Public Policy and Landlord Maintenance Effort in the Section 8 Existing Rental Assistance Program: Evidence from Two Cases

Abstract

This paper examines an issue with significant implications for the viability of the Section 8 Rental Assistance Program for Existing Housing: the trade-offs between the financial costs and benefits experienced by landlords participating in the program. Using a modified experimental design, these trade-offs are analyzed in carefully matched samples of Section 8 and market rate units managed by two rental firms operating in very different neighborhoods within the St. Louis area—one poor, predominantly black, and central city in location; the other, middle income, white and suburban. Similar patterns are found in both cases: (1) Section 8 units cost significantly more to repair and maintain than comparable market rate units; (2) Section 8 authorized rents and rent collections are significantly higher than market rate; and (3) no significant cashflow differences before debt service are observed between Section 8 and market rate properties. In other words, added maintenance costs resulting from Section 8 participation are adequately compensated for by above-market rents, thereby enhancing program viability. Implications for housing administrators and policy makers are examined in the concluding section of the paper.