Do I have to rent to Section 8 tenants?

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Section 8 Tenancies

Today’s post addresses a question I am frequently asked by Nevada property managers – “Do I have to rent to Section 8 tenants?” It seems many landlords are either unfamiliar with this HUD program, or are relying on hearsay to make their decisions as to whether to accept a renter on housing assistance.  (NOTE: Nevada’s Fair Housing Law does not list “Source of Income” as a protected class – other states and jurisdictions DO prohibit housing providers from discriminating on the basis of a tenant’s income source. Know your local laws and statutes!)

What is “Section 8?”

“Section 8” is a commonly-used term for what HUD calls “the Housing Choice Voucher Program.”  It is the federal government’s primary program for assisting low-income families, the elderly, and persons with disabilities to afford clean, safe, and desirable housing in the private market.  

Participants in the program apply locally at the public housing agencies who receive federal funds from HUD to administer their programs.  A participant who is issued a housing voucher is responsible for finding suitable housing of his/her choice where the owner agrees to rent under the Section 8 program. Once a lease is executed, the public housing agency pays the landlord directly on behalf of the participant.  The participant then pays the difference between the actual rent charged by the landlord and the amount subsidized by Section 8.

Any housing unit chosen by the Section 8 participant must meet an acceptable level of health and safety. When the participant finds a unit he wishes to occupy and reaches an agreement with the landlord over the lease terms, the local public housing agency inspects the dwelling to determine whether the rent requested is reasonable.

The local agency determines a payment standard that is the amount generally needed to rent a moderately-priced dwelling unit in the local housing market and that figure is used to calculate the amount of housing assistance a participant will receive.

The tenant must sign a lease with the landlord for a minimum of one year. The landlord may collect a security deposit, in an amount determined by the landlord, and based on market conditions.  (Careful here:  security deposits should be set uniformly for all your rentals, and only varied for clearly established business reasons.)  After the first year the landlord may initiate a new lease or allow the participant to remain in the unit on a month-to-month lease.  The tenant is required to comply with the terms of the lease, including paying his share of the rent on time and maintaining the dwelling unit in good condition.

Are the property manager’s responsibilities increased over “traditional” rentals?

The landlord’s obligations to a tenant under a Section 8 lease are essentially the same as his/her obligations under a “traditional” tenancy.  The landlord must maintain the property in a safe and sanitary condition.  Take a look at Nevada’s landlord/tenant law.  It includes similar property condition standards.

How does Section 8 work?

The program is pretty simple, really.  The tenant pays what he/she can afford, and HUD pays the difference.  HUD’s payments generally arrive like clockwork, too.  They show up the same time each and every month, for the life of the contract.  So, why would a landlord hesitate to rent to a “Section 8” participant?

Some housing providers perceive participants in this housing assistance program to be less-than-desirable renters.  This generalization hurts both the landlord and tenant, and is unrealistic.  The landlord’s responsibility in any rental housing agreement is to “screen” his/her tenants before entering into an agreement to rent.  Most landlords use a combination of credit, income and rental history in making a decision whether or not to rent to an applicant.  As a landlord renting to a participant in a housing assistance voucher program, you should process the application in the same way as all other applications.  The applicant would either qualify or not, based on your criteria, which is applied universally to every rental application. When determining whether the tenant can afford the rental property, remember to base your calculations on the amount of rent the tenant will be paying under a Section 8 voucher, and not the entire rental amount for the dwelling.

Property Condition Standards in Section 8 Housing

Some landlords complain the demands of the local housing agency regarding dwelling condition are unreasonable.  These dwelling condition standards are set and enforced on a local level, and are intended to be in keeping with our state landlord/tenant laws.  If the requirements are truly unreasonable, property managers have the ability to enter into dialogue with the local agency.  After all, the agency’s goal is to help its participants.  If there is a shortage of available housing for program participants, the agency is falling short of its objectives.  I have seen several cases of productive dialogue between property managers and local housing agencies, and encourage you to explore this avenue.

When determining whether you will rent to “Section 8” participants, consider whether a “no Section 8” policy is justified.  Can you point to clear business reasons for refusing program participants?  I strongly recommend you consult your attorney when drafting such policies.

Do you have an experience with Section 8 housing you’d like to share? Please do so by leaving a comment on this blog.

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About Judy

Property Management Mentor
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8 Responses to Do I have to rent to Section 8 tenants?

  1. Sally says:

    Kudos to you! This ranks as one of the most well-written articles on housing choice vouchers. Thank you! More articles about vouchers should be written by you. Again, great job.

  2. One thing I’m not crazy about with Section 8 is that they cannot (or will not) tell you how much rent they’re going to pay for during the application process. This makes it impossible to qualify a person properly. That never made much sense to me.

    • Judy says:

      Hi Bob – Have you had a discussion with the local reps about this? A couple of managers have told me they had the same issue, and gave “conditional” approval, pending the rent determination. Perhaps, that would satisfy the concern. The Section 8 process can be a bit cumbersome in the beginning, but tends to pay off in the long term – some of my best tenants were Section 8 recipients. Thanks for reading and commenting.

  3. Yes, it was the local NRHA reps that told us. It’s like they don’t understand we have to qualify a tenant before we can agree to rent to them. I’ve never been able to get a satisfactory explanation of why someone who already has a voucher can’t be told how much of the rent Section 8 will cover. Still, we’ve had a fair amount of success with Section 8- no more or no less issues with any other tenants- except the rent is usually on time. :>

  4. Judy says:

    I wonder if “conditional approval” will work, in these cases; it has for other managers. Might be worth a try, or at least a chat with the local NRHA; the managers who’ve done this are both in the Reno market – different local agency.

    There is much to be said for on-time rent! I agree – no greater issues with Section 8 tenants than any others. Thanks, Bob!

  5. Bonnie Huval says:

    Good article, and interesting discussion!

    I did not have problems qualifying Section 8 applicants when I had a small apartment building. I got the same total rent for an apartment from a Section 8 renter as I did from a regular renter, and I knew the housing agency set the tenant’s share of the rent at a level that was achievable. But maybe it was easier for me because most of my Section 8 tenants were on disability, and their disability income was as stable as the Section 8 subsidy payments.