Low-income Americans wait years to get housing vouchers that are often impossible to use. Fixing the system could mean more funding and less red tape.

• The Housing Choice Voucher Program is the biggest, most effective federal housing assistance program.
• But housing vouchers are both severely underfunded and complicated to use.
• Proposals include increasing funding, easing inspection rules, and exploring cash assistance options.

The most effective housing assistance program in the country is facing a slew of mounting challenges. The federal Housing Choice Voucher Program, also known as Section 8, is also the biggest, aiding about 5 million people in 2.3 million households.

But a declining number of landlords across the US are accepting the vouchers, and a growing number of recipients are failing to secure housing through the program.

Voucher holders pay about 30% of their income toward rent, while the Department of Housing and Urban Development covers the rest — up to what it determines to be fair market rent. There's lots of research showing the program is very effective at reducing homelessness and dangerous housing conditions like overcrowding.

It also gives low-income people more power to choose the neighborhood, building, and unit they want to live in — and to stay there. Kids whose families have vouchers are less likely to bounce from school to school or end up in foster care, said Will Fischer, senior director of housing policy at the left-leaning Center on Budget and Policy Priorities (CBPP).

Vouchers aren't helping as much as they should

But the program is only reaching a fraction of those who could benefit from it. Only about one in four Americans who are eligible for a voucher get one — and the average wait time is two and a half years. So about 10 million additional low-income households are going without the help they qualify for.

Once someone gets a voucher, it can be very challenging to find a home that meets the program's requirements, and a landlord willing to accept the applicant within the period of time — as short as 60 days — allotted to find a unit. The vast majority of landlords in Los Angeles (76%), Fort Worth (78%), and Philadelphia (67%) refused to rent to voucher holders, according to a 2018 study. While it's illegal in some places to discriminate against voucher holders, the practice isn't outlawed everywhere. Some places, including Iowa, have banned protections for voucher holders.

Lawsuits against property owners and brokers have accused them of explicitly denying applicants based on their source of income. Racial discrimination against voucher holders, who are disproportionately Black, is also rampant, advocates say. But many landlords say the administrative process — which includes an inspection — is simply too slow or burdensome.

Ultimately, only about 60% of voucher recipients are successful in finding a home with the subsidy. Those lucky enough to get a voucher and move into an apartment sometimes face issues with their city and state housing authorities and are wrongly ejected from the program.

More funding could help

Of course, the single biggest challenge the program faces is that it's severely underfunded. Government housing assistance for the poorest renters has dropped to the lowest levels in 25 years even as the number who need the aid has soared, according to an analysis by Harvard housing experts published in The New York Times in December.

Fully funding housing vouchers would mean many more housing-insecure and unhoused people would get help. It's up to Congress to make this change, as it determines how much the federal government spends on its housing assistance programs, mainly Housing Choice Vouchers and public housing, every year.

In its budget for fiscal year 2025, the Biden administration requested a $2.5 billion increase for voucher funding over 2023 levels. As part of that funding increase, vouchers would be guaranteed to very low-income veterans and youth aging out of foster care — two groups particularly vulnerable to homelessness. But Republicans have sought to cut HUD funding, making it challenging to significantly expand the reach of vouchers.

Jenny Schuetz, an expert on urban economics and housing policy at the Brookings Institute, told Business Insider earlier this year that Congress could consider reducing the amount of voucher funding per household so that it can offer vouchers to more households. "If you're gonna have an honest conversation about how much Congress is willing to fund, then the number of people could be higher than it is today," she said.

The Biden administration isn't interested in spreading funding more thinly as rents spike across the country. Instead, it boosted funding per voucher by increasing its limits for fair market rents to better keep up with rent increases, which allowed about 20,000 additional households to use vouchers.

'Graffiti can't harm you'

The second-biggest problem, experts say, is the home inspection process. Before a voucher recipient can sign a lease on a home, it must be inspected by the local housing authority to make sure it meets a slew of health and safety standards. But that process can create lengthy delays, cause landlords to keep a unit empty and miss out on rent payments, and ultimately result in the voucher holder losing out on the home.

Rising rent — and the impact that has on households — is a much bigger concern than unsafe housing, a recent in-depth report on HUD's housing quality standards and inspection processes by the Urban Institute. The author of the report, Michael Stegman, called inspecting every apartment before a voucher holder can move in "akin to using a bazooka to kill a gnat" during a panel discussion of the Urban Institute report in May.

Stegman detailed how the quality of rental housing across the country has dramatically improved since Section 8 was first implemented in the mid-1970s. And he recommended that HUD try out different inspection regimes, including allowing landlords and tenants to self-certify that the home meets health and safety guidelines, with unannounced inspection audits by local housing authorities.

Congress has made some efforts to address the issue, including the introduction of a bipartisan bill designed to incentivize landlords and loosen inspection requirements. Housing authorities across the country have been more successful in streamlining their inspection processes over the last decade.

The Biden administration has made some headway on the issue. Last October, slightly less burdensome regulations, known as NSPIRE, went into effect. The new process attempts to zero in on health and safety issues while relaxing regulations around non-threatening conditions, like traffic noise and graffiti.

"Graffiti can't harm you, can't kill you," Tara Radosevich, an assessment manager at HUD, said. "It might be something you may not want to live near, but if it doesn't harm a resident, we're willing to accept that our units may be in areas with graffiti."

Still, experts say much more needs to be done to reduce administrative burdens and boost landlord participation. One solution is to offer so-called holding fees, which would pay landlords while they hold a unit vacant during the inspection process, Fischer said. Another way to incentivize property owners is to create a fund to reimburse landlords for damage to units, as Oregon and Washington State have done.

Other fixes, Fischer has written, include allowing voucher funding to be used for security deposits and other upfront costs, offering voucher holders help in the home search process and giving them more time to secure a home, making it easier for voucher recipients to move, and banning discrimination against voucher holders across the country.

The Biden administration is also exploring offering housing assistance in cash. Researchers at the Department of Housing and Urban Development have proposed piloting a direct cash transfer program for rent as an alternative to housing vouchers. Cash payments for housing, researchers say, have a slew of benefits, and cut the red tape associated with vouchers.

"Giving people money has a lot of advantages over giving people vouchers," Schuetz said. But she added that smaller-scale experiments with cash programs are needed to shed light on just how effective they might be as housing assistance.

Are you a housing voucher recipient or a landlord who's dealt with vouchers? Reach out to this reporter at erelman@businessinsider.com.