The Housing and Community Development Act of 1974 added sex as a protected class to the Fair Housing Act and funded community development for low-income families.

Because this act expanded on fair housing laws, it’s a crucial aspect of the real estate exam. As a real estate expert with years of experience, I’m here to guide you through the crucial details of this act.

In this post, we’ll define the Housing and Community Development Act of 1974, give examples of how it works, and explain how it impacts real estate.

What Is the Fair Housing Act of 1968?

Before we discuss the Housing and Community Development Act of 1974, we must briefly explain the Fair Housing Act of 1968.

The Fair Housing Act (FHA) prohibits discrimination in housing against protected classes. Protected classes are groups with certain characteristics that make them vulnerable to prejudice.

When the Fair Housing Act was first enacted in 1968, it only protected the following classes:

Race
Color
National origin
Religion

Since 1968, more protected classes have been added to the list, and a few have had their definition expanded upon.

What Is the Housing and Community Development Act of 1974?

The Housing and Community Development Act (HCD) amended the Fair Housing Act by adding sex as a protected class and funded community development for impoverished families.

The historical significance of this act was massive. Before 1974, housing providers could legally discriminate against and deny housing to women.

Examples of Sex-Based Housing Discrimination

Some common examples of housing discrimination against women include:

Refusing to rent rooms to women
Refusing to sell houses to women
Denying housing to female victims of domestic violence
Charging extra fees for female tenants and buyers
Giving rules to female tenants that do not apply to male tenants
Sexually harassing female tenants

Luckily, the Housing and Community Development Act of 1974 helped to ban these particular discriminatory acts. The above examples are now illegal under fair housing laws.

How Has the Definition of Sex Changed?

Since 1974, the definition of sex has expanded to include sexual orientation, gender identity, and more. This means that same-sex couples and transgender individuals are now protected under the Fair Housing Act.

As a result, the following discriminatory actions also violate fair housing laws:

Denying housing to a same-sex couple
Asking potential tenants about their sexual orientation
Refusing to repair a tenant’s room because they are transgender
Imposing rules on same-sex couples but not heterosexual couples

What Is the Difference Between Sex and Gender in Fair Housing?

The law perceives gender as your socially constructed view, while sex is your biological. In 1974 the law didn’t cover transgender discrimination or discrimination based on gender identity. That was later added and expanded on by many states.

For example, if you look at a state-specific protected class list, you can see both sex and gender are covered separately. Oregon’s laws protect people from being treated differently because of their: race, color, religion, sex, national origin, whether or not you have kids, disability (also: source of income, domestic violence survivors, marital status, sexual orientation, and gender identity).

Examples of How the HCD Act Fights Sex-Based Discrimination

Let’s look at some recent real world examples of how the Housing and Community Development Act protects sex and gender in real estate.

Sexual Harassment Case Against Ohio Landlord

In 2021, a landlord named Anthony Hubbard was charged with sexually harassing female tenants. Hubbard made unwanted sexual advances toward his female renters, offered to reduce their monthly payments, and entered their homes without consent.

Thanks to the HCD Act prohibiting sex-based discrimination, this behavior violates fair housing laws. Hubbard, in addition to the other landlords he was in business with, had to pay $100,000 to the Justice Department for sex-based discrimination and sexual harassment.

The settlement also prohibits Hubbard from managing rental housing in the future and requires that his business partners receive fair housing training.

While this case exemplifies the importance of the Housing and Community Development Act, it also shows that sex-based discrimination is still an issue in real estate today.

Property Manager Sued for Discrimination Against Trans Woman

An example of gender-based discrimination occurred in 2022 when a black transgender woman filed suit against her property manager. Shayla Anderson claims she filed a noise complaint with management at her apartment building, but the complaint was ignored.

When she confronted management about the issue in person, the property manager purposely misgendered Anderson and encouraged her to move out. Later, management refused to make repairs to Anderson’s apartment unit and blocked her from making repair requests.

While the lawsuit is still ongoing, Anderson filed a discrimination complaint with the Fair Housing Act, which authorized her right to sue.

Who Enforces the Housing and Community Development Act?

The Department of Housing and Urban Development (HUD) enforces the Housing and Community Development Act. If an individual feels they are facing discrimination based on sex or gender identity, they can file a complaint with HUD’s Office of Fair Housing and Equal Opportunity.

Penalties for Violating the Housing and Community Development Act

Housing providers who discriminate against protected classes violate the Fair Housing Act. The penalties for breaking fair housing laws include

$16,000 fines for first-time offenders
$37,500 for two violations in five years
$65,000 for three violations in seven years

Violators may even spend time in jail when force or the threat of force is used for discrimination.

Are There Other Protected Classes Under the Fair Housing Act?

Since the Housing and Community Development Act of 1974, the FHA has expanded its list of protected classes even more. Under the Fair Housing Amendments Act of 1988, the following two protected classes were added:

Familial status
Disabilities

This prohibits housing providers from discriminating against families with children and people with disabilities.

How Did the Housing and Community Development Act Fund Community Development?

This act also goes by the name of the Community Development Assistance Act.

A secondary goal of this act was to encourage community development and improve living conditions for families with low incomes.

Under this act, the government provides funds for communities to improve the economy and ensure sanitary housing. The government generally gives these funds to

Rural housing programs
Housing for senior citizens
Housing for low and moderate-income families

The HDC Act created two new programs to implement fund allocation for community development. These programs are

Housing Choice Voucher Program (Section 8)
The Community Development Block Grant Program

What Is the Housing Choice Voucher Program (Section 8)?

The Housing Choice Voucher Program, or Section 8, provides housing choice vouchers to eligible citizens. Examples of eligible applicants include:

Families with very low incomes
Disabled people
Senior citizens

Housing choice vouchers help these groups find affordable and sanitary housing. They can choose any housing unit that meets program requirements, including:

Single-family homes
Apartments
Townhouses

How Do Housing Choice Vouchers Work?

Public housing agencies (PHA) are given funds from the government for community development. PHAs decide which candidates in their communities are eligible for these vouchers.

Eligible families must look for a home that meets program requirements. When they find a suitable housing unit, the PHA pays a subsidy to the landlord on the family’s behalf. The family then pays the difference between the rent amount and the subsidy.

What Is the Community Development Block Grant Program (CDBG)?

The Community Development Block Grant Program (Title I of the HCD Act) supports community development through grants. A grant is a fund given by the government to help individuals or entities in need.

The U.S. government provides Community Development Block Grants to states, metropolitan cities, and urban counties. The goal of this funding is to:

improve the economy
expand housing opportunities
assist individuals and families with low and moderate incomes

Who Can Receive Community Development Block Grant Program Funds?

Eligible states, cities, and counties are the only entities that can receive grants directly from the CDBG. However, individuals and organizations can apply for assistance through local government organizations.

Grant applicants must:

Create a three-year community development plan and program
Operate the program while following civil rights and fair housing laws
Inform citizens about the program and how it affects them

What Can CDBG Grantees Use Funds For?

Grantees can use CDBG funds for any community development activities as long as they meet one of the following requirements:

The grant benefits persons with low and moderate incomes
The grant aids in housing development
The grant assists in urgent development to avoid community harm

Example of How the HCD Act Funds Community Development

According to HUD, the Housing and Community Development Act has housed over 35,000 households, including homeless families and domestic abuse survivors.

Some of the communities that have found the most success in implementing the HDC Act include:

Housing Authority of Santa Barbara in California
Greenville Housing Authority in North Carolina
San Diego Housing Commission in California

These organizations have an 84-96% utilization rate of housing choice vouchers, which help to house families and individuals that could otherwise be homeless.

Where Does the Housing and Community Development Act Fall Short?

The Housing and Community Development Act helped to protect women from housing discrimination and fund low-income communities, but it still needed some improvements.

As we’ve mentioned, vulnerable groups like families with children and people with disabilities could still be discriminated against until 1988.

Furthermore, the Housing and Community Development Act failed to eradicate sex-based discrimination from the housing market. Many cases of sex-based discrimination against women, same-sex couples, and transgender individuals still go unenforced.

In terms of community development, it can take years for families to get assistance from Section 8 due to the long waiting list. Some public housing agencies even turn away families because of the overwhelming amount of applicants.

Another issue with Section 8 is that many families cannot find landlords who accept housing choice vouchers. While some states make it illegal for landlords to decline vouchers, many states have no regulations, leaving impoverished families with no housing.

What to Know Before the Real Estate Exam

When it comes time for your exam, you need to know the Housing and Community Development Act of 1974 included sex as a protected characteristic under the FHA and supported community development.

This act was vital in the fight against discrimination as it strengthened the Fair Housing Housing Act. The HCD was one of the first steps the federal government took to protect women, which eventually led to same-sex couples and transgender protections too.

Not only did the act play an important role in fair housing, but it also established funds for low-income communities in need of better housing.

This isn’t the only act you’ll need to be familiar with before the real estate exam. You can brush up on other vital terms using our online Real Estate Flashcards.