What if universal rental assistance were implemented to deal with the housing crisis?

• Universal rental assistance could be an effective solution to address the housing crisis in the US, as many experts agree that rents are too high and affordable housing options are scarce.
• The current subsidies in place, such as Housing Choice Vouchers, are already available to some renters, but they only cover a small percentage of eligible households (25%) and have limited funding, leading to long waiting lists and bureaucratic hurdles for recipients.
• Expanding rental assistance to all eligible low-income households could make huge headway in solving the rental affordability crisis, with estimates suggesting it would cost around $118 billion per year, which is comparable to the annual costs of tax breaks for homeowners.
• The benefits of universal rental assistance go beyond just providing affordable housing; it would also save federal, state, and local governments billions of dollars in homeless services and reduce the need for additional subsidies to finance new affordable housing.
• Implementing universal rental assistance could be a more effective solution than simply lowering rents or increasing the supply of affordable housing, as it would provide a guaranteed source of income for renters and allow builders to obtain loans with more ease, ultimately addressing the root causes of the housing crisis.

If there’s one thing that U.S. politicians and activists from across the political spectrum can agree on, it’s that rents are far too high.

Many experts believe that this crisis is fueled by a shortage of housing, caused principally by restrictive regulations.

Rents and home prices would fall, the argument goes, if rules such as minimum lot- and house-size requirements and prohibitions against apartment complexes were relaxed. This, in turn, would make it easier to build more housing.

As experts on housing policy, we’re concerned about housing affordability. But our research shows little connection between a shortfall of housing and rental affordability problems. Even a massive infusion of new housing would not shrink housing costs enough to solve the crisis, as rents would likely remain out of reach for many households.

However, there are already subsidies in place that ensure that some renters in the U.S. pay no more than 30% of their income on housing costs. The most effective solution, in our view, is to make these subsidies much more widely available.

A financial sinkhole

Just how expensive are rents in the U.S.?

According to the U.S. Department of Housing and Urban Development, a household that spends more than 30% of its income on housing is deemed to be cost-burdened. If it spends more than 50%, it’s considered severely burdened. In 2023, 54% of all renters spent more than 30% of their pretax income on housing. That’s up from 43% of renters in 1999. And 28% of all renters spent more than half their income on housing in 2023.

Renters with low incomes are especially unlikely to afford their housing: 81% of renters making less than $30,000 spent more than 30% of their income on housing, and 60% spent more than 50%.

Estimates of the nation’s housing shortage vary widely, reaching up to 20 million units, depending on analytic approach and the time period covered. Yet our research, which compares growth in the housing stock from 2000 to the present, finds no evidence of an overall shortage of housing units. Rather, we see a gap between the number of low-income households and the number of affordable housing units available to them; more affluent renters face no such shortage. This is true in the nation as a whole and in nearly all large and small metropolitan areas.

Would lower rents help? Certainly. But they wouldn’t fix everything.

We ran a simulation to test an admittedly unlikely scenario: What if rents dropped 25% across the board? We found it would reduce the number of cost-burdened renters – but not by as much as you might think.

Even with the reduction, nearly one-third of all renters would still spend more than 30% of their income on housing. Moreover, reducing rents would help affluent renters much more than those with lower incomes – the households that face the most severe affordability challenges.

The proportion of cost-burdened renters earning more than $75,000 would fall from 16% to 4%, while the share of similarly burdened renters earning less than $15,000 would drop from 89% to just 80%. Even with a rent rollback of 25%, the majority of renters earning less than $30,000 would remain cost-burdened.

Vouchers offer more breathing room

Meanwhile, there’s a proven way of making housing more affordable: rental subsidies.

In 2024, the U.S. provided what are known as “deep” housing subsidies to about 5 million households, meaning that rent payments are capped at 30% of their income.

These subsidies take three forms: Housing Choice Vouchers that enable people to rent homes in the private market; public housing; and project-based rental assistance, in which the federal government subsidizes the rents for all or some of the units in properties under private and nonprofit ownership.

The number of households participating in these three programs has increased by less than 2% since 2014, and they constitute only 25% of all eligible households. Households earning less than 50% of their area’s median family income are eligible for rental assistance. But unlike Social Security, Medicare or food stamps, rental assistance is not an entitlement available to all who qualify. The number of recipients is limited by the amount of funding appropriated each year by Congress, and this funding has never been sufficient to meet the need.

By expanding rental assistance to all eligible low-income households, the government could make huge headway in solving the rental affordability crisis. The most obvious option would be to expand the existing Housing Choice Voucher program, also known as Section 8.

The program helps pay the rent up to a specified “payment standard” determined by each local public housing authority, which can set this standard at between 80% and 120% of the HUD-designated fair market rent. To be eligible for the program, units must also satisfy HUD’s physical quality standards.

Unfortunately, about 43% of voucher recipients are unable to use it. They are either unable to find an apartment that rents for less than the payment standard, meets the physical quality standard, or has a landlord willing to accept vouchers.

Renters are more likely to find housing using vouchers in cities and states where it’s illegal for landlords to discriminate against voucher holders. Programs that provide housing counseling and landlord outreach and support have also improved outcomes for voucher recipients.

However, it might be more effective to forgo the voucher program altogether and simply give eligible households cash to cover their housing costs. The Philadelphia Housing Authority is currently testing out this approach.

The idea is that landlords would be less likely to reject applicants receiving government support if the bureaucratic hurdles were eliminated. The downside of this approach is that it would not prevent landlords from renting out deficient units that the voucher program would normally reject.

Homeowners get subsidies – why not renters?

Expanding rental assistance to all eligible low-income households would be costly.

The Urban Institute, a nonpartisan think tank, estimates it would cost about $118 billion a year.

However, Congress has spent similar sums on housing subsidies before. But they involve tax breaks for homeowners, not low-income renters. Congress forgoes billions of dollars annually in tax revenue it would otherwise collect were it not for tax deductions, credits, exclusions and exemptions. These are known as tax expenditures. A tax not collected is equivalent to a subsidy payment.

For example, from 1998 through 2017 – prior to the tax changes enacted by the first Trump administration in 2017 – the federal government annually sacrificed $187 billion on average, after inflation, in revenue due to mortgage interest deductions, deductions for state and local taxes, and for the exemption of proceeds from the sale of one’s home from capital gains taxes. In fiscal year 2025, these tax expenditures totaled $95.4 billion.

Moreover, tax expenditures on behalf of homeowners flow mostly to higher-income households. In 2024, for example, over 70% of all mortgage-interest tax deductions went to homeowners earning at least $200,000.

Broadening the availability of rental subsidies would have other benefits. It would save federal, state and local governments billions of dollars in homeless services. Moreover, automatic provision of rental subsidies would reduce the need for additional subsidies to finance new affordable housing. Universal rental assistance, by guaranteeing sufficient rental income, would allow builders to more easily obtain loans to cover development costs.

Of course, sharply raising federal expenditures for low-income rental assistance flies in the face of the Trump administration’s priorities. Its budget proposal for the next fiscal year calls for a 44% cut of more than $27 billion in rental assistance and public housing.

On the other hand, if the government supported rental assistance in amounts commensurate with the tax benefits given to homeowners, it would go a long way toward resolving the rental housing affordability crisis.

This article is part of a series centered on envisioning ways to deal with the housing crisis.

Alex Schwartz has received funding from the Catherine and John D. MacArthur Foundation. Since 2019 he has served on New York City's Rent Guidelines Board. He has a relative who works for The Conversation.

Kirk McClure received funding from the U.S. Department of Housing and Urban Development and receives funding from the National Science Foundation.

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