Rental Assistance Assets Accounts: An Proposal to Support Work and Savings Among Recipients of Housing Assistance

The federal government currently spends $25 billion a year to provide rental housing assistance to over 4 million families. Assistance is delivered through a mix of housing vouchers, access to public housing, or subsidies to private owners, but still there are millions more families with unmet needs that don’t receive assistance. Under current rules, families receiving federal rental assistance pay 30 percent of their adjusted income to cover the costs of rent and utilities. Unfortunately, this approach may have unintended consequences. As the earnings of assisted families rise, their rent also increases, creating a disincentive for work.

Jeff Lubell of the Center for Housing Policy and I have just released a paper that calls for a reform of the delivery system of rental housing assistance to align incentives to support increased earnings, savings, and self-sufficiency, which would free up resources to help more families. Our proposal features offering every recipient of assistance access to a Rental Assistance Asset Account.

Over time, as families’ earnings rise, they would accrue savings in these accounts, providing access to a pool of resources that they could use to buy or fix a car, make a down payment on a home, invest in education or training, or spend in some other way that helps advance their personal goals. This combination of increased earnings and increased savings—together with complementary services to help families overcome barriers to work and improve their financial literacy—could help families prepare to access private-market housing, freeing up scarce rental assistance subsidies for other qualifying families.

The paper describes the proposal, its policy rationale, and discusses innovative ways to address some of the fiscal constraints of the policy. We are looking forward to sending it to the incoming HUD team.