This type of affordable housing is based on the use of subsidies, the amount of which is geared to the tenant's ability to pay. The subsidy makes up the difference between what the low-income household can afford, and the contract rent established by HUD for an adequate housing unit. Subsidies are either attached to specific units in a property (project-based), or are portable and move with the tenants that receive them (tenant-based). The Section 8 program was passed by Congress in 1974 as part of a major restructuring of the HUD low-income housing programs. Section 8 was created to permit federal housing assistance to go for construction or rehabilitation of new low-income housing or to subsidize existing housing.

Privately owned rental units participating in the low-income rental assistance program. Landlords receive subsidies on behalf of qualified low-income tenants, allowing the tenants to pay a limited proportion of their incomes toward the rent.

Many Section 8 contracts have expired or will expire soon, and the property owners must now decide whether to renew their contract or leave the program ("opt out"). Most of these contracts are now renewed on a one-year basis. Projects with high risk of opting out typically have rents set by the Section 8 contract below the prevailing market rents for comparable units. Owners thus have an incentive to leave the program and convert their property to private market rentals. Reference: www.huduser.org/rbc/categories.html Section 8 Vouchers: This federal program is administered by the local housing authority. Eligible tenants receive vouchers they can use to help them pay for apartments in the private market. Reference: www.huduser.org/rbc/categories.html