Landlord Incentives in the HCV Program: Do They Work?

HUD’s Office of the Inspector General (OIG) recently issued a report on a limited review conducted to determine the use of landlord incentives in the Moving to Work (MTW) demonstration program to increase landlord participation and retention in the Housing Choice Voucher (HCV) program. The review also considered landlord incentives to expand housing options for voucher households outside areas of low-income or minority concentration.

MTW Background

MTW is a demonstration program for PHAs, giving them the opportunity to test innovative, locally designed strategies that use federal dollars more efficiently, help residents find employment and become self-sufficient, and increase housing choices for low-income families. MTW allows PHAs exemptions from many existing public housing and voucher rules and provides funding flexibility with how they use their federal funds.

PHAs in the MTW demonstration have pioneered a number of innovative policy interventions that have been proven to be successful at the local level and were then rolled out to the rest of the country’s PHAs. As of July 21, 2020, there were 39 MTW PHAs nationwide. Through these flexibilities, some MTW PHAs have offered landlords incentives to encourage their participation and increase housing choices for program participants.

The challenge facing families is to find both a suitable unit and a willing landlord. In 2018, several studies by HUD’s Office of Policy Development and Research identified reasons why some landlords choose to participate in the Housing Choice Voucher program while others don’t. These included bureaucratic factors, financial considerations, and preconceptions about the tenants. The studies recommended ways in which HUD and PHAs could make the Housing Choice Voucher program more appealing to landlords. Recommendations included:

• Offering one-time signing bonuses or financial incentives for new landlords or for landlords in low-poverty neighborhoods;
• Providing security deposits or insurance against damages;
• Paying a vacancy loss fee if an existing program landlord re-rents a unit to a new program tenant; and
• Adopting fair market rents or payment standards that are better aligned with market rents; and
• Streamlining the inspection process.

Results

Of the 34 PHAs that responded to the questionnaire, 28 indicated that they used some form of incentive to recruit or retain landlords in the HCV program during the period Jan. 1, 2016, through Dec. 31, 2019. Of the 28 PHAs, 27 used nonmonetary incentives, 20 used monetary incentives, and 19 used a combination of monetary and nonmonetary incentives.

OIG identified the five nonmonetary incentives that were most popular: direct housing assistance payment deposit, online access specifically for landlords’ use (a portal), workshops and outreach activities, landlord liaison, and streamlining the inspection process. The report also identified the most popular monetary incentives:

• Bonuses to landlords new to the HCV program;
• Property damage reimbursements;
• Vacancy loss or bonuses for renting to another voucher household (“re-rent”);
• Higher payment standards for high-opportunity areas;
• Bonuses for new landlords in high-opportunity areas; and
• Security deposit assistance

Eighty-two percent of the PHAs indicated that the incentives, in general, were effective in keeping landlords in the program, but 61 percent indicated that incentives were not as effective at getting existing landlords to add more units.

Of the five most popular nonmonetary incentives, direct deposit and landlord portals were considered most effective, while the monetary incentives thought most effective were new landlord bonuses, property damage reimbursements, and vacancy loss payments/re-renting bonuses. Some of the most popular incentives the PHAs used included new landlord bonuses, vacancy loss re-rent (continuity) bonuses, and landlord liaisons.