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.