Section 8 (housing)
Section 8 of the Housing Act of 1937 (42 U.S.C. § 1437f), often called Section 8, as repeatedly amended, authorizes the payment of rental housing assistance to private landlords on behalf of low-income households in the United States. Of the 5.2 million American Households that received rental assistance in 2018, approximately 1.2 million of those households received a Section 8 based voucher. 68% of total rental assistance in the United States goes to seniors, children, and those with disabilities. The U.S. Department of Housing and Urban Development manages Section 8 programs.
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The Housing Choice Voucher Program provides "tenant-based" rental assistance, so a tenant can move from one unit of at least minimum housing quality to another. Landlords are not required to participate in the voucher program. Some states have laws that prevent landlords from discriminating based on 'source of income'. These laws are not applicable in all areas and the program remains voluntary in most places. The program also allows individuals to apply their monthly voucher towards the purchase of a home, with over $17 billion going towards such purchases each year (from ncsha.org analysis). Voucher amounts vary depending on what city or county you are in, size of unit, and other factors.Once individuals receive a voucher they have a limited amount of time to find a unit with a willing landlord that meets HUD housing standards. There are often long wait lists for Section 8 vouchers.
Voucher amounts are based on Fair Market Rents (FMRs) calculated in the area by the Department of Housing and Urban Development (HUD). Recently, a Small Area Fair Market Rents (SAFMRs) program was established to reduce the area that rents are based on to the area of zip codes in major metropolitan areas.
Section 8 also authorizes a variety of "project-based" rental assistance programs, under which the owner reserves some or all of the units in a building for low-income tenants, in return for a federal government guarantee to make up the difference between the tenant's contribution and the rent amount in the owner's contract with the government. A tenant who leaves a subsidized project will lose access to the project-based subsidy.
The United States Department of Housing and Urban Development (HUD) and the United States Department of Veterans Affairs (VA) have created a program called Veterans Affairs Supportive Housing (VASH), or HUD-VASH, which distributes roughly 10,000 vouchers per year at a cost of roughly $75 million per year to eligible homeless and otherwise vulnerable U.S. armed forces veterans. This program was created to pair HUD-funded vouchers with VA-funded services such as health care, counseling, and case management.
Federal housing assistance programs started during the Great Depression. In the 1960s and 1970s, the federal government created subsidy programs to increase the production of low-income housing and to help families pay their rent. In 1965, the Section 236 Leased Housing Program amended the U.S. Housing Act. This subsidy program, the predecessor to the modern program, was not a pure housing allowance program. Housing authorities selected eligible families from their waiting list, placed them in housing from a master list of available units, and determined the rent that tenants would have to pay. The housing authority would then sign a lease with the private landlord and pay the difference between the tenant's rent and the market rate for the same size unit. In the agreement with the private landlord, housing authorities agreed to perform regular building maintenance and leasing functions for Section 236 tenants, and annually reviewed the tenant's income for program eligibility and rent calculations.
The Housing and Urban Development Act of 1970 introduced the federal Experimental Housing Allowance Program (EHAP) and the Community Development Corporation and authorized larger outlays for housing subsidy programs and rent supplements for moderate-income households.
In the 1970s, when studies showed that the worst housing problem afflicting low-income people was no longer substandard housing, but the high percentage of income spent on housing, Congress passed the Housing and Community Development Act of 1974, further amending the U.S. Housing Act of 1937 to create the Section 8 Program. In the Section 8 Program, tenants pay about 30 percent of their income for rent, while the rest of the rent is paid with federal money.
The Section 8 program initially had three subprograms—New Construction, Substantial Rehabilitation, and Existing Housing Certificate programs. The Moderate Rehabilitation Program was added in 1978, the Voucher Program in 1983, and the Project-based Certificate program in 1991. The number of units a local housing authority can subsidize under its Section 8 programs is determined by Congressional funding. Since its inception, some Section 8 programs have been phased out and new ones created, although Congress has always renewed existing subsidies.
The 2008 Consolidated Appropriations Act (Public Law 110-161) enacted December 26, 2007, allocated $75 million funding for the HUD-Veterans Affairs Supportive Housing (HUD-VASH) voucher program, authorized under section 8(o)(19) of the United States Housing Act of 1937. This new program combines HUD Housing Choice Voucher rental assistance for homeless veterans with case management and clinical service support which is provided by Veterans Affairs administration at its own medical centers and also in the community.
The main Section 8 program involves the voucher program. A voucher may be either "project-based"—where its use is limited to a specific apartment complex (public housing agencies (PHAs) may reserve up to 20% of its vouchers as such)—or "tenant-based", where the tenant is free to choose a unit in the private sector, is not limited to specific complexes, and may reside anywhere in the United States (including Puerto Rico) where a PHA operates a Section 8 program.
Under the voucher program, individuals or families with a voucher find and lease a unit (either in a specified complex or in the private sector) and pay a portion of the rent. Most households pay 30% of their adjusted income for Section 8 housing. Adjusted income is a household's gross (total) income minus deductions for dependents under 18 years of age, full-time students, disabled persons, or an elderly household, and certain disability assistance and medical expenses.
There is an asset test in addition to earned income. Over a certain amount, HUD will add income even if the Section 8 tenant does not receive any interest income from, for example, a bank account. HUD calls this "imputed income from assets" and, in the case of a bank account, HUD establishes a standard "Passbook Savings Rate" to calculate the imputed income from the asset. By increasing the amount of a tenant's total income, the amount of imputed income from assets may affect a tenant's assigned portion of rent.
The PHA pays the landlord the remainder of the rent. Each year, the federal government looks at the rents being charged for privately owned apartments in different communities, as well as the costs of utilities (heat, electricity, etc.) in those communities. The Fair Market Rents (FMRs) are amounts (rents plus utilities) for medium-quality apartments of different sizes in a particular community. As an example, 2012 FMR for 1 bedroom housing in San Francisco is $1,522 and in New York is $1,280 while in many other places it is less than $500.
Landlords, although required to meet fair housing laws, are not required to participate in the Section 8 program. As a result, some landlords will not accept a Section 8 tenant. This can be attributed to such factors as:
- not wanting the government involved in their business, such as having a full inspection of their premises by government workers for HUD's Housing Quality Standards (HQS) and the possible remediations required
- a desire to charge a rent for the unit above FMR
Depending on state laws, refusing to rent to a tenant solely for the reason that they have Section 8 may be illegal. Landlords can use only general means of disqualifying a tenant (credit, criminal history, past evictions, etc.). It also may be illegal to post "No Section 8" advertisements.
However, other landlords willingly accept Section 8 tenants, due to:
- a large available pool of potential renters (the waiting list for new Section 8 tenants is usually very long, see below)
- generally prompt regular payments from the PHA for its share of the rent
- tenants' incentive to take good care of the property (PHA's require that tenants not damage rental properties. In many instances a tenant may be removed from the program if they owe a previous landlord money).
Whether voucher- or project-based, all subsidized units must meet the HQS, thus ensuring that the family has a healthy and safe place to live. This improvement in the landlord's private property is an important byproduct of this program, both for the individual families and for the larger goal of community development.
Applicants may apply for a Section 8 housing voucher at any county or city housing authority office in their state, and although rules vary according to each authority, in general, residents of a particular area who receive a voucher from the jurisdiction in which they live may use the voucher anywhere in the country, but nonresidents of the jurisdiction must live in the jurisdiction that issues the voucher to them for 12 months before they can move to a different area. Also, priority for vouchers is often reserved for those who reside in the service area of that housing authority.
In many localities, the PHA waiting lists for Section 8 vouchers may be thousands of families long, waits of three to six years to obtain vouchers are common, and many lists are closed to new applicants. Wait lists are often briefly opened (often for just five days), which may occur as little as once every seven years. Some PHAs use a "lottery" approach, where there can be as many as 100,000 applicants for 10,000 spots on the waitlist, with spots being awarded on the basis of weighted or non-weighted lotteries, with priority sometimes given to local residents, the disabled, veterans, and the elderly. There is no guarantee that anyone will ever receive a spot on the waiting list.
Families who participate in the program must abide by a series of rules and regulations, often referred to as "family obligations", in order to maintain their voucher, including accurately reporting to the PHA all changes in household income and family composition so the amount of their subsidy (and the applicable rental unit size limitation) can be updated accordingly. In recent years, the HUD Office of the Inspector General has spent more time and money on fraud detection and prevention.
Fair Market Rents
Fair Market Rents (FMRs) are calculated to determine how much a landlord is able to accept for rent of a unit to a Section 8 voucher recipient. FMRs are gross rental rates and dictate the maximum rental rate to be agreed upon in a lease document. The calculation of FMRs is based on a standard quality rent from the five year American Community Survey, as well as a recent mover adjustment, which is the relationship between the standard quality for five years and the one year recent mover rents. FMRs also include a CPI adjustment and a trend factor adjustment. The trend factor adjustment is how HUD expects rental rates to grow.
FMRs include all major utilities (heat, electricity, etc.), but does not include telephone, cable, satellite television, or internet service. Utilities are included in FMRs whether the obligation of payment is under the tenant or the landlord. FMRs can be found using HUD's Database.
Small Area Fair Market Rents
The Small Area Fair Market Rents Program (SAFMRP) was officially implemented by HUD in January of 2017. This system is an update to the system HUD uses to calculate Fair Market Rents (FMRs) in metropolitan areas. The purpose is to examine metropolitan area FMRs by ZIP code, as opposed to in total. HUD stated that this program is aimed to allow voucher recipients to move into higher opportunity areas and reduce the concentration of voucher recipients in a given metropolitan area.While the program was originally intended to be mandatory for several metropolitan areas immediately, the requirement for the use of SAFRMs was delayed to October 1, 2019.SAFMRs can now be found through the HUD database.
The implementation of this program follows a demonstration project coordinated by HUD in 2010. The project included the following Public Housing Authorities (PHAs): The Housing Authority of the County of Cook (IL), the City of Long Beach (CA) Housing Authority, the Chattanooga (TN) Housing Authority, the Town of Mamaroneck (NY) Housing Authority, and the Housing Authority of Laredo (TX).
An early report states that the effects of this program need to be analyzed over a long period of time before determining results. Vincent Reina, Arthur Acolin, and Raphael W. Bostic, published an early examination of the new SAFMRP in 2019. This study finds varied results in the SAFMRP based on different metropolitan areas. Two areas of note are the highest performing city in the study and the lowest, Dallas, TX, and Chattanooga, TN, respectively. The authors argue that Dallas performed well with the SAFMRP because the city was required by court order to implement the program, and the program has been in place for longer than all other cities in the study. The authors state that the benefits of the SAFMRP change over time, and analysis of the program must include time series analysis for all effects.
The authors also explain why Chattanooga, TN may have performed the lowest in the study. Two reasons include the fact that most rental units were already in accessible areas, and most residential areas in Chattanooga are low opportunity, therefor voucher recipients did not have increased choice with the implementation of the program.
Earned Income Disallowance
There is a provision for disabled people who have a Section 8 subsidized dwelling to have their rent frozen for a specified time if they are working part-time below a certain income level. This is called the Earned Income Disallowance or Earned Income Disregard (EID) and is stipulated under US 24 CFR 5.617, "Self-sufficiency incentives for persons with disabilities—Disallowance of increase in annual income". This was enacted as part of Quality Housing and Work Responsibility Act of 1998 (QHWRA) (Sec. 508(b); 42 U.S.C. 1437a(d)). This requires Public Housing Authorities and some owners, in calculating rent, to temporarily "disregard" increased income earned when certain public housing residents and disabled participants in certain housing assistance programs return/go to work or job-related programs. The idea is to foster self-sufficiency for those who are on subsidies and disability and other assistance.
Howard Husock, vice president for policy research at the conservative Manhattan Institute, heavily criticized Section 8 in a 2003 book on housing policy as a vehicle for exporting inner city social problems to the suburbs.
Hanna Rosin, an American journalist, has argued that Section 8 has led to crime being more evenly spread out across U.S. metropolitan areas, without any net decrease. This was the core thesis of her article published by The Atlantic in 2008, in which she linked Section 8 to a crime wave in the Memphis, Tennessee, metropolitan area. Rosin's article attempted to position Memphis as just one particularly troubling example of a nationwide trend: "Still, researchers around the country are seeing the same basic pattern: projects coming down in inner cities and crime pushing outward, in many cases destabilizing cities or their surrounding areas." Rosin's article has been highly influential among politicians in cities claiming to be negatively affected by Section 8, such as Lancaster, California.
Rosin's article was later criticized by Greg Anrig in an article published on The American Prospect. In the article, Anrig accuses Rosin of placing an excessive amount of blame on housing policy for the reported increase in crime. The article makes reference to the fact that Rosin never made a conclusive argument that those who participate in Section 8 were responsible for the higher rates of crime, as those who receive housing support are subject to screenings based on drug use and previous criminal activity. Rosin instead relies on a heat map of crime created by Richard Janikowski and Phyllis Betts who are reported to have said they were "[…] amazed – and deflated – to see how perfectly the two data sets fit together."
Janikowski and Betts later disavowed any connection between housing vouchers and increases in crime in the area in a later letter to the editor for the Atlantic. Rosin failed to mention that there was a consistent decrease and increase in crime from inner-cities to the inner-ring suburbs across most metropolitan areas due to shifting populations. Anrig argues that economic factors are more likely responsible for Memphis's increase in crime, as male unemployment almost doubled between the years of 1990 and 2000. Anrig also makes reference to Moving to Opportunity (MTO), a randomized policy experiment. The study concludes that there was no increase in violent crime for the participants of subsidized housing or their surrounding neighborhoods in the five cities tested; Memphis was not a part of the study. Even though the participants were far more likely to stay in poorer areas when given the chance to leave, families still received a modest academic and psychological benefit. In fact, according to a paper prepared for the U.S. Department of Housing and Urban Development and the Office of Policy Development and Research rather than increasing crime, those who use housing vouchers are more likely to move into areas where crime is increasing.
Matthew Marr published a study of the Los Angeles housing market in Summer of 2001 that examines the effects of housing placement specialists on the Section 8 voucher program. Marr finds that housing placement specialists function as an intermediary between tenants and landlords that help increase mobility of Section 8 voucher recipients.
Tight rental markets can pose a challenge to Section 8 voucher recipients. Marr finds, through observations and interviews, that the resource of housing placement specialists can help prevent private landlord apprehension, and help voucher recipients navigate the program and general rental market. Landlord apprehension can be a result of many factors. Common qualitative data indicates some factors to be: tenant behavior, tenant cleanliness, and financial burden. These factors are some areas housing specialists work to mitigate problems.
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- Described further in "Programs of HUD" Archived 2015-11-20 at the Wayback Machine, HUD.
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- HUD, "Project Based Vouchers" Archived 2009-01-11 at the Wayback Machine "Project-based vouchers are a component of a public housing agency's (PHAs) housing choice voucher program. A PHA can attach up to 20 percent of its voucher assistance to specific housing units if the owner agrees to either rehabilitate or construct the units, or the owner agrees to set aside a portion of the units in an existing development."
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- Steinberg, Jessica, Esq., "The Income and Assets Test for Section 8 Housing" Archived 2009-08-05 at the Wayback Machine, Legal Network News, California Advocates for Nursing Home Reform (CANHR), Winter 2004. "If a family's net assets are worth more than $5000, the family must count toward annual income the greater of either (1) all income derived from the assets, or (2) a percentage of the total value of the assets based on the passbook savings rate, as determined by the U.S. Department of Housing & Urban Development (HUD) each year. The PHA will never count the full cash value of the asset toward annual income."
- HUD, "Housing Choice Voucher Program Guidebook" Archived 2009-01-18 at the Wayback Machine, Chapter 5: Eligibility and Denial of Assistance, pp. 5–24. January 10, 2008 version. "Calculation When Assets Exceed $5,000: When net family assets are $5,000 or less, use the actual income from assets. When family assets are more than $5,000, use the greater of: Actual income from assets; or A percentage of the value of such assets based upon the current passbook savings rate as established by HUD. This is called imputed income from assets."
- "Passbook Savings Rate – Section 8" Archived November 20, 2008, at the Wayback Machine
- HUD, "Public Housing Occupancy Guidebook" Archived 2009-01-18 at the Wayback Machine. "Public Housing Passbook Savings Rate" Another conforming change is related to the passbook savings rate. The Public Housing Occupancy Guidebook suggests that PHAs use a new rate of 2% to be consistent with Multi-Family Housing's passbook savings rate policy. However, as the Office of Housing is updating the passbook savings rate, therefore, PHAs should continue to implement PIH's current policy regarding the passbook savings rate until further notice."
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Property owners increasingly can charge more than the government is willing to pay.
- "DC Human Rights Act of 1977" Archived 2006-12-06 at the Wayback Machine Subchapter 2 Part C: Housing and Commercial Spaces the document states: 'It shall be an unlawful discriminatory practice to do any of the following acts, wholly or partially for a discriminatory reason based on the actual or perceived...source of income.' Government assistance such as vouchers are considered a source of income.
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