Major Changes Are Needed in the New Leased-Housing Program

The Department of Housing and Urban Development (HUD) section 8 leasing program, the principal Federal program for housing lower income persons, has had limited success in providing occupancy for lower income persons and stimulating new housing starts.

Major changes are needed to improve administration and increase activity under four section 8 programs: existing, newly constructed, substantially rehabilitated, and State agency housing. Weaknesses in HUD methods to establish program rents resulted in rents which appear too low to encourage sufficient participation by private housing owners. Owner's unwillingness to assume the management risks associated with housing lower income families with children will result in disproportionate assistance to lower income elderly persons to the detriment of large and very-low-income families. Some owners are reluctant to participate in the program because they believe that the HUD-established fair market rents will not compensate them for complying with the section 8 requirements and for accepting the heavier management burden which they believe comes with renting to lower income persons. Some smaller communities and public housing agencies have refused or were unable to participate. Program activity has been limited by program regulations which assign lower income participants numerous complex responsibilities and by public housing agency-imposed residency requirements which restrict participant mobility. Private developers have limited their activity because of lack of financing, owner's numerous program responsibilities compared with the low financial rewards, and low HUD-established fair market rents. State agencies have been unable to sell bonds to finance section 8 projects because the bonds lack the security and higher return available in the corporate bond market.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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