Chile's New Rental Housing Subsidy and Its Relevance to U.S. Housing Choice Voucher Program Reform

AbstractUntil recently, rental housing policy was largely absent throughout South America as governments widely supported homeownership. Amid growing recommendations for rental sector interventions in South America, at the start of the 2014, Chile was the first country in South America to adopt a national rental subsidy program-one aimed at making rental housing more affordable to lowand moderate-income young families. This article presents an overview of Chile's rental program and its relevance for U.S. rental subsidy reform. Chile's program consists of a flat-rate, time-limited subsidy that offers a degree of administrative simplicity and payment flexibility for tenants facing income volatility. In the United States, policymakers have flirted with building these program elements into the United States' longstanding Housing Choice Voucher Program. Although the Chilean and U.S. rental subsidy models operate within different contexts, as discussed in the article, a close examination of Chile's implementation and outcomes has the potential to inform U.S. rental housing policy reform. The authors also address the unique opportunity for monitoring and evaluation offered by Chile's program.IntroductionAlthough more than one-half of families across South America's biggest cities cannot afford to buy a proper formal dwelling, national housing strategies throughout the region largely ignore the rental housing sector.1 Until recently, rental housing policy was largely absent throughout South America as governments widely supported homeownership. Amid growing recommendations for rental sector interventions in South America at the start of 2014, Chile was the first country in South America to adopt a national rental subsidy program.2 Chile's first rental subsidy program aims to make rental housing more affordable to lowand moderate-income young families throughout the country.This article presents an overview of Chile's rental subsidy program and its relevance for U.S. rental subsidy reform. The article highlights key features of Chile's new rental subsidy model and its relevance for U.S. policy. In particular, Chile's program consists of a flat-rate, time-limited subsidy that offers a degree of administrative simplicity and payment flexibility for tenants facing income volatility. In the United States, policymakers have flirted with building these program elements into the longstanding Housing Choice Voucher Program (HCVP). Although the Chilean and U.S. rental subsidy models operate within different contexts, as we discuss in the following sections, a close examination of the Chilean implementation and outcomes shows that the Chilean model has the potential to inform U.S. rental housing policy reform.Current State of Housing Policy in ChileChile is an upper middleto high-income country. Its per capita income is roughly $14,000, the highest in South America (World Bank, 2013a). 3 Chile also has one of the fastest growing economies throughout the region and a reputation for well-functioning and innovative social policy (OECD, 2009; World Bank, 2013b). During the past 30 years, the Chilean government has consistently supported growth and trade and has seen a substantial decline in poverty to a rate that is currently among the lowest in South America. In 2010, Chile was the first South American country to join the Organisation for Economic Co-operation and Development (OECD). 4 Despite strong economic growth, however, Chile has one of the highest rates of poverty and the greatest level of income inequality compared with those of the other OECD countries. Improving housing conditions and better targeting housing policy to those most in need have become national priorities and are being used as tools for reducing poverty and inequality (OECD, 2012). Throughout South America, Chile has been and continues to serve as a model for housing policy.5 During the past 20 years, key features of Chile's housing policy have supported homeownership for lowto moderate-income households. …