Rental Housing:

Housing Vouchers Cost More Than Certificates but Offer Added Benefits

RCED-89-20: Published: Feb 16, 1989. Publicly Released: Mar 2, 1989.

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Pursuant to a congressional request, GAO provided information on the: (1) costs of the Department of Housing and Urban Development's (HUD) section 8 existing certificate and housing voucher programs; and (2) adequacy of HUD fair-market rents and their impact on tenant rent burdens.

GAO found that: (1) although the voucher and certificate programs had the similar goal of subsidizing private rental housing, state and local public housing agencies computed rent subsidies differently for the programs, since vouchers provided incentives for finding the most suitable housing; (2) HUD use of inconsistent budgeting approaches resulted in its misleading contention that vouchers were less expensive than certificates and its proposal to replace certificates with vouchers; (3) vouchers were actually more costly than certificates, since they provided higher subsidies to families renting units for less than the fair-market rent; (4) the higher cost of vouchers would result in fewer families being assisted with vouchers than with certificates; (5) HUD planned to refinance 780,000 certificates scheduled to expire over the next 12 years with vouchers, at a cumulative cost of $9.6 billion more than if it refinanced them with certificates; and (6) fair-market rents did not always accurately reflect actual market rents, due to HUD use of outdated or regionally nonspecific data, resulting in oversubsidies, high rent burdens, or difficulty in locating affordable units.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The recommendation requested that the Congress consider establishing one rental assistance subsidy program. Such legislation was pending for several years. In the fall of 1998, the Congress passed the Work Responsibility Act which combined the housing voucher and certificate programs into one comprehensive rental assistance program. This new program adopts those features that the Congress deemed as those that best satisfied the intent of providing decent, safe, and affordable rental housing.

    Matter: Congress should consider establishing one rental assistance subsidy program. In doing so, it would need to evaluate the merits and drawbacks of several features that distinguish vouchers from certificates and adopt those features that best satisfy the programs' legislative intent of providing decent, safe, and affordable rental housing.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HUD is making timely adjustments to proposed fair-market rents based on ongoing contracted surveys of actual rental market data, and is establishing a tenant database with section 8 utilization rates and rent burdens. Survey areas are being identified by HUD field offices as locations with high or low fair-market rents.

    Recommendation: The Secretary of Housing and Urban Development should identify areas within defined housing markets where fair-market rents appear to be too high or too low and make necessary, timely adjustments to the fair-market rents. In identifying these areas, the process of setting and adjusting fair-market rents should include an analysis of data from HUD field offices on tenant rent burdens, utilization rates of certificates and vouchers, and available rental market subsidies. Through this identification process, the Secretary may find that some of these areas are large enough to warrant their consideration as separate fair-market rent areas.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Implemented

    Comments: HUD has implemented this recommendation. As of fiscal year 1991, HUD now requires that fund reservations for the certificate program be made on the same basis as for vouchers.

    Recommendation: The Secretary of Housing and Urban Development should establish consistency in the budgeting processes for certificates and vouchers, as long as the two programs coexist.

    Agency Affected: Department of Housing and Urban Development

 

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