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Affordable Rental Housing

Each year, the federal government spends around $40 billion for rental housing programs serving households with lower incomes. As the stock of housing assisted with federal funds ages and the number of families experiencing housing affordability problems grows, the federal government faces a number of management challenges and policy issues in its efforts to support affordable rental housing.

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Since 1937, the federal government has supported various programs that subsidize the construction or rehabilitation of low-cost rental housing or make rents affordable to eligible households. The government currently administers over a dozen different affordable rental housing programs, which provide assistance through a variety of tools, including rental assistance payments, grants, loan guarantees, and tax incentives. Each year, the Department of Housing and Urban Development (HUD), Department of Agriculture (USDA), and the Internal Revenue Service (IRS) spend around $40 billion on such programs, serving households with lower incomes (80 percent or less of the applicable area median income) as well as populations with special needs, such as the elderly and persons with disabilities. Key federal rental assistance programs include:

  • HUD’s Housing Choice Voucher, Project-based Section 8, and Public Housing programs
  • IRS’s Low-Income Housing Tax Credits program, and
  • USDA’s Rural Rental Program.

However, not all eligible low-income households receive federal rental assistance. According to the most recent available HUD data, in 2009, of the 17.12 million very low-income renters susceptible to severe rent burdens and severely inadequate housing, 7.10 million—41.5 percent—faced one or both of those problems without housing assistance.

The federal government faces a number of management challenges and policy issues in its effort to support affordable rental housing, including:

  • ensuring that its rental programs operate efficiently and effectively while also providing safe and decent housing and limiting growth in program costs;
  • ensuring that the stock of assisted properties is maintained in a physically and financially sound manner, is administered in a way that best serves the needs of low-income households, and remains available to lower-income tenants to the extent practicable; and
  • examining options for providing housing assistance that recognize the importance of promoting economic self-sufficiency and providing incentives for work among low-income households.
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    • Daniel Garcia-Diaz
    • Director, Financial Markets and Community Investment
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