HUD ensures that voucher-holding tenants are treated properly by their landlords and only using the vouchers at approved and safe housing locations. If you do fail the inspection, you will be given a list of items that need to be fixed. 1. 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. In most areas, landlords are not required to accept Section 8 tenants. Landlords, although required to meet fair housing laws, are not required to participate in the Section 8 program. Even when there are additional laws and protection in place to prevent housing discrimination, no law will require you to accept any tenant that you do not find to be a good fit. State Mortgage & Expense Forbearance Resource Page – https://www.dfs.ny.gov/ Does refusing section 8 vouchers make sense for the common landlord, or are there benefits to accepting these government-backed housing vouchers? Full guide on how to navigate COVID-19 as a landlord or renter in NYS:  https://www.rentprep.com/landlord-tips/coronavirus-resources-new-york/, General Landlord Resources – https://hcr.ny.gov/ If a landlord wishes to collect a security deposit, he or she has to get this deposit directly from the tenant. 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. Are Landlords Required To Accept Section 8 Tenants? A Simple Benefits Guide. When a tenant moves out, the voucher remains with the property for the next tenant. 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. The maximum amount you can collect is determined by your state security deposit limit. 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… 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. No. The bottom line. Learn six risks that a landlord may face when dealing with the Section 8 program. Why do certain landlords advertise they take Section 8 and some don't? 2. By calling up the local housing division or even an experienced realty lawyer in the area, you’ll be able to find out if there are any ordinances that will need to be considered. I require clean credit outside of medical debt for my units, and positive landlord references. If a landlord wishes to collect a security deposit, he or she has to get this deposit directly from the tenant. 2. Tenant Moves In Before You Collect Rent, 3. There are more tenants with section 8 vouchers than landlords willing to accept … 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). 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 approves a Section 8 tenant and the landlord's property passes a HUD inspection, the parties execute a one-year lease. There are quite a large number of places where you cannot deny a Section 8 applicant simply because they are going to be using a housing voucher to cover some of their rent. This is not the only way that Section 8 housing works. Not everywhere the Section 8 pays the entire rent. A Simple Benefits Guide. If you continue to use this site we will assume that you are happy with it. 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. As with any other tenant, you should never allow a Section 8 tenant to move in without first collecting a security deposit from them. In fact, you can keep your property full and profitable if you treat Section 8 housing vouchers the right way. She has more than 16 years of experience in real estate. This is the top reason many landlords do not accept Section 8 vouchers. Section 8 sets up a specific range of prices, and these prices usually fall on the lower end of the market average. 3 Government Housing Programs Every Landlord Should Know, The Balance Small Business is part of the. Even if your market does not have a large number of tenants on Section 8, by accepting these tenants, you are not relying on them as the only way to fill your vacancy, but rather are just increasing your prospective tenant pool. They may believe that you are a “slumlord,” that the property will be dirty or that the tenants will be disrespectful and noisy. I am a first time Section 8 landlord and my experience with Section 8 rentals was not a good one. In most areas, landlords are not required to accept Section 8 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. Home / Is Section 8 Good For Landlords? Total Contract Rent in the Section 8 Program. 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. Traditionally most properties that accept Section 8 vouchers are on the north side of the city, which remains heavily African American. The idea of receiving vouchers makes many feel like they are taking unnecessary risk on their investment. The biggest risk of the program, in our opinion, is that the price of your rental will be at least partially dictated by the HUD program. 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. Many Sec 8 tenants have a bad reputation. required to accept Section 8 tenants. Also that they will not take care of the property. Some landlords may find it more work to accept two rent payments for an apartment. Ultimately, the thing that matters most about Section 8 housing is not whether or not you are required to accept these vouchers. You may have seen “No Section 8” on “for rent” signs and apartment ads — and in many places, that’s entirely legal. 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. 2. The landlord cannot charge a Section 8 tenant more than a reasonable rent and cannot accept payments outside the contract. 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%. If one floor of my 3 family would be Section 8, would the whole property become Section 8? 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. Subsidized or market rate, a responsible tenant is the key to a happy ownership experience. However, these problems can happen with any tenant you rent to. Will accepting these vouchers help or hurt your business? My Section 8 tenant was supposed to move into my three bedroom apartment with her 3 children and her husband (who was not in the Section 8 program). If a section 8 applicant presents with clean credit and positive landlord references I would accept them. In some cases, the voucher is held by a specific property rather than by a specific tenant. The final risk of renting to Section 8 tenants is that there is a maximum amount that Section 8 will pay. Another risk of renting to a Section 8 tenant is the belief that Section 8 tenants are very destructive. Since these tenants are not paying much for the rental, they have less incentive to keep the property in great shape. When you rent to a Section 8 tenant, you will have to deal with frequent inspections of your property. Many landlords do not initially realize that there are a large number of good reasons to review Section 8 applicants with a positive eye. Landlords can’t lock or freeze out tenants. Section 8 is a rental assistance program run by the government. This can be attributed to such factors as: 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. 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. 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. Why Do Some Landlords Not Accept Section 8 Vouchers? 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? Ultimately, it will be up to you to decide. The amount of the housing voucher will be between 90 percent and 110 percent of the Fair Market Rent. When potential tenants plan to use Section 8 vouchers as a payment method, a lot of landlords will quickly look the other way and find a new tenant. Do landlords have to accept Section 8? the Section 8. There are different procedures and requirements a landlord must follow when renting to a Section 8 tenant than when renting to a tenant who does not receive this housing choice voucher. Tenants who do not collect rental assistance may be turned off by the fact that you allow Section 8 tenants in your property. Our tenant screening services have been trusted by over 90,041 landlords & property managers since 2007. Getting approvals to accept HUD Sec 8 is a lot of red tape, lots of restrictions & requirements, time-consuming process. As is often the case in real estate, there is not a single answer to this question. 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. The agency doesn’t sign a lease, the tenant does. 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. Sometimes, you’ll meet a potential tenant that you really like, but they just can’t afford the rent at your property so you have to let their application pass by. Most landlords do not accept Section 8 because the Section 8 program is run by the United States government. Therefore, you do not have to worry that there will be a shortage of Section 8 tenants. Through the Housing Choice Voucher program, Housing Works awards Housing Assistance Payments (vouchers) to those in need. 3. Also to know, why do landlords not accept Section 8? Business Assistance – https://www1.nyc.gov/, Q: Can I still close on my property in state? that prohibits landlords from denying or refusing to accept applications from those who utilize public assistance. The phrase “Section 8 Housing” refers to a specific part of the national housing code that helps struggling tenants pay for housing. When this event happens, the government increases their share of rent to landlord to cover loss of income from tenant. The argument goes that to disperse African Americans throughout other, higher-income neighborhoods throughout the city, landlords city-wide must be forced to accept vouchers. But some states and municipalities do, often as part of a broader ban on “source of income” or “public assistance status” under the state or local fair housing law. A: Yes – https://www.cnn.com/2020/03/19/success/real-estate-coronavirus/index.html, Q: Do I still have to pay property taxes? The maximum amount you can collect is determined by your state security deposit limit. Your local Public Housing Authority will send a Section 8 inspector to your property once a year. Each year, HUD puts together a list of Fair Market Rents for over 2,500 areas of the country. The tenant pays a portion of the rent based on his/her income and the Voucher covers the balance. 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. 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. While the government pays 70% of the rent directly each month, the other 30% will still need to be paid by the tenant. They found that two-thirds of landlords who had rented to Section 8 tenants had what they described as a negative experience, and had vowed never to rent to voucher holders again. The Balance Small Business uses cookies to provide you with a great user experience. Security Deposits Are Not Paid by Section 8, 4. section 8 tenants waiting to fill an empty unit. 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… That’s the problem, argue the researchers: When landlords don’t face any penalties for declining vouchers, they feel free to reject perfectly good tenants. Another advantage of section 8 tenants is the large pool of available tenants. Use that information to make your choice. There are 13 areas the inspector will look at to determine if the unit meets HUD’s safety and health standards. and she was having trouble, as they had rented from me … That’s a misperception, Galvez says. This is why it is so important to screen all tenants, including Section 8 tenants, properly. The simple fact is that all tenants, regardless of where their income is sourced from, need to be thoroughly screened to help ensure that you choose a good tenant. 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. Once you fix all items on the list, you can schedule a re-inspection with the Section 8 office. As long as you don’t cross any boundaries in that respect, you are free to approve or deny tenants according to your will. 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. 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. By using The Balance Small Business, you accept our. 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. We use cookies to ensure that we give you the best experience on our website. A: Yes – https://portal.311.nyc.gov/article/?kanumber=KA-01253, Q: Do I still have to pay my water bill? The delay in payment is something to keep in mind when considering renting to Section 8 tenants. 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. Can I decide whether I want to participate in this program or not? Wear and Tear Concerns/Property Damage, 5. These vouchers do not include an amount for the security deposit. 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 … Federal law can’t counter the misconceptions that many landlords have about the Section 8 program: that they have to accept any and every voucher … 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. Aside from the reasons aboasve to not accept Section 8 and HASA, I don’t accept those anymore because there’s absolutely no accountability. Landlords that participate in the section 8 program never have to worry about losing rent from a tenant they are evicting. You will need to determine if low vacancy rates make up for the lower price point. These housing units, sometimes referred to as projects, grant voucher privileges to those living at the property. While the majority of state laws do not require Section 8 acceptance, many cities and counties have adopted their own HUD housing ordinances. A: Depends on the city you live in – https://www.politico.com/, Is Section 8 Good For Landlords? A landlord is never required to accept a tenant’s application, but many areas will require you to treat a Section 8 tenant’s application with the same respect that you would treat any other application.Â. 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 provides housing vouchers that pay the tenant’s monthly rent. 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. But the researchers found it hard to disentangle actual incidents from personal prejudices. Section 8 is different. The simple fact is that all tenants, regardless of where their income is sourced from, need to be thoroughly screened to help ensure that, If you’re interested to know more about becoming a HUD landlord, you can check out our complete guide to becoming one. Moreover talking about the disadvantages, … So why do so many landlords reject tenants with Section 8 vouchers? 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. As a result, some landlords will not accept a Section 8 tenant. The choice to accept Section 8 Housing Voucher tenants is up to an individual owner. 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 … 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. “No Section 8” Finding a landlord that will accept their voucher can also be very difficult. The laws focus on the reasons why you decide that a tenant is fit or unfit for your property. Instead, you should think about HUD housing from the business side of things. The quality of the tenant is not normally very good. The Section 8 program has very strict standards, so it is not unusual to fail a Section 8 inspection. State Eviction & Nonpayment Resource Page – https://www.nyhousing.org/ Within 2 months of moving in, the number of occupants in the apartment became 9 instead of 5. Government section 8 payments are generally prompt, and you do not need to worry about the government defaulting on your payments. Enacted in the early 1970s, this program is managed by the Department of Housing and Urban Development. They will once again send the inspector to determine if all issues have been fixed. There are good Section 8 tenants and there are bad Section 8 tenants. 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%. ” refers to a specific part of the national housing code that helps struggling tenants pay for housing. 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. You can also find some specific information about each state’s rules on the HUD website. Just because the government guarantees the rent does not guarantee you have a responsible tenant. 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. A landlord generally faces an uphill legal battle if he or … In the right situation, however, tenants that have hit hard times will have a Section 8 housing voucher they can use to rent approved properties. There have even been cases where landlords have had to wait as many as three or four months to get paid by Section 8, but once you receive the first payment, you should expect consistent payment each month. Failure to do so can lead to eviction and discontinuation of benefits. 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. During the term of the lease, the tenant must pay the landlord his share of the rent. As is often the case in real estate, there is not a single answer to this question. The amount that you will receive from Section 8 will be calculated using the Fair Market Rent for your area based on the number of bedrooms you are renting out, such as a one bedroom or a two bedroom. Understanding how Section 8 housing vouchers could play a part in your profits or losses is an important part of becoming a more experienced landlord; here’s what we think that you need to know. There have been horror stories about floors being destroyed, cabinets being pulled off the walls, toilets being cracked, garbage and filth everywhere and many more people living in the unit than are listed on the lease. Landlords are looking for responsible tenants with predictably middle class behavior. This inspection has to be done even if there has been no tenant turnover. If non-Section 8 tenants see that your property is quiet and in pristine condition, they may change their opinion about Section 8. 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