When Subsidy Payments Stop: What Landlords Need to Know

When Subsidy Payments Stop: What Landlords Need to Know

(Written for landlords at Salmon Real Estate serving Staten Island and beyond)

A prolonged federal government shutdown creates real stress for housing providers who rely on subsidy payments for assisted units. As the budget stalemate drags on, landlords participating in federally-funded rental subsidy programs need to be prepared.

What’s Happening?

• The federal shutdown means that many agencies are operating with limited funding or staff. The U.S. Department of Housing and Urban Development (HUD) has already obligated certain funds to keep voucher payments flowing through the near term. NAHRO+3Multifamily Dive+3California Apartment Association+3

• According to the California Apartment Association’s Q&A, for example, voucher payments will likely continue for existing contracts through at least October or into mid-November, but if the shutdown extends, there is a risk of payment interruption once obligated funds run out. California Apartment Association+1

• The recent flyer for tenants from the National Housing Law Project states that if a subsidy contract cannot be renewed during the shutdown, landlords may not receive payments once the contract ends. National Low Income Housing Coalition+1

What It Means for Landlords

• Cash flow risk: If you have tenants whose rent is subsidized (voucher tenants), your portion of the rent collected from HUD or a housing authority could be delayed or eventually stopped if the shutdown drags on. Multifamily Dive+1

• Tenant portion still due: Although the government’s share may be delayed, tenants remain obligated to pay their portion (usually ~30 % of income for voucher programs). Landlords must continue collecting that portion as usual. Multifamily Dive+1

• Eviction risk must be handled carefully: You cannot use the government’s non-payment (for the subsidy) as a automatic cause for eviction of the tenant for nonpayment of their portion. Federal rules and many state/local laws prohibit using delayed subsidy payments as a reason to evict voucher tenants. California Apartment Association+1

• Contracts expiring are especially vulnerable: If the rental assistance contract (for example, project-based voucher contracts) is set to expire during the shutdown, there is risk of non-renewal or delay, which may result in loss of payments. National Low Income Housing Coalition+1

What Should a Landlord Do If Payments Stop or Are Delayed?

Here are actionable steps you should consider, especially in the role you hold at Salmon Real Estate, managing or owning assisted units or working with brokers/clients who do.

1. Stay informed & communicate

   • Regularly check in with your local Public Housing Authority (PHA) or contract administrator to see how the shutdown is affecting them: Are they still making payments? For how long? What is their reserve position? Multifamily Dive+1

   • Keep tenants informed as well. Transparent communication builds trust. Let them know if there’s a delay in subsidy payments that’s beyond their control, and reiterate that their portion remains due.

   • Document all communications: letters, emails, notes of phone calls with the PHA, tenant, etc. Good documentation can protect you later. Crossville News First

2. Review your financial/reserve position

   • Recognize that you may need to cover operating costs (maintenance, taxes, insurance, etc.) without relying on the subsidy check for a period. If you haven’t already, evaluate how many months of expenses you can cover without the subsidy payment. Multifamily Dive

   • Avoid rash decisions (like raising rents on voucher units or evicting tenants solely because of subsidy delays). Such moves may violate federal law or the specific contract terms. Crossville News First+1

3. Ensure tenant portion payments are collected

   • Continue to collect the tenant’s portion of rent per the lease. The government’s share is distinct and separate. Failure by the tenant to pay their share could still be grounds for non-payment enforcement (depending on state/local law) but delayed subsidy payments are not grounds to blame the tenant. National Low Income Housing Coalition+1

   • If a tenant begins to struggle (for example, if the tenant is a federal employee or contractor losing pay), you may consider working out a short-term payment arrangement—but document it and treat it as a landlord/tenant agreement, not as the tenant being at fault for the subsidy delay.

4. Check lease/contract terms and your legal rights

   • Review your subsidy contract (e.g., HAP contract for voucher units) or lease addendum to know your rights and obligations if subsidy payments stop or are delayed.

   • Understand that many legal resources say you cannot evict or terminate participation of a tenant in a voucher program simply because of a government shutdown. California Apartment Association+1

   • Consult your attorney if you have concerns about contract expiration, renewal, or how to handle a tenant who refuses to pay their portion.

5. Plan for worst-case scenarios

   • If the shutdown stretches long and reserved funds in housing authorities run out, you may experience a prolonged delay. Begin contingency planning: How will you cover losses? Which units are at highest risk?

   • Consider whether you have units with contracts expiring soon; if so, have a strategy for whether to continue with subsidy programs or transition them if necessary.

   • Monitor the status of other related programs (e.g., USDA Rural Development, or contract-based housing) because different federal programs may be impacted differently. NHLP+1

Key Takeaways for Landlords

• A government shutdown does not automatically mean subsidy payments stop—but they can be delayed or suspended if funding runs out.

• Landlords must continue collecting the tenant’s portion of rent. The government’s portion is separate.

• Landlords cannot evict a voucher tenant or demand the tenant pay the government’s portion due to a payment delay caused by the shutdown.

• Communication, documentation, and planning are your best defenses.

• Be particularly vigilant if you have contracts that are up for renewal or if your local housing authority signals funding risks.

Why This Matters on Staten Island / New York City Context

As the broker-owner of Salmon Real Estate, operating in Staten Island and the broader New York City area, I understand that our landlords are likely to interact with a variety of rental assistance programs. While the U.S. Dept. of Housing and Urban Development (HUD) and local agencies may be more robust here, a shutdown is still a risk. Many landlords in NYC rely on subsidy payments or work with tenants who do.

By getting ahead of the risk and putting these practices in place now, you position yourself—and your clients—for greater stability in uncertain times.

Suggested Template for Your Landlord Clients

Here’s a short note you could provide to landlords (or send as an email) to summarise actions:

Subject: Important: Federal Subsidy Payments & Government Shutdown – What to Do
Dear [Landlord/Owner],

With the current federal government shutdown continuing, we wanted to make sure you are prepared in case subsidy payments (e.g., Section 8 housing assistance payments) are delayed or temporarily interrupted. Here are key steps:

1. Continue collecting the tenant’s portion of rent as per the lease.

2. Do not treat a delayed government payment as tenant non-payment, eviction cause, or reason to raise the rent.

3. Stay in contact with the local housing authority administering the voucher program to track payment status and contract renewals.

4. Keep clear records of all payments, communications, and notices from housing authorities or HUD.

5. Review your contract expiry dates. If your subsidy contract ends soon, plan accordingly.

If you have questions about your specific property or subsidy contract, we can connect you with a qualified housing-law attorney and keep you updated on developments.