DOGE Takes Aim at Section 8—Will Vouchers Lose Funding?

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In This Article

DOGE (the Department of Government Efficiency) has been ripping through the federal government like a chainsaw. No department is immune, including the Department of Housing and Urban Development (HUD), which, among other duties, administers Section 8 housing vouchers to public housing agencies (PHAs).

In the face of Texas-based Musk’s impending chainsaw massacre, the Trump-appointed HUD Secretary Scott Turner put out a video saying the DOGE taskforce at HUD has identified $260 million in cuts and counting. Said Turner, a former NFL player and motivational speaker who worked at a Trump-allied think tank:

“I’m happy to announce the DOGE task force here at HUD. We will be very detailed and deliberate about every dollar spent in serving tribal, rural, and urban communities across America. We will identify and eliminate all waste, fraud, and abuse.”

Landlords Are on Edge

For investors and developers who lean on the federal government to fund inner-city projects and help with rentals, there could be some seismic changes ahead. In addition to overseeing housing vouchers, HUD provides funding to house the homeless, help lower-income families buy homes, and fund the construction and repairs of affordable housing.

According to Governing.com, 2.3 million low-income families currently use housing vouchers. Public assistance programs have long been in the crosshairs of the Republican Party, and the recent temporary freeze on federal funding has caused problems for housing agencies and landlords.

Georgi Banna, general counsel for the National Association of Housing and Redevelopment Officials (NAHRO), stated that since the pause, landlords have been on edge, worried if they would receive their money. “That’s a crack in the trust a little bit between HUD and the housing authorities, and between the housing authorities and the landlords,” he told Governing.com.

50% of HUDs Workforce Could Be Laid Off

In February, DOGE announced that it had de-obligated $1.9 billion in HUD funds it says were earmarked unnecessarily by the previous administration.

If reports are to be believed, the Trump administration could lay off as much as 50% of HUD’s workforce, disrupting or disqualifying many Section 8 tenants and possibly increasing homelessness.

The National Low Income Housing Coalition wrote on its website:

“Terminating HUD staff will make it significantly harder for states and communities to access the congressionally approved federal investments needed to address their most pressing housing and homelessness challenges. As a direct consequence, homeless shelters will close their doors; communities will stop construction on new projects to build housing and community centers; households receiving rental assistance will face immediate rent increases and evictions; and communities, families, and small businesses impacted by disasters will be unable to rebuild.”

Staff Cuts Could Slow Down Section 8 Payments

Although all states use Section 8 vouchers, those with the most concentrated use are New York, Massachusetts, and Washington, D.C., according to HUD statistics quoted by Governing.com The tenants themselves have protections, so long as they pay their portion of the rent according to their lease agreements, but the long-term disruption to the program might cause some landlords to sell their properties or drop out of the program and rent to non-Section 8 tenants if it proves to be problematic to deal with a reduced federal workforce.

Many Section 8 landlords are already frustrated with the red tape and officious inspectors within the HUD system. Georgi Banna told the Associated Press that cuts to Public and Indian Housing staff could slow down payments for Section 8 vouchers.

“This program only works well when landlords are involved,” Banna added. “Without landlords, this program can’t exist.”

“Even a short pause in funding could cause significant harm to low-income families and their communities,” National Low Income Housing Coalition Interim president and CEO Renee Willis said on its website. “The longer the freeze continues, the greater the risk that low-income households receiving federal rental assistance could face eviction, and in the worst cases, homelessness, homeless shelters may be forced to close their doors, and nonprofit organizations may have to lay off staff.”

FHA Loans Could Be Affected

One of the easiest ways for fledgling landlords to get on the property ladder has been through FHA loans. Buying a small multifamily building of two to four units, using an FHA loan, and allowing for a 3.5% down payment is an effective way to house hack before rinsing and repeating to build a portfolio. The Office of Housing, which oversees the FHA (Federal Housing Administration), could face a 44% cut in staff—a loss of 1,000 employees.

“There are going to be consequences all the way across the board,” said Antonio Gaines, who’s worked at HUD for over two decades and is president of AFGE National Council 222, which represents HUD workers.

Final Thoughts

Landlords who rent extensively to Section 8 tenants may need to start exploring their options. If the last month has taught us anything, it’s that nothing is off the table. Just because Section 8 might have been a steady source of income for landlords for years doesn’t mean it will continue to be.

Although housing vouchers were originally a Republican-supported plan meant to disperse low-income residents out of housing projects and into other neighborhoods filled with private landlords, it has ultimately been centered around lower-income neighborhoods. It has also garnered a reputation for attracting bad tenants—or overwhelming red tape and onerous inspections. This has led many landlords to avoid offering Section 8 vouchers, even before the current administration’s plans to reshape HUD and possibly limit welfare programs.

An analysis by the Furman Center for Real Estate and Urban Policy at New York University found that in 2022, nearly half of households awarded housing vouchers could not use them.

The situation has only worsened for prospective tenants. From 2018 to 2022, the share of families unable to use their vouchers increased from 35% to 45%, according to the study.

“It’s a dire situation,” Ingrid Gould Ellen, director of the Furman Center and one of the study’s authors, told USA Today. “That after winning the lottery, essentially, and getting this voucher, many of them may be searching and searching and unsuccessful. That is tragic for that individual family.”

Therefore, the message for landlords is simple: Don’t rely on the government to help you rent your apartment.