New Issue Brief: The Costs and Benefits of Source of Income Discrimination Laws

Imposing more regulatory burdens on landlords hurts low-income renters  

New York, NY – Many states and cities have passed Source of Income (SOI) antidiscrimination laws that prevent landlords from rejecting tenants based on the source of their rental payments, particularly targeting discrimination against holders of government housing vouchers. Research on the effects of SOI laws is limited, with some studies suggesting modest benefits for voucher holders, but these studies provide little evidence on long-term outcomes for renters or the costs for landlords.

In a new Manhattan Institute issue brief, senior fellow Judge Glock argues that while SOI laws aim to combat discrimination, they do not benefit most low-income renters, and they increase burdens on landlords, leading to a decrease in low-income housing supply. He suggests reforming government voucher programs to address landlord concerns and improving voucher payment systems rather than mandating the acceptance of vouchers. These recommended reforms include:

• Reduce the Burden of Vouchers on Landlords: Local Public Housing Agencies (PHAs) can increase landlord acceptance of vouchers by improving tenant preparation, insuring landlords against damages caused by voucher tenants, addressing complaints about annual inspections, and creating clearer inspection standards.
• Reform Payment Methods to Increase Vouchers Acceptance: Perceived costs for landlords regarding voucher holders can be offset by benefits, such as increased rental payments in higher-cost areas. Adjusting Fair Market Rents and overissuing vouchers can also help address concerns about unused vouchers.
• Reducing the Burden of SOI Laws: Given the clear economic downsides of SOI laws, as well as the existing alternatives to them, Glock advises against their adoption and—in cities that already have them—he calls for their repeal. All states would be wise to follow the paths of ones like Indiana and Texas, which have banned their cities from passing SOI laws.

Read the full issue brief here.