ENTITLEMENT, Section 8 Housing Subsidy

Housing subsidies

Housing subsidies are designed to promote the construction industry and homeownership.

As of 2018, U.S housing subsidies total around $15 billion per year.

Housing subsidies can come in two types;

assistance with down payment and interest rate subsidies.

The deduction of mortgage interest from the federal income tax accounts for the largest interest rate subsidy.

Additionally, the federal government will help low-income families with the down payment, coming to $10.9 million in 2008.^[33]

As a housing policy tool, housing subsidies also help low income individuals gain and maintain liveable residency by easing the cost burdens of housing for low income individuals and households.

However, some policy makers and experts believe they are costly to implement and may even reduce incentives for beneficiaries to participate in the labour market.

In the contrary, certain literatures have found that subsidy cuts do not encourage employment or participation among beneficiaries.

For example, research by Daniel Borbely found that reducing housing subsidies did not increase employment and labour force participation.

Though, he also added that claimants relocated to other areas of the rental market to maintain their benefits.^[34]

Nonetheless, the most common method for providing housing subsidies is via direct payments to renters by covering a part of their rent on the private rent market.

This method of direct transfer of housing subsidies is often referred to as 'housing vouchers'.

In the United States, the so-called Section 8 is a direct payment program subsidising the largest amount of money to renters for rental assistance.^[35]