Accession Number: 3507
Title: Rent Reduction Credit Feature of the Section 8 Existing Housing Program.
Author(s): Khadduri, Jill
Publication Date: 07/1980
Performing Organization(s): U.S. Department of Housing and Urban Development
Washington, DC
Availability: HUD USER, P.O. Box 23268, Washington, DC 20026-3268; phone (800) 245-2691; fax (202) 708-9981; or TDD (800) 927-7589
Descriptors: Sec 8 Existing Housing Prg. Rent discounts. Effects of government policies.
Abstract: As the Section 8 Existing Housing Program is now structured and administered, the rent reduction credit does not act as an effective mechanism for preventing unjustified rent increases (those increases which are not accompanied by commensurate increases in housing consumption for the family). The rent credit works as follows: if a family rents a unit below the rent ceiling or fair market rent listed on its Section 8 certificate, its contribution is no longer 25 percent of adjusted income; 25 percent of income minus a share of the "savings" are proportional to the family's contribution to the maximum allowable rent. This provision has not resulted in families finding lower rentals, partly because the current formula offers most families a trivial monetary incentive compared to the benefit they risk losing by failing to qualify for the program. An additional reason for the ineffectiveness of the incentive is that the program is administered so that calculations of the precise value of the subsidy are not the dominant influence on rent levels. There is a direct relationship between public housing authorities and landlords, and the public housing authorities play an active role in bringing units into the program and setting terms of the lease; hence, the rent credit would probably not be very effective even if it were modified to give all the savings to the family and if families were made aware of this potential for saving. Two directions which reform might take are (1) to make the rent credit part of a more general change in the program's structure and administration or (2) to accept the program's current overall structure and administrative patterns and institute measures designed to prevent unjustified rent increases within the context. Thirty-one footnotes are provided.