Evidence on the excessive costs of all forms of unit-based housing assistance compared with recipient-based housing vouchers argues for replacing unit-based with recipient-based assistance as soon as current contractual commitments permit. The U.S. Congress has already mandated the conversion of public housing projects to recipient-based assistance under certain circumstances and allowed it under other circumstances. It could go further and require housing authorities to offer recipient-based housing vouchers to all current public housing tenants, financing this initiative with the money currently spent on operating and modernization subsidies to these authorities. Furthermore, hundreds of thousands of units in private subsidized projects in the United States come to the end of their use agreements each year.

At this time, the federal government could offer the occupants of these projects recipient-based vouchers rather than extending the use agreements. Despite the importance of this policy issue, there has been no theoretical analysis of the effects of vouchering out unit-based assistance on the consumption patterns and well being of occupants of housing projects. This paper shows how these effects depend upon the nature of the recipient-based voucher program, whether the household can remain in its project unit on the previous terms, the market rent of the project unit relative to the voucher program’s payment standard, and the cost of moving.