Low-Income Apartment Program in Jeopardy

In the interest of keeping apartment owners and management companies abreast of political events as well as reaching out to those renters searching for affordable housing, we wanted to pass along and summarize an issue under consideration in Washington that is poised to affect the housing rental industry.

Last Wednesday the Senate Committee on Banking, Housing and Urban Affairs received a strong admonishment regarding the inability of the United States Housing and Development to sustain the Section 8 affordable housing program from Hector Pinero of Related Management Company, LLC, who spoke on behalf of the National Multi Housing Council, National Leased Housing Associated and the National Apartment Association.

According to a press release issued by the National Multi Housing Council, Mr. Pinero warned members of the Senate Committee that HUD has been unable to make timely reimbursements to apartment managers that participate in the Section 8 subsidized program. The Housing Choice Voucher Program, commonly referred to as Section 8, a reference to the section of U.S. Housing Act of 1937 that created the subsidy program, has helped low-income families pay the rent since the Great Depression.

People who rent an apartment under the Section 8 program pay around 30% of their income to the apartment manager for rent and the HUD subsidy covers the remaining rent. However, late payments have become commonplace, making it difficult for apartment management companies that offer low-income apartments to pay their mortgages on time and make necessary repairs and improvements to their buildings.

The NMHC, NAA and NLHA advocate the following three steps to be taken by Congress to avoid the possible exodus of apartment owners from the Section 8 program:

1. Reevaluate and audit the process by which HUD calculates its own budget regarding Section 8 expenditures
2. Pass legislation that would penalize HUD for making late payments
3. Allocate more money to HUD to continue the Section 8 program, since the proposed budget will likely result in 100,000 renters losing their subsidies

These groups believe that the Section 8 program, which Mr. Pinero called “the most effective housing subsidy ever devised by Congress,” will be unsustainable without the above reforms. If HUD fails to make timely reimbursements to apartment owners, it is likely that many of them will opt out of the program. With waiting lines for vouchers perpetually growing, a decrease in the supply of subsidized apartments would result in many families being faced with some very difficult housing decisions.

The MyNewPlace apartment search allows you to select “affordable” as one of the amenities. Selecting this icon will include apartment buildings that offer Section 8 housing programs. Many buildings are mixed between market and subsidized housing so be sure to contact the management company for availability and details. Another great resource is RealPage.com’s MPF Research, which conducts original research to detect rental market trends.

Check out our forthcoming apartment guide for more tips on affordable apartments and updates on the Section 8 housing program.