The U.S. federal government recently entered a partial shutdown that has directly impacted the Department of Housing and Urban Development (HUD). This situation is raising concerns among real estate investors and landlords, especially those who rent to tenants with HUD assistance (such as Section 8 vouchers). In this post, we’ll cover what is happening, why it’s happening, what is expected to happen next, and what landlords should expect in the short term.
Why Is There a HUD Shutdown?
This shutdown arose because Congress failed to pass a budget or stopgap funding bill by the start of the new fiscal year. In other words, lawmakers did not reach an agreement on federal spending in time, leading to a lapse in appropriations and the shutdown of most non-essential government functions. The impasse was driven by disagreements over spending priorities.
Government shutdowns affecting HUD are not unprecedented. In fact, a similar budget standoff in 2018–2019 led to the longest shutdown in U.S. history. During that period, HUD’s programs experienced delays - for example, over a thousand project-based rental assistance contracts expired and had to be renewed retroactively once funding was restored. Earlier shutdowns also caused temporary disruptions, though critical housing subsidies were eventually restored.
How HUD Programs Are Affected
When a federal shutdown happens, HUD does not completely close, but it significantly reduces its operations. Around 70% of HUD’s staff have been furloughed, leaving only essential operations active. HUD has a contingency plan that outlines which activities continue and which are paused. Here are the major impacts:
Rental Assistance Payments: HUD will continue paying rental subsidies under previously obligated contracts. That means existing Section 8 and project-based rental assistance payments are being made, at least while pre-obligated funds last. Funding has been secured through October and likely into mid-November.
No New Contracts or Vouchers: HUD is not issuing new vouchers or rental assistance contracts during the shutdown. Approvals, renewals, and new applications are on hold. Families already holding vouchers may still move in using pre-approved funds, but new applicants will face delays.
Reduced Staffing and Delayed Services: With most employees furloughed, services like policy development, complaint processing, and most HUD grant activity are paused. The FHA will process already-committed loans but will not process new ones, and borrowers should expect delays.
Impact on Other Housing-Related Programs: Agencies like Fannie Mae and Freddie Mac continue operating, but programs such as the National Flood Insurance Program cannot issue new policies - which may delay real estate transactions in flood zones.
In short, HUD’s current obligations are being fulfilled, but new activity is frozen. If the shutdown persists, delays in contract renewals and payment processing could increase.
What’s Expected Going Forward
If the shutdown is resolved quickly - within a couple of weeks - the impact on HUD programs should remain limited. Rental payments will continue, and paused processes will resume. However, a prolonged shutdown would strain housing authorities and delay payments.
During past shutdowns, payments under Section 8 and project-based contracts were delayed but made whole afterward. That precedent provides a level of reassurance that, even if payments are held up, they are likely to be fulfilled retroactively once the shutdown ends.
What Landlords Should Expect
If you rent to tenants receiving HUD subsidies, here’s what to expect right now:
Ongoing Rent Payments: HUD-funded rental payments for existing contracts are continuing. Housing authorities have enough obligated funds to cover at least October and part of November. So, for now, landlords should continue receiving their payments on time.
No New Activity: Don’t expect any new voucher issuances, rent increase approvals, or contract renewals until the shutdown ends. If you were expecting to onboard a new tenant with a voucher or enter into a new HUD agreement, those processes are on pause.
Evictions for HUD Nonpayment Not Allowed: If government payments are delayed, landlords are advised not to evict tenants for the government’s unpaid portion. Tenants are still responsible for their share, but the subsidy shortfall is not their fault.
PHAs Remain Operational: Local Public Housing Authorities (PHAs) continue to operate. While HUD is affected, PHAs are locally run and can function with the funding they already have. Stay in touch with them for local updates.
Plan Ahead: If you rely heavily on HUD payments, it’s wise to plan for delays in case the shutdown drags on. Keep reserves if possible, and maintain open communication with tenants. Based on past experience, any delayed payments are expected to be reimbursed in full once funding resumes.
Final Thoughts
The HUD shutdown is a disruption, but not a disaster - especially in the short term. Most rent payments are continuing, and operations at the local housing authority level are still moving. However, if the impasse continues into late November or beyond, challenges will grow.
Landlords working with HUD should remain calm, stay informed, and prepare for the possibility of delayed payments - while knowing that historical precedent points to eventual resolution and full reimbursement. As always, proactive communication with tenants and PHAs can help navigate the uncertainty with minimal disruption.
Oct 20, 2025
