A Briefing From HUD on Boosting Landlord Voucher Acceptance

A Briefing From HUD on Boosting Landlord Voucher Acceptance

Housing choice vouchers remain the largest rental assistance program in the United States, serving approximately 2.3 million households annually. Because residents use vouchers to lease privately owned units, the program’s success depends on landlord participation, but fewer landlords have been accepting vouchers leading to declining voucher utilization rates. Increasing landlord participation in the voucher program is a priority for HUD. On April 14, 2023, the Bipartisan Policy Center (BPC) hosted “A Briefing from HUD on Boosting Landlord Voucher Acceptance,” a webinar discussing the various challenges to landlord voucher acceptance as well as current and proposed initiatives to increase landlord participation in the Housing Choice Voucher (HCV) program. The presenters were Solomon Greene, principal deputy assistant secretary at HUD’s Office of Policy Development and Research (PD&R); Todd Richardson, general deputy assistant secretary at PD&R; and Nicholas Bilka, acting director of the Housing Choice Voucher Program. Owen Minott, a senior policy analyst at BPC, moderated the discussion.

Barriers to Landlord Participation 

Richardson explained that more than 5,000 landlords left the HCV program every year between 2010 and 2020. Because the number of voucher holders has been rising, the number of vouchers per participating landlords has fallen even more dramatically during this time. According to an Urban Institute study, in some cities, more than 70 percent of landlords refuse to rent to voucher holders. The panelists attribute the low participation rate among landlords primarily to the perceived burdensome program requirements that HUD and the public housing agencies (PHAs) impose on landlords. Citing a 2018 study from the Poverty and Inequality Research Lab at Johns Hopkins University, Richardson and Bilka said that the most common complaint that landlords have about participating in the voucher program is its mandatory inspection process. According to Richardson, although most landlords agree with the inspection requirement, they view its current implementation as a long, capricious, and inconsistent process. Some landlords also have expressed frustration that PHAs seem to prioritize their tenants’ needs over their own. “Landlords fundamentally believe in the idea of a partnership with the PHA” and see themselves as “the implementors of a government program,” Richardson said. “[Landlords] expect the PHA to take their side when they have a conflict with a tenant, when there are damages, or they think the tenant is causing problems.”

Some landlords also report inadequate rents as a reason for nonparticipation. Although participating landlords have wide discretion in setting rents, they must base their rent on the area’s fair market rent (FMR). This rule can discourage landlords from renting to voucher holders, particularly in areas where large local variations in rents and sudden price hikes result in published FMRs underestimating a property’s true market rent. Richardson believes that high rents and low vacancy rates in 2021 might have significantly discouraged landlord participation.

Encouraging Landlord Participation

Nicholas Bilka discussed HUD’s actions since 2021 to increase landlord participation in the voucher program. HUD has been working to streamline the inspection process and make inspections more objective and consistent across jurisdictions. HUD recently gave PHAs the option to conduct remote video inspections, so that “there is no longer a need for an inspector to go onsite to resolve what could be sometimes minor deficiencies which saves money and time for the PHA and landlord,” Bilka said. HUD also now allows PHAs to require inspections biennially rather than annually.

HUD has taken steps to increase the payment standard, or the amount of subsidy that PHAs offer landlords. In 2016, HUD introduced Small Area Fair Market Rents (SAFMRs), which are calculated at the Zip Code level. PHAs that base their payment standard on SAFMRs can provide higher subsidies for rentals in communities with average rents that are notably higher than the market area’s average. The 24 PHAs that must adopt SAFMRs generally have seen more participating landlords and more leasing opportunities in higher-cost neighborhoods. When the COVID-19 pandemic hindered data collection efforts for the 2020 American Community Survey, HUD used private-sector sources such as Zillow and CoStar to determine FMRs. According to Greene, using data from private sources increased FMRs by approximately 10 percent overall. HUD also increased the maximum payment standard from 110 to 120 percent of FMR. Bilka said this change allows PHAs to account for rent inflation that FMRs might not have captured yet. Furthermore, the 2022 appropriations act allowed PHAs to use administrative fees for security deposits, utility deposits, holding fees, and landlord incentives, such as signing bonuses and reimbursement for tenant damages. HUD’s 2023 budget included a 15 percent increase for these administrative fees as well as a 10 percent increase for rental payments.

Future Directions

Bilka highlighted several proposals in HUD’s 2024 budget. HUD is launching a demonstration program that allows Housing Assistance Payment funds, which previously were restricted to rental payments, to be used for security deposits. Bilka suggested that policymakers amend the code to permanently allow the more flexible use of administrative fees, which previously was granted only through annual appropriations. Another budget proposal is to allow PHAs to preinspect units before the current residents are ready to move. Preinspection would allow voucher holders to move into units more quickly, ensuring that landlords get paid promptly. Bilka also suggested employing certain technologies to make renting units to voucher holders easier for landlords. Digitizing all required forms and offering real-time status updates for inspection visits are two ways in which Bilka believes PHAs can more closely emulate private-sector entities. The panelists also agreed that more states or localities could pass source of income laws to protect voucher holders from discrimination by landlords. Greene said, however, that source of income protection “doesn’t necessarily result in better outcomes for voucher holders if it’s not also accompanied by other things, such as program improvements.” For example, Oregon’s source of income law includes a fund that repays landlords for lost security deposits. According to Greene, this fund, although rarely used, has helped alleviate some landlords’ concerns. The panelists then outlined important avenues for future research.

Richardson noted that the voucher program already has inherent strengths that HUD can build on. The stability of tenants with vouchers can benefit landlords, who have reduced turnover costs. Furthermore, many landlords enjoy the feeling that they are helping families who are in need of housing. PD&R and HUD continue to monitor the effectiveness of new and existing strategies to further strengthen the program. Richardson said that PD&R is conducting controlled experiments to evaluate how effective HUD’s policy tools are at increasing landlord participation rates. The panelists emphasized, however, that the program’s success also depends on PHAs, state and local lawmakers, and the landlords themselves.