Creating a Direct Rental Assistance Demonstration

Creating a Direct Rental Assistance Demonstration

Brian J. McCabe, Deputy Assistant Secretary for Policy Development in the Office of Policy Development and Research (left) and Aaron Shroyer, Senior Advisor in the Office of Policy Development and Research (right).

Brian J. McCabe, Deputy Assistant Secretary for Policy Development
Aaron Shroyer, Senior Advisor, Office of Policy Development and Research

The Housing Choice Voucher (HCV) program is HUD’s largest assisted housing program, helping approximately 2.3 million households rent units in the private market each year. Access to rental assistance through the HCV program offers numerous benefits to assisted households, including reductions in housing instability and access to neighborhoods with lower poverty rates. But voucher holders find it increasingly difficult to find suitable rental units on the private market because of source of income discrimination, lack of landlord participation in the HCV program, and tight rental markets.

To implement many of its pandemic-era assistance programs, the federal government simplified the design of these programs, making payments directly to households through economic impact payments, the expanded child tax credit, and emergency rental assistance. HUD is spearheading an effort to learn from these pandemic-era programs and simplify the administration of the HCV program.

The HCV program currently requires that public housing agencies (PHAs) issue the voucher subsidy to the landlord on behalf of an eligible household; for the household to benefit, the landlord must accept the voucher, have their unit pass an inspection, and sign a contract with the PHA. Approximately 40 percent of households offered a voucher are unable to find an eligible unit with a willing landlord. 

Providing rental assistance directly to the eligible household, rather than to their landlord, could streamline the assistance process and enable more low-income renters to benefit from the program. Already in Philadelphia, the housing authority is testing a model of rental assistance provided directly to tenants on the Housing Choice Voucher waitlist.  The agency selected 300 tenants from the waitlist to receive a prepaid debit card, rather than a housing voucher.  The direct cash assistance is intended to help selected families offset the cost of their monthly rent.

HUD and PHAs presently lack the authority to use existing resources to provide direct payments to households. Building from the work in Philadelphia and the experience of other guaranteed income pilots across the country, HUD is looking to partner with national and local philanthropy on a Direct Rental Assistance pilot. Here’s how it would work: households selected from existing voucher waitlists would have the opportunity to receive either a traditional voucher (funded by HUD) or a monthly payment for the equivalent value of the voucher (funded by philanthropy). The demonstration would run for several years in several housing markets that vary based on vacancy rate, level of tenant protections, and geography. This multisite demonstration would allow HUD to compare success rates, search times, housing quality, housing location, and other outcomes between households receiving the direct cash subsidy and those receiving a traditional voucher. If the pilot yields positive results, HUD could use these findings to encourage Congress to fund a larger demonstration and provide HUD with the requisite authorities to administer it. See here for more details on the program design for the Direct Rental Assistance pilot.

PD&R currently is engaging stakeholders across a range of sectors, including philanthropy, guaranteed income advocacy groups, tenant advocates, and the private sector to get feedback, solicit information, and develop the idea. If you’re interested in learning more about this demonstration or how you can help, please reach out to Aaron Shroyer.