Countless advertisements on Craigslist and in newspapers boldly declare “No Section 8.” The tenant could pass an onslaught of background and credit checks and still be denied simply based on their source of payment. Why do certain landlords advertise they take Section 8 and some don't? The choice to accept Section 8 Housing Voucher tenants is up to an individual owner. Like all government funded programs there is a lot of paperwork involved and a lot of requirements that cost the landlord a lot of time and money. The Section 8 program has very strict standards, so it is not unusual to fail a Section 8 inspection. The quality of the tenant is not normally very good. Moreover talking about the disadvantages, … Now that we’ve gotten our refresher course about Section 8 housing, let’s get into today’s main topic: Are landlords required to accept Section 8 tenants? The Housing Choice Voucher Program, also called Section 8, enables very low-income households to rent units from private landlords with subsidies administered by Housing Works. In these situations, the only thing you can do is make sure you place quality tenants in your property and that you keep up with property maintenance. These housing units, sometimes referred to as projects, grant voucher privileges to those living at the property. Once you fix all items on the list, you can schedule a re-inspection with the Section 8 office. As with any other tenant, you should never allow a Section 8 tenant to move in without first collecting a security deposit from them. They will once again send the inspector to determine if all issues have been fixed. When a tenant moves out, the voucher remains with the property for the next tenant. Texas has laws that forbid cities and counties from implementing any discrimination bans such as those passed in Chicago.Â, You can also find some specific information about each state’s rules on the, Low vacancy rates because of the high demand for HUD-friendly properties, 70% of rent paid directly by the government; no risk, Tenants pre-approved by the PHA before receiving their voucher, Other landlords have an implicit bias against those that use vouchers, and they falsely believe that these tenants will be more likely to cause property damage than other tenants. Also to know, why do landlords not accept Section 8? So why do so many landlords reject tenants with Section 8 vouchers? The bottom line. A Simple Benefits Guide. There are 13 areas the inspector will look at to determine if the unit meets HUD’s safety and health standards. This does not mean you have to accept section 8, it just means you have to treat section 8 vouchers the same as any other income in your assessment. Traditionally most properties that accept Section 8 vouchers are on the north side of the city, which remains heavily African American. Government section 8 payments are generally prompt, and you do not need to worry about the government defaulting on your payments. Also known as HUD housing, this program grants vouchers to tenants that act as a guarantee that the program will pay 70% of the rent while the tenant will be responsible for the other 30%. The tenant pays a portion of the rent based on his/her income and the Voucher covers the balance. She has more than 16 years of experience in real estate. Enacted in the early 1970s, this program is managed by the Department of Housing and Urban Development. Security Deposits Are Not Paid by Section 8, 4. Each year, HUD puts together a list of Fair Market Rents for over 2,500 areas of the country. If a section 8 applicant presents with clean credit and positive landlord references I would accept them. Can Landlords Keep Security Deposits for Normal Wear and Tear? While the rent portion coming from the government is virtually guaranteed, many landlords fear that the tenants may be to poor to pay their share of the rent. If you do fail the inspection, you will be given a list of items that need to be fixed. The agency doesn’t sign a lease, the tenant does. As with any other tenant, you should never allow a Section 8 tenant to move in without first collecting a security deposit from them. Also that they will not take care of the property. You may have seen “No Section 8” on “for rent” signs and apartment ads — and in many places, that’s entirely legal. Landlords are looking for responsible tenants with predictably middle class behavior. Under the Section 8 Housing Voucher program, the total contract rent paid to a landlord is negotiated between the landlord and the prospective tenant, governed by rent reasonableness. However, there are some regions and states where there are some limitations about when landlords can and cannot deny an application by a Section 8 voucher holder. Aside from the reasons aboasve to not accept Section 8 and HASA, I don’t accept those anymore because there’s absolutely no accountability. If you are not financially able to wait a couple of months to receive rent, then Section 8 may not be the right choice for you. Do landlords have to accept Section 8? State Mortgage & Expense Forbearance Resource Page – https://www.dfs.ny.gov/ Rules like the ones on track in Baltimore and San Jose would not “force” landlords to accept Section 8 vouchers (as some landlords might tell it). https://www.rentprep.com/landlord-tips/coronavirus-resources-new-york/, https://www.cnn.com/2020/03/19/success/real-estate-coronavirus/index.html, https://portal.311.nyc.gov/article/?kanumber=KA-01253. There are good Section 8 tenants and there are bad Section 8 tenants. The idea of receiving vouchers makes many feel like they are taking unnecessary risk on their investment. Erin Eberlin wrote for The Balance Small Business, covering rental management, tenant acquisition, and property investment. A: Depends on the city you live in – https://www.politico.com/, Is Section 8 Good For Landlords? that prohibits landlords from denying or refusing to accept applications from those who utilize public assistance. California landlords would no longer be allowed to reject prospective tenants solely because they hold federal Section 8 housing vouchers under a bill passed by the state Legislature on Wednesday. Section 8 is a rental assistance program run by the government. Does refusing section 8 vouchers make sense for the common landlord, or are there benefits to accepting these government-backed housing vouchers? Depending on the condition of your property and the Fair Market Rent HUD has calculated for your area, you may be able to rent your property for a higher amount to a non-Section 8 tenant. “No Section 8” Finding a landlord that will accept their voucher can also be very difficult. Learn six risks that a landlord may face when dealing with the Section 8 program. These areas include sanitary system, lead-based paint, water supply, electrical and smoke detectors. You are not required as a landlordto participate in section 8 it is at your option, and if you do decide to open your rentals to section 8 participants, you need to have your housing unit pre inspected by section 8 so it will pass their requirements for housing and you know what their rules are. When this event happens, the government increases their share of rent to landlord to cover loss of income from tenant. That’s a misperception, Galvez says. While we cannot list every single area as there are too many, we can cover some of the most well-known exceptions: All in all, there are 15 states that have some type of rules about Section 8 housing or income-based housing discrimination at this time.Â. In most areas, landlords are not required to accept Section 8 tenants. If one floor of my 3 family would be Section 8, would the whole property become Section 8? A landlord generally faces an uphill legal battle if he or … Also known as HUD housing, this program grants vouchers to tenants that act as a guarantee that the program will pay 70% of the rent while the tenant will be responsible for the other 30%. Landlords across the state frequently deny housing to people with legal sources of income in the form of Section 8 housing vouchers, child support, or other non-wage income. However, there are some regions and states where there are some limitations about when landlords can and cannot deny an application by a Section 8 voucher holder. You will typically not receive your first rent check from Section 8 until after the tenant moves into the property. Ultimately, it will be up to you to decide. During the term of the lease, the tenant must pay the landlord his share of the rent. Some landlords may find it more work to accept two rent payments for an apartment. Other landlords have an implicit bias against those that use vouchers, and they falsely believe that these tenants will be more likely to cause property damage than other tenants. Landlords prefer not to accept Section 8 because it is assumed that the tenants will be unstable financially and may have other social pathologies such as substance abuse or criminal activity, drugs etc. However, the opposite could be said because tenants have more incentive to stay in good status with the landlord’s policies to avoid losing their voucher. If a landlord wishes to collect a security deposit, he or she has to get this deposit directly from the tenant. Your local Public Housing Authority will send a Section 8 inspector to your property once a year. Non-Section 8 Tenants May Not Want to Live at the Property, How to Calculate the Fair Market Rent for Your Unit, Reasons a Landlord Can Take a Tenant to Court, When and Why the Section 8 Inspection Is Conducted, Here Is a Look at the Advantages of Renting to Section 8 Tenants, How Section 8 Decides if Landlord Is Charging a Reasonable Rent, Complete This 10 Item Checklist Before Tenant Move In. Certainly, this can happen. This is the top reason many landlords do not accept Section 8 vouchers. In New York, more than half a million low-income residents who use some form of federal rental assistance to pay for housing are at risk of being turned away. By using The Balance Small Business, you accept our. Most landlords do not accept Section 8 because the Section 8 program is run by the United States government. Business Assistance – https://www1.nyc.gov/, Q: Can I still close on my property in state? It’s also why Brian stopped accepting Section 8 tenants – every year, his entire cash flow for the year would be wiped out by repairs ordered on a whim by local inspectors trying to prove they visited each home on their schedule… While the majority of state laws do not require Section 8 acceptance, many cities and counties have adopted their own HUD housing ordinances. I have a couple of rental houses I do accept section 8 on one, who I helped get on section 8, when her husband ran off with a younger woman. Landlords, although required to meet fair housing laws, are not required to participate in the Section 8 program. In some cases, the voucher is held by a specific property rather than by a specific tenant. As there are some major benefits to renting through the section 8 program, we usually recommend that you determine whether you accept a tenant or not based on their overall application and not on where their income comes from. The amount of the housing voucher will be between 90 percent and 110 percent of the Fair Market Rent. The Fair Housing Act (FHA) ( 42 U.S. Code § § 3601-3619 and 3631 ), a federal law, doesn’t bar landlords from discriminating based on Section 8. In most areas, landlords are not required to accept Section 8 tenants. They may believe that you are a “slumlord,” that the property will be dirty or that the tenants will be disrespectful and noisy. This could be an issue because the tenant has already shown to have limited income by being approved for a Section 8 voucher in the first place. Though the apartment owners’ lobby had said that Section 8 requires landlords to sign a 400-page document and makes it more difficult to evict … The delay in payment is something to keep in mind when considering renting to Section 8 tenants. The main thing that we would like to emphasize is that you are never required to accept a tenant just because they apply to rent your property and have a special voucher. 3 Government Housing Programs Every Landlord Should Know, The Balance Small Business is part of the. This is why it is so important to screen all tenants, including Section 8 tenants, properly. But the researchers found it hard to disentangle actual incidents from personal prejudices. State Rent Assistance Resource Page – https://access.nyc.gov/ Instead, you should think about HUD housing from the business side of things. If you’re interested to know more about becoming a HUD landlord, you can check out our complete guide to becoming one here. In most cities, landlords are not required by law to accept Section 8 housing vouchers and many landlords prefer not to take vouchers, because some neglectful families have given the program a … Use that information to make your choice. Total Contract Rent in the Section 8 Program. House Bill 2578, which will go into effect at the end of September, makes it illegal for landlords to reject applicants based on their use of public assistance… These are some of the major factors of the HUD housing program that we find to be very attractive for landlords: There are always going to be some risks involved when renting a property; the same remains true when renting to tenants with housing vouchers. The maximum amount you can collect is determined by your state security deposit limit. Why Do Some Landlords Not Accept Section 8 Vouchers? I require clean credit outside of medical debt for my units, and positive landlord references. Section 8 sets up a specific range of prices, and these prices usually fall on the lower end of the market average. The Balance Small Business uses cookies to provide you with a great user experience. Failure to do so can lead to eviction and discontinuation of benefits. Since these tenants are not paying much for the rental, they have less incentive to keep the property in great shape. And the money is given to a tenant who will or won’t give it to you…When screening tenants you have to choose someone who won’t violate your lease terms. The biggest concern that landlords have is about whether or not they can trust tenants with limited income to pay their rent in full in a timely manner. In Chicago, it is illegal to discriminate based on a tenant’s income, so denying a Section 8 tenant just for their voucher is ill-advised. Will accepting these vouchers help or hurt your business? 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