American Community Survey (ACS). 

Renewal Funding Inflation Factors (RFIFs) impact the amount of money available for PHAs to fund their voucher programs. In 2024, HUD changed the methodology for how RFIFs are calculated. This change does not accurately reflect the increasing costs of vouchers which are impacted by large increases in FMRs and, as a result, caused insufficient funds to be allocated for voucher programs across the country. 

Recommendation: HUD should revert back to the RFIF methodology it used in FY 2023 to calculate RFIFs to ensure voucher costs are keeping pace with rental markets. If HUD decides to update the RFIF methodology in future years, HUD should engage in a public notice and comment process.  

It can be challenging for voucher holders to find eligible units. Recent research shows that only “61[%] of searches initiated [in the voucher program] in 2019 succeeded using a 180-day search window . . .” Additionally, “[i]f that timeline [was] extended to 240 days, the estimated success rate [rose] to 63[%].”  Other research shows that the stock of low-cost units has been declining.  There has been a loss of 3.9 million units with rents below $600 in the past decade and the low-rent segment has declined by 1.2 million units between 2019 and 2021. Thirty-six states lost more than 10% of units with contract rents below $600. 

Research has shown benefits to voucher holders moving out of areas of concentrated poverty – including benefits to physical health and mental health. For children under the age of 13, there are also long-term financial benefits in the form of increased lifetime earnings.  Programs that help voucher holders move out of areas of concentrated poverty are called mobility programs. Enhanced Payment Standards that allow voucher holders to move to more expensive neighborhoods that have increased access to community amenities and lower poverty rates are critical.  

Enhanced Payment Standards would allow PHAs to be able to set payment standards within the following parameters: either 90% to 130% of the FMR or 90% to 150% of the Small Area FMR. Housing agencies should also be able to set payment standards at 140% for FMRs and 160% for Small Area FMRs as a reasonable accommodation for a person with a disability without applying to HUD for a waiver. Since this additional flexibility does not include the ability to lower a payment standard from its current lower bound, there will be no harm to voucher recipients of receiving a voucher less than they normally would. Additionally, since no voucher recipient will receive a lower payment standard, there is no need to require an impact study. 

Recommendation: Ensure all families have access to neighborhoods of opportunity through mobility programs and Enhanced Payment Standards. 

While administrative fees are mainly used to operate the program, in certain instances, PHAs can use them to help voucher holders overcome barriers to leasing up housing. In 2022, HUD began to allow PHAs to use administrative fees for expenditures other than those associated with normal administrative activities. This includes providing landlord    incentive payments, landlord retention payments, security deposit assistance, utility deposit assistance, utility arrears assistance, application fees, non-refundable administrative or processing fees, refundable application deposits, broker fees, holding fees, or renter’s insurance, if required by the lease. These new uses are a major change to the program and illustrate why adequate administrative fee funding is critical to help voucher holders lease up units.  Currently, the administrative fee account is significantly oversubscribed. In Fiscal Year 2024, PHAs only received 91 cents for every dollar they should have received based on the administrative fee formula. 

Recommendation: Fully fund HCV Administrative Fees to ensure that PHAs can help their residents find safe, secure housing in extremely tight rental markets across the country.  

Attracting landlords to the voucher program remains a key priority for both HUD and PHAs.  Recent research, primarily in metropolitan areas, highlights some frustrations landlords have with the program. The three most common factors that can influence a landlord’s preference for renting to voucher holders are: financial motivation, landlords’ perception of tenants, and bureaucratic factors.  

Source of income anti-discrimination laws prevent landlords from discriminating against potential renters based on the source of the income used to pay rent, including HCV subsidy. In most instances, these laws do protect voucher holders from landlord discrimination. However, only certain, select jurisdictions have source of income anti-discrimination laws – there are currently no federal protections.  Although laws preventing source-of-income discrimination are selectively enforced and violations may be difficult to prove, they do offer a benefit to voucher holders seeking to lease units.    

Recommendation: Prohibit source of income discrimination at the federal level. 

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Expand the Allowable Uses of HAP to Help Families Lease Units 

Allowing PHAs to use HAP for certain limited, specific, and enumerated activities that would assist families in overcoming obstacles to voucher usage, like short-term financial assistance and to create risk mitigation funds, would help increase voucher utilization, improve success rates, and foster movement to areas of opportunity. This change is cost-neutral and will improve the efficacy of vouchers, while housing more people.  

Short-term financial assistance  

Many of the barriers to using a voucher are small payments that a family may struggle to afford. These barriers are common in high-opportunity areas. Examples of these types of costs are landlord-required security deposits and application fees. Allowing Public Housing Agencies (PHAs) to use HAP funding to address some of these common barriers to leasing up would greatly help families use their vouchers and secure homes in high-opportunity areas.   

Risk mitigation fund

One-way PHAs have found to increase private sector involvement and to attract landlord participation, is through the creation of a risk mitigation fund. This fund would reimburse landlords for any damages that voucher holders might cause to their units. From past PHA experiences, the fund is rarely used, but its existence helps draw landlords to the program and alleviates landlords’ concerns. This fund is an extremely efficient use of federal funds because it helps to attract landlords to the program, but is rarely, if ever, spent. Allowing HAP to be used in the creation of this fund would help draw landlords to the program, increasing the number of potential units.  

Recommendation: Allowing voucher HAP funding to be used for short-term financial assistance can help residents secure housing in areas with limited availability and make them more competitive when leasing up. Specific activities that PHAs should be able to use their HAP funding for are the following:  

• Funding security deposits for voucher holders – not having funding for security deposits can prevent families from leasing up a unit.
• Funding screening fees – in some areas, landlords charge for screening fees, which can act as a barrier to leasing a unit;
• Funding application fees – in some areas, landlords charge for application fees for rental applications, which can act as a barrier to leasing units;
• Funding one-time utility deposits – in some areas, utility companies require one-time utility deposits before starting services, which can act as a barrier to leasing a unit;
• Funding hold fees – these fees are charged by certain landlords when a potential tenant expresses an interest in a unit and would like to “reserve” the unit for themselves (sometimes necessary as the tenant is waiting for the housing agency to inspect the unit); lack of funding for hold fees can act as a barrier to leasing a unit;
• Renter’s insurance – some landlords require that tenants have renter’s insurance to lease their unit, which can act as a barrier to leasing a unit;
• Other similar short-term financial assistance – certain areas may have other short-term costs which prevent voucher holders from leasing a unit; and
• Creating a risk mitigation fund – a risk mitigation fund would reimburse landlords for any damages that voucher holders may cause to a unit. While landlords rarely file claims, having this fund provides reassurances to landlord and makes them more likely to participate in the program.  

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Fund and Streamline Public Housing 

The Public Housing program remains the oldest source of federally assisted affordable housing in the country. Public housing units are permanent units that must remain affordable in perpetuity. Since its inception in the 1930s, public housing has evolved dramatically, but still provides critical housing to low-income families, seniors, and individuals with disabilities nationwide – 34% of public housing units house families with children and 37% of public housing units have an individual over the age of 62 as the head of household. Most residents of public housing spend 30% of their income on rent, except when residents opt to pay a flat rent or a PHA charges a minimum rent. This structure has long been successful in making housing available to families that otherwise may not be able to afford a home.  

Based on federal performance metrics, PHAs that manage and maintain public housing have operated the program effectively, especially when considering funding trends over the past decade. Underfunding of public housing capital needs has created a considerable backlog that must be addressed to ensure public housing units are preserved for future generations. 

Public housing units remain critically important because they are a source of project-based subsidy in an increasingly expensive rental market. Unlike other rental subsidy programs, which require the cooperation of private landlords, public housing units are permanently and deeply subsidized because they are owned by PHAs, who set rental rates based on tenant income, regardless of the cost of operating the unit. The public housing stock is an especially critical resource today: the Harvard Joint Center for Housing Studies found that, since 2019, the share of cost burdened renter households has increased annually and that, since 2011, the overall percentage of affordable rental units has decreased.  Household income determines program eligibility based on a family’s ability to afford homes in the private housing market. 

Funding for public housing units is governed by an Annual Contributions Contract (ACC), the contract between HUD and the PHA, which sets the rules and requirements between the two parties. Agencies administering public housing receive funding for the program through two primary federal sources: the Public Housing Operating Fund and Public Housing Capital Fund. These funds are critical to ensure the adequate maintenance and operation of the public housing program. The ACC is a critical document that ensures PHAs have the rights needed to successfully operate their programs. 

Recommendation: Fully fund the Public Housing Fund, including the Public Housing Operating and Capital Fund programs. This includes accounting for significant program increases due to insurance premiums and inflation.   

Recommendation: Ensure that the Annual Contributions Contract (ACC) between HUD and PHAs is representative of the requirements in the 1937 Housing Act. 

Operating Fund dollars are used for day-to-day operations associated with public housing. The amount of Operating Fund dollars that PHAs receive for their public housing developments is determined by the Operating Fund formula. The formula takes into account the number of occupied unit months, the number of available units, inflation levels, utility expenses, additional programs in operation, and income generated through tenant rents. Typically, appropriations for the Operating Fund do not cover the full costs of the Operating Fund formula.  

Certain recent market changes have impacted the Operating Fund. First, inflation has drastically limited PHAs’ spending power, and the Operating Fund formula will continue to lag behind this trend into funding for next year. Second, the Operating Fund formula considers rents charged instead of rents collected. This means that there are numerous instances where HUD assumes PHAs have received more tenant rent than they have, especially as different COVID-19 pandemic-related eviction moratoria ended over the past few years. Third, insurance premiums have increased dramatically nationwide. 

All of this means that operating fund levels have not kept up with operating costs.  The most recent PHA-level data shows that average monthly spending rose by 23% for agencies operating the public housing program from 2022 to 2023, while the Operating Fund increased by only 15%.  This creates an operating fund shortfall. In May 2024, 157 agencies, or about 6% of all agencies with public housing, were both in shortfall and eligible for funding to meet this need. Other agencies may report shortfall but be ineligible for funding due to receiving shortfall awards in 2023, repositioning public housing developments, or high monthly operating reserves (MORs). In fiscal year 2023, the average shortfall amount was $139,619 per PHA operating public housing, totaling $377 million nationally. 

Recommendation: Fully fund the Public Housing Operating Fund shortfall account as PHAs have seen an unprecedented rise in operating costs. 

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