Would rent subsidies solve the affordable housing problem? I recently wrote about rent control, pros and cons for tenants and landlords. I also explored the idea of a universal basic income in a recent post. One other way to solve or at least help with the affordable housing issue is rent subsidies.
If You Are In Nova Scotia (Housing NS)
It could be a real easy way to help people stay in or move to a desired area. Nova Scotia has a rent subsidy program, however, many families do not qualify. The website to apply is housing.novascotia.ca The qualifying questions are quite extensive, for example a person must be spending or require to spend 30% or more of there gross income on rent. The money paid goes directly to the landlord.
If You Are In The USA (HUD)
If you are in the USA there is an organization known as HUD (Department of Housing and Urban Development). According to Wikipedia The United States Department of Housing and Urban Development (HUD) is a Cabinet department in the executive branch of the United States federal government. Although its beginnings were in the House and Home Financing Agency, it was founded as a Cabinet department in 1965, as part of the “Great Society” program of President Lyndon Johnson, to develop and execute policies on housing and metropolises.
HUD handles many housing programs, such as a list of affordable units all over the USA. From their website: A subsidized housing unit is one in which a tenant pays approximately 30% their adjusted income on rent and utilities. The management agent and/or the Public Housing Authority (PHA) calculate the tenant’s rent amount. HUD then pays the difference between the tenants rent contribution and the total rent that is paid to the building owner.
It is great to have programs provided by many levels of government. The challenge is many programs have long waitlists. The other part is that the criteria is very strict, which limits the amount of people who could use it.
I think if various levels of governments would broaden their view on the affordable housing requirements, a lot more individuals and families could be helped.
How Does The Government Encourage Developers?
In my area the city is making development approvals easier to get if the developer is willing to pay a fee for additional height or having some of the units available for rent below market value. It is not necessarily a solution, however, does provide incentive for developers to add money towards an affordable housing fund or to build affordable units. The downside to the current system is that just because a unit is a few hundred dollars below market rent, does not make it affordable to many people. It also forgets about the math required to make a building worth building.
Is It An Expensive Government Problem They Do Not Actually Want To Solve?
Maybe the affordable housing issue is just too expensive for governments to want to resolve. Maybe it would require all levels of government to contribute to one fund to make a difference.
If we take an example of providing a rent subsidy of $200 per family it would cost $2400 per year to help one family or person. If you wanted to help just 10000 people / families, the cost would be $24,000,000.
Would A Housing Security Solution Reduce Costs In Other Government / Social Programs?
The name that comes to mind when I think about housing security is the American psychologist Abraham Maslow (Reference Master Class Article)
His work is important, because he summarized the needs of humans in a simple way. I wont go into great detail, but Maslow proposed that five core needs form the basis for human behavioral motivation.
Physiological needs: He determined the following needs have to be met before a person can ever experience fulfillment. food, water, clothing, shelter, rest, health and reproduction.
Safety needs: This is not just about being safe from violence & theft, but also emotional stability, health and financial security.
These are the two that relate most directly to the affordable housing issue, the others are: Love and belonging needs, Esteem needs, and Self-actualization needs. Also see Wikipedia Hierarchy of Needs
I do believe Maslow’s theory is on point. This leads me to think if the government programs focused on the basic needs, it would save many programs a lot of money. Often times when a tenant has a struggle paying rent, rent is not the only problem on the basic needs pyramid the tenant is dealing with.
Summary
The affordable housing crisis is not an easy problem to solve. In fact it may never be completely solved, especially in countries where the standard of living and the distance between the rich and the poor is growing. The expectation of shelter is changing as the standard of living changes. The COVID times we are experiencing now are amplifying the problem since many of the job losses are lower paying positions, as well as families that are losing their homes are entering the rental market.
Rent subsidies would be a great place for governments at all levels to focus on, rather than reducing the quantity or quality of rental inventory by placing the responsibility to solve the affordable housing crisis on the backs of landlords and developers.
Until next time,
Design your landlord experience,
Michael P Currie
Landlord by Design
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