A Renter Safety Net: A Call for Federal Emergency Rental Assistance

For decades, escalating housing costs have outpaced income growth for middle- and lower-income earners. As a result, millions of American households have too little income leftover after paying rent to accumulate a savings buffer to cover other necessary expenses. When unexpected financial shocks occur, such as a drop in earnings or a surprise medical expense, many low-income households may not have sufficient savings and liquidity to pay their full rent at that time, leading many to the brink of eviction or a forced move. In this chapter, the authors document the costly externalities that such housing instability poses to renters and to society more broadly.

To help low-income renters manage temporary shocks, the authors propose the creation of a Federal Emergency Rental Assistance Program to provide one-time, short-term financial help to low-income renters who face unexpected financial shocks. They suggest that short-term assistance would fill a critical gap in the current suite of federal housing programs which promote housing stability by subsidizing homeownership for middle- and higher-income households and providing long-term rental assistance to a small share of eligible, low-income households. Although the chapter emphasizes flexibility to allow states and localities to tailor the program to local conditions, it highlights key design features that would promote efficiency. Finally, while the proposed program is designed to address idiosyncratic financial shocks, it could be scaled up to address common shocks when such need arises.