Renters and landlords to take a hit from Section 8 housing subsidy cuts

Government agencies will issue 6,000 fewer low-income housing vouchers than were slated for this year as a result of federal cuts — widely-deemed “sequestration” —  that will cut $120 million from the budget for Section 8 of the Housing Act of 1937, Crain’s reported. This would be the first major housing subsidy cut since President Richard Nixon founded Section 8 in 1974, in order to assist landlords in providing low-income rental housing.

The cuts will affect both landlords whose tenants receive Section 8 vouchers as well as landlords who contract directly with the Department of Housing Preservation and Development, Crain’s said. Roughly 630 city properties with 75,000 subsidized units will be affected, which could lead to rent hikes for tenants or loan defaults for landlords who have mortgages backed by Section 8.

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City agencies involved with the program, such as the New York City Housing Authority and Housing and Urban Development, are grappling with the issue and will likely issue fewer vouchers than previously planned and issue some vouchers for lower amounts, Crain’s said.

“The real problem is, these are our neediest tenants, the ones who cannot even afford the units in our developments,” who will be affected in many cases, HPD Commissioner Mathew Wambua told Crain’s. [Crain’s]Hiten Samtani