Although the government shutdown has come to an end, long-term damage has already been done to affordable housing programs in the form of distrust.
The Department of Housing and Urban Development (HUD) is responsible for funding project-based assistance programs, voucher programs, and other affordable housing programs throughout the U.S.
During the shutdown, HUD was unable to renew contracts with private landlords in project-based rental assistance programs, known as Section 8, which pays landlords the difference between the amount of rent a household can afford to pay and the rent for a housing unit. A total of 1.4 million households use Section 8, with an additional 2.2 million using portable rental vouchers.
And even though the funding for these contracts resumed, individuals who use these housing programs may suffer negative consequences going forward.
“I’m very concerned about the longer-term damage to the reputation of [Section 8 housing] and other HUD programs that depend on private market participation to function,” Diane Yentel, director of the National Low Income Housing Coalition, told Yahoo Finance.
Despite the shutdown coming to an end, “if landlords or property owners see federal funding as unreliable and volatile, they’ll be less willing to participate in these crucial programs,” she said, “which will do long-lasting harm to low-income renters in need of these programs.”
‘There’s no legal protection for voucher holders’
Exacerbating the issue, it is legal in most cities for landlords to discriminate against people using government programs for housing.
“There are some states’ localities that have laws in place prohibiting discrimination against voucher holders, but we’re talking about in the dozens around the country,” Rice said. “In the vast majority of communities, there’s no legal protection for voucher holders except ones that are really limited. In a case of properties that receive other kinds of federal subsidies, such as low-income housing tax credits, those properties are prohibited from discriminating against voucher holders.”
These pieces of anti-discrimination legislation are known as source of income laws. States that enforce these include Connecticut, Delaware, Maine, Massachusetts, New Jersey, North Dakota, Oklahoma, Oregon, Utah, Vermont, Washington, and the District of Columbia. There are also various counties and cities across the country that have these laws.
“Families need certainty. Property owners need certainty. Lenders need certainty. And the only thing they’re getting from Washington right now is uncertainty,” Habitat for Humanity International’s Vice President for Government Relations and Advocacy Chris Vincent told Yahoo Finance in a statement. “Funding interruptions seed doubt that hurt those who use USDA loans to purchase homes in rural areas, families who get rental assistance from HUD, and builders that use community development dollars to build affordable housing.”
Vincent further called on Congress and the White House to “implement policies that provide more stability and address our nation’s affordable housing shortage.”
‘The shutdown really put a damper’
“[These partnerships] only function if the government is considered to be a reliable partner, and a big part of that and part of what attracts owners to these programs … is the possibility of receiving reliable monthly subsidy payments from the federal government, or in the case of the voucher program, the state housing authorities that administer it,” Rice said.
A study conducted by the Urban Institute indicated “that finding housing with a voucher is extremely difficult, from identifying an available unit and reaching landlords to finding landlords willing to accept vouchers to meeting with landlords to view available housing. The search required sifting through numerous advertisements, making several calls, and facing frequent rejection.”
The system could obviously use some work.
“There’s a conversation going on about how to partner with landlords better, because they play a really important role in the tenant-based voucher system,” Martha Galvez, principal research associate at the Urban Institute, told Yahoo Finance. “[The shutdown] really put a damper on that and raised a level of distrust or concern that housing authorities aren’t a good partner, that HUD won’t always pay its bills, or that it’s risky to take part in the program and to accept voucher holders.”
As for who is to blame, Galvez said it’s “a mix of things.”
“It’s folks who don’t really understand the program well, and it’s markets that are really hard to navigate right now,” she said. “There’s a combination of not enough affordable housing and landlords who are distrustful of voucher holders that are making it harder to use this important resource.”
‘A burgeoning problem’
The distrust is not new, Douglas Rice, senior policy analyst at the Center on Budget and Policy Priorities, said.
“This has been sort of a burgeoning problem in recent years,” Rice told Yahoo Finance. “The funding disruptions we’ve had in recent years just kind of added to it. I wouldn’t expect anything unprecedented because of the shutdown, mostly because in fact the voucher program payments weren’t disrupted.”
Landlords haven’t seen much of an impact on the ground, he said, because HUD was able to get money to them through February before the shutdown began. HUD did not respond to request for comment.
“That’s less true than the project-based rental assistance side of things, though,” Rice said. “HUD was unable to renew hundreds of these rental assistance contracts that expired in December and then in January because of the shutdown. But that’s a relatively small number of units we’re talking about. And frankly, it’s not unusual for HUD to be several days or weeks behind schedule and miss the expiration of contracts, but they typically take care of it within a couple of weeks.”
Adriana is an associate editor for Yahoo Finance. Follow her on Twitter @adrianambells.