THE INS AND OUTS OF SECTION 8 HOUSING
By Laura Farley, NVAR Staff Attorney
Most real estate professionals are familiar with the term Section 8 housing, but few really understand what it means. This primer explains the basics of government assistance for housing rental programs.
What is Section 8 housing?
There are a number of government housing programs which offer different types of assistance to individuals with low income. Two primary options exist for people who want to rent: public housing and subsidized housing. Public housing units are those which the government owns, and either operates or has contracted with a third party to operate for it. Subsidized housing programs include Multifamily Subsidized Housing and the Housing Choice Voucher Program (formerly known as Section 8 from Section 8 of the United States Housing Act of 1937).
Multifamily Subsidized Housing refers to specific properties that are approved by the local housing authority, and the subsidy remains with the property even when tenants change.
Under the Housing Choice Voucher Program, individuals or families apply with the local housing authority to receive a voucher which they can use to rent any appropriate available unit. Under this system, the tenants retain the subsidy even if they choose to move to a different property.
Who is eligible for assisted housing?
Each of the assisted housing programs has its own specific qualification requirements, and all programs have income requirements. In general, to qualify for assistance, the household income can be no greater than 80 percent of the area median income. In the Washington Metro area, this means that in 2011, a family of four making $67,600 or less would qualify.
Who is in charge of the Housing Choice Voucher Program?
While the Housing Choice Voucher Program is a federal program, it is administered by local public housing agencies. In Northern Virginia, each city or county has its own public housing agency. The Virginia Housing Development Authority runs the Housing Choice Voucher Program for most of the rest of the state.
Why do I need to know about the Housing Choice Voucher Program?
Nationwide, more than 1.8 million households have received tenant-based voucher assistance from July 2010 to November 2011. In Virginia, almost 43,000 households received tenant-based vouchers during the same period. In the Northern Virginia area, there are nearly 9,000 tenant-based vouchers that are used in Alexandria City, Arlington, Fairfax, Loudoun and Prince William counties. With Housing Choice Voucher Programs so pervasive in Northern Virginia, landlords may want to consider participating.
Breakdown of participants by jurisdiction:
Alexandria City: 1,283
Arlington County: 1,260
Fairfax County: 3,303
Loudoun County: 695
Prince William County: 2,014
What should I tell my clients who are landlords faced with a tenant who is a Housing Choice Voucher Participant?
Many landlords may be wary of individuals participating in the Housing Choice Voucher program, yet there are a number of benefits to accepting these tenants. First, the landlord will receive regular monthly payments directly from the local housing agency. If the tenants income is reduced, their portion of the rent will be adjusted and the housing agency will make up the difference. This means that the landlord is guaranteed the full rental amount.
Additionally, the local housing agency pre-screens applicants for prior criminal activity, and the agency will work with landlords if any problems arise with the tenant. While the local agency will also screen tenants for compliance with the program requirements, landlords may still screen voucher-holding tenants in the same manner as they would any prospective tenant.
Housing Choice Voucher participants are motivated to be excellent tenants because if they are evicted for any reason, they will likely lose their subsidy. This means that these tenants have more than just their security deposit at risk when it comes to lease compliance.
Many local housing authorities, including Loudon County, maintain their own list of property managers in charge of units that are willing and interested in renting to those with vouchers. This provides another, free, source of advertising for these landlords.
What is the process for accepting a tenant with a Housing Choice Voucher?
While most local housing authorities do not maintain a list of units that are certified as having met the stated safety requirements, many do have lists of such properties where the landlord has indicated a willingness to rent to individuals using the Housing Choice Voucher Program.
Once a family has approached the landlord and filled out an application, they should be treated like any other applicant the landlord should perform any background checks that would be conducted for a regular applicant. If the landlord decides to rent to the applicant, together they will fill out a Request for Tenancy Approval which is sent to the local housing authority.
The local housing authority will review the request to ensure that the rent charged is in line with similar properties in the area and that the gross rent does not exceed certain caps. If the rent is within acceptable limits, the housing authority will prepare a Housing Assistance Plan, which is a contract between the landlord and the housing authority. This becomes an addendum to the lease.
At this point, the housing authority will contact the landlord to set up a Housing Quality Standards Inspection and a time to sign the paperwork. The Housing Quality Standards Inspection must be conducted before the housing authority gives final approval, and again each year that the tenant is in the property. The purpose of the inspection is to check that the plumbing, electric, heating and air conditioning systems are in good working condition, and that there are functioning smoke detectors on each level.
Do the landlords give up any rights by accepting a tenant with a Housing Choice Voucher?
No. The landlord can still screen the tenant and require a security deposit, as long as these are done in a manner similar to other applicants. Landlords retain all of their rights as property owners and may set rent at whatever rate they want. Landlords may also request increases in the rent, as long as they are the same as increases for other units, and do not move the unit out of the Fair Market Rent Schedule used by the program.
How is the Fair Market Rent amount determined?
Each year, the Department of Housing and Urban Development establishes the Fair Market Rent rates. VHDAs payment standards are set at 110 percent of the area Fair Market Rent. This means that if the Fair Market Rent on a one-bedroom unit is set at $1,000/month, the landlord can receive up to $1,100/month rent for that unit. In general, the local housing authority will pay up to 70 percent of the monthly rent while the tenant pays the difference.
What happens when a landlord wants to terminate a lease with a tenant who has a Housing Choice Voucher? Are there different standards?
HUD has stated that the landlord may only terminate the lease for four reasons:
Serious or repeated violations of the terms and conditions of the lease;
Violations of federal, state or local law that directly relate to the occupancy or use of the unit or premises;
Criminal activity or alcohol abuse; or
Other good cause.
During the initial term of the lease, the landlord is limited in what qualifies as other good cause to things that are within the renters control. After the initial term of the lease, other good cause can include the owners desire to use the unit for personal or other use, or for business or economic reasons.
For example, during the initial lease, the landlord may only use other good cause to terminate a lease for a tenant who has caused a disturbance for neighbors or has living or housekeeping habits that cause damage to the unit. After the initial term, the landlord may terminate the lease for a number of reasons, including the owners desire to use the unit for personal use or to rent the unit for more money than the local housing authority will pay.