Lenient Rules Abet the Occupancy of Low Income Housing by Ineligible Tenants

The Department of Housing and Urban Development (HUD) recently took a number of positive steps when it: (1) lowered to 10 percent the percentage of section 8 assisted units in any new project that can be rented to ineligible households without explicit HUD approval, and (2) developed new sanctions for dealing with project owners who fail to comply with the limitation.

GAO agreed with these changes but believed additional measures were needed, since all previously completed projects continue to be covered by the older regulations and because HUD enforcement options are still limited. This problem warrants prompt attention because under present regulations, the potential exists for greater occupancy by ineligible households in the future, and the incentives to house ineligible households and market forces that encourage such occupancy will increase as the cost of housing escalates and the scarcity of rental housing becomes more prevalent. Occupancy of section 8 contracted units by ineligible tenants frustrates the intent of the program by causing it to fall short of its planned assistance, even though the money to achieve more assistance has been made available by Congress. The cost effectiveness of the program is degraded since indirect subsidy costs which are incurred, regardless of who occupies the housing units, must logically be counted against a lower number of assisted households. Ineligible occupancy works against or fails to enhance economic integration in many instances. Economic integration among assisted units should be achieved by selecting tenants across the broad range of income-eligible households. Units already earmarked for assisting lower income households should not be rented to middle income households without regard to the availability of assisted households.

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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