Four Options to Support Vulnerable Renters as Emergency Measures End

This post was originally published on Urban Wire, the blog of the Urban Institute. 

For the first time, the median listed rent in the US rose above $2,000 per month. Rent is up even in formerly affordable cities, making it a growing crisis—especially for people with low incomes.

Even before the pandemic started, nearly one-quarter of renter households paid more than half their income on rent, and more than 3 million eviction filings occurred annually. Because structural racism has limited and excluded people of color from opportunities like homeownership and equal access to employment and education, renters with low incomes are more likely to be people of color. Many renters face additional barriers to stable housing because they’re more likely to be disabled, elderly, recent immigrants, or people who don’t speak English (PDF). These same households faced disproportionately worse health, employment, and housing outcomes throughout the pandemic.

To keep people stably housed during the crisis, federal and state governments launched various rental assistance measures, including Emergency Rental Assistance (ERA) funds and eviction moratoria.

Rigorous research on both emergency (PDF) and long-term rental assistance shows it works. And though we don’t yet have a rigorous study of the pandemic ERA programs, the early data and trends on eviction filings show promise. Nationally, almost two-thirds of ERA funding has been delivered to households with extremely low incomes.

Yet, as rent continues to climb, the share of renters who need housing support remains stubbornly high, particularly for households of color. Eviction filings have been increasing as moratoria expire and ERA programs close. As of May 2022, of the 31 cities that the Eviction Lab tracks, 11 had filings above 100 percent of the historical average, and 7 of these had closed their emergency rental assistance programs.

It’s clear vulnerable renters need a form of universal rental assistance. How it should be administered is another matter. Here’s what we know about four potential options.

1. Continued funding for ERA programs 
   
   Legislatures in several states have extended rental assistance temporarily, and a federal bipartisan bill, the Eviction Crisis Act (S. 2182), would provide a permanent funding stream for programs and services designed to prevent eviction, including ERA.
   
   State and local programs—many of them new—spent the past year building and refining programs to reach renters in need, delivering rental assistance and essential legal, navigation, and rehousing services to tenants facing displacement. Preliminary data look promising on ERA reaching households with the lowest incomes. Recent research also suggests some ERA administrators may be targeting funds upstream of renters at imminent risk of eviction, creating opportunities to improve the use of these dollars to prevent homelessness.
   
   However, tenants and landlords continue to cite applications’ onerousness and inflexibility (PDF) as influencing their willingness to participate in ERA programs. And other research in specific markets shows challenges to aid reaching vulnerable renters, particularly for immigrants and tenants who don’t speak English (PDF).

2. Expanded housing choice vouchers
   
   Congress modestly expanded the Housing Choice Voucher Program in the US Department of Housing and Urban Development’s FY2022 budget, including an additional $200 million to expand rental assistance vouchers to approximately 25,000 households. And the president’s FY2023 budget requests funding to expand assistance to an additional 200,000 households. But still, about 8.2 million households have incomes at or below 50 percent of area median income and pay more than 30 percent of their income on rent and aren’t currently covered by a voucher.
   
   Research shows that, much like ERA, landlord willingness to participate is one of the main issues with the program. Landlords cite burdensome inspection and paperwork requirements as issues. Some evidence suggests state and local protections that prevent landlords from discriminating against voucher holders, like source-of-income discrimination laws, can improve both voucher use and the quality of the neighborhood where the voucher holder obtains housing.

3. Federal renter tax credits
   
   During the Democratic primaries leading up to the national 2020 elections, candidates for president debated renter tax credits, but they have largely fallen out of the national policy debate.
   
   Tax credits can be structured many ways (PDF). Renter credits generally provide a rebate to cost-burdened renters with low incomes for the difference between their rental payment and 30 percent of their income. Landlords can also receive credits—for example, as a rebate on the owner’s tax payments in exchange for a rent reduction. 
    
   Renter tax credits could help solve some of the issues related to ERA and voucher programs, including landlord discrimination, as the credit is essentially cash. However, studies have shown that most US households that don’t file taxes earn less than $10,000 (PDF), meaning some of the most vulnerable renters wouldn’t benefit from this policy.

4. Universal basic rent
   
   Modeled after universal basic income pilots happening around the country, universal basic rent would give certain income-qualified households cash to cover the difference between 30 percent of their household income and the cost of rent. Philadelphia is testing this model with a new pilot for 300 families funded by local and national philanthropies. The pilot will be evaluated as it’s launched and potentially scaled. Other models innovated on the ERA program to essentially provide cash in hand quickly, such as the COVID-19 Eviction Defense Project’s Colorado Stability Fund. 
    
   Evaluations of other direct cash transfer programs have shown they lead to fewer unsheltered days for those facing housing instability, recipients largely use them to cover essential needs, and they support other meaningful outcomes such as employment gains. Universal basic rent would also function as cash and could limit landlord discrimination but may not address more systemic neighborhood quality issues tied to siting of existing housing for households with low incomes.

As policymakers consider a national rental assistance program, they can base it on the fundamentals we already know: that rental assistance works, but certain design factors can make it more effective. These include flexibility for tenants, limiting administrative burden, providing a range of supportive services, and considering incentives for landlord participation.

As long as we face low housing supply, increasing demand, and resulting increases in rent prices, renters at the lowest income levels will need support to stay stably housed. Such financial support could help offset a host of personal, societal, and governmental costs caused by housing insecurity.