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Analysis finds Charleston among top places HUD rent proposal would affect

Real Estate - Residential
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Charleston-area households that receive federal rental assistance could see their housing costs rise by an average of $940 a year if a federal proposal goes through, according to an analysis by a national nonpartisan research institute.

The Center on Budget and Policy Priorities found the Charleston metro area’s predicted rent increase was second only to that of the Washington, D.C., area, where rents could increase $980 per year.

According to the Department of Housing and Urban Development, 9,300 households in the Charleston region receive federal rental assistance, currently paying an average gross rent of $3,620 a year. The increase would affect 8,900 of those households, according to the center.

Across the Palmetto State, according to the center, 36,900 households would be affected by the new regulations, with an average gross rent increase of $870 per household. South Carolina ranked No. 5 on the center’s list of states that could see the largest rent increases.

The Center on Budget and Policy Priorities works at the federal and state level on policies that affect low- and moderate-income families and individuals.

Under the current system, households receiving federal rental assistance pay 30% of their adjusted gross income, 10% of their gross income, or a minimum of $50, whichever is greater.

At the end of April, HUD proposed new policies (.pdf) designed to increase a household’s share of the rent by raising the adjusted gross income limit from 30% to 35%; allowing minimum rent payments to increase to $150; and eliminating deductions for households with high out-of-pocket expenses such as medical bills and child care. 

HUD Secretary Ben Carson said in a statement when the proposal was released that the reforms are meant to simplify the current system.

“The system we currently use to calculate a family’s rental assistance is broken and holds back the very people we’re supposed to be helping,” Carson said. “HUD-assisted households are now required to surrender a long list of personal information, and any new income they earn is ‘taxed’ every year in the form of a rent increase. Today, we begin a necessary conversation about how we can provide meaningful, dignified assistance to those we serve without hurting them at the same time.”

In remarks to the Council of Large Public Housing Authorities at the beginning of May, Carson said the reforms are also meant to encourage individuals to find higher-paying work and eventually become self-sufficient. The proposal also includes a provision that would allow local public housing authorities to impose a work requirement for individuals or families.

Will Fischer, a senior policy analyst at the Center on Budget and Policy Priorities, said in an analysis, however, that higher rents would not create the desired outcome.

“Raising rents on low-income people would force them to divert resources from other basic needs and expose some to eviction and homelessness,” he said. “Most of those affected would be working-poor families with children, seniors, and people with disabilities.”

Fischer said HUD’s proposal could potentially simplify part of the process by eliminating deductions for people with high out-of-pocket costs, but he said the proposal also complicates matters by creating separate rules for elderly people and people with disabilities.

“So there’s one set of rules for elderly and disabled households and one set of rules for other households,” Fischer said. “And on top of that, they create this new definition of elderly and disabled that’s different from what they usually use, and so there’ll be so many systems figuring out who counts as elderly and disabled.”

Fischer said the last time the federal government raised rents on this scale was in the 1980s, when the percentage paid by households went from 25% to 30% of the family’s income.

“These rules have been in effect for a long time, and there’s a lot of research showing that ... these programs work pretty well with the current rent rules,” he said. “They’re really effective at reducing homelessness and housing instability.”

The House Financial Services Committee is discussing a draft bill (.pdf) similar to HUD’s proposal, but the House version would eliminate limits on rents and allow local housing authorities to set rental rates. Fischer said this bill, to be sponsored by Rep. Dennis Ross of Florida, would make the system even more complicated and would allow rents to be raised even higher.

“The Ross bill is even more complicated because now all of a sudden, you have every housing agency picking their own rent rules and you would have, in a single metropolitan area, potentially 10 or 15 different rent rules that people would have to deal with,” he said.

A message left with the Charleston Housing Authority was not returned by press time.

Reach Patrick Hoff at 843-849-3144.

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