Elimination of the Rent Credit Feature of the Section 8 Existing Housing Program

The Department of Housing and Urban Development (HUD) recently completed a nationwide study of the Section 8 Housing Assistance Program and is now considering the rent reduction incentive feature of the program. This feature was established to encourage participating families to find housing units at the lowest possible rent and to reduce federal subsidies by offering a reduction in the family's contribution when it selects rentals below HUD limits. However, rather than operating as an incentive to encourage families to shop for less expensive housing, only a few families receiving the rent credit have actually altered their housing choice because of it. Families were unable to make selections because most communities experienced low vacancy rates and relatively low program rental limits. The estimated cost to HUD for the rent credit feature is about $14.4 million annually and could increase to about $33.1 million annually when all housing units authorized through fiscal year 1978 are leased. The rent credit should be eliminated for in-place families as well as for all families assisted under the section 8 program.