Federal rental assistance is a critical component of the social safety net in the United States, helping approximately five million households with low incomes afford their housing costs. The public housing and Housing Choice Voucher programs are two of the largest federal rental assistance programs. Together, these programs serve approximately three million households across the country. Continual improvement of these rent subsidy programs has been a longstanding public policy goal and central to the U.S. Department of Housing and Urban Development’s (HUD) Moving to Work (MTW) Demonstration. Receiving MTW authorization gives public housing agencies exemptions from many traditional program rules and offers them the flexibility to find new approaches to pursue three statutory objectives of the MTW Demonstration: reduce costs and achieve greater cost effectiveness, give families incentives to work toward economic self-sufficiency, and increase housing choices for families with low incomes.

This report examines one such effort, HUD’s Stepped and Tiered Rent Demonstration, which tests two alternative rent policies: a tiered rent model and a stepped rent model. The tiered rent model is tied to income: households are grouped by income into tiers, and all families with income within a single tier pay the same total tenant payment until their next recertification, which takes place every three years. Stepped rents, in contrast, are decoupled from income and increase annually, unless eligible hardship circumstances are present. The report presents the baseline characteristics of the 11,749 households participating in the study and summarizes the findings from interviews with public housing agency staff members to describe their perspectives on the early implementation of the two new rent policies.

This report is the second and final report of the first phase of the study. The second phase, which will cover an additional four years of policy implementation, will extend through late 2029.