Housing and Urban Development Secretary Ben Carson announced legislation Wednesday that would overhaul the way rent is set on federally assisted housing, raise the minimum rent, and allow housing officials to experiment with other designs such as work requirements.
The legislation, the Making Affordable Housing Work Act of 2018, which needs congressional approval, could raise rents for some very poor households.
In a call with reporters, Carson said the overhaul is meant to simplify the system for renters and housing providers and to eliminate perverse incentives that discourage some people from working or marrying.
“The current system isn’t working very well,” he said. “Doing nothing is not an option.”
The centerpiece of the bill would change the prevailing requirement that renters pay 30 percent of their adjusted income, calculated annually. Instead, they would pay 35 percent of their gross income, calculated once every three years.
By making that change, Carson said, families would escape disincentives to increase their earnings during the three years, whereas now any extra earnings would face an implicit tax in the form of lost rent assistance.
The proposal also would raise the minimum rent that could be charged, potentially meaning rent increases for some poor families.
The law also would allow public housing authorities to experiment with other ways of setting rents as an alternative to the 35 percent of income formula. Authorities could work with other designs approved by the HUD secretary, including by implementing work requirements. They would be required, however, to maintain the same overall level of assistance.
HUD provides rent assistance to about 4.7 million families through several programs. But only about 1 in 4 families who qualify for assistance receive it.
“It’s clear that, from a budget perspective and from a human point of view, the current situation is unsustainable,” Carson said.
The changes would not apply to elderly or disabled renters, who make up most of HUD rental assistance beneficiaries. The proposal would evolve with comments from renters and stakeholders, Carson said.
