The thought of accepting a tenant with a Housing Choice Voucher may intimidate some landlords who are unfamiliar with the process or guidelines. As with any decision, landlords have, there are downsides. However, as affordable housing continues to be harder and harder to find, property owners may find several advantages to participating in the program. After all, any opportunity to expand the pool of potential renters is typically a good step. So, to help understand the housing choice voucher process and decide what is best for your rental property, continue reading below.
What is the Housing Choice Voucher Program?
The Housing Choice Voucher Program is a federally funded subsidy program overseen by the U.S. Department of Housing and Urban Development. Commonly known as “Section 8,” this program focuses on matching qualified individuals with secure, safe, and suitable rental units. Every participant must apply and meet specific income criteria to be eligible for subsidized rent through the program. In addition, applicants submit to basic background checks and must follow all residential lease terms or risk losing their housing choice voucher.
Types of Housing Choice Vouchers
- Tenant-Based Vouchers – Enables low-income families to lease decent and affordable privately owned rental housing.
- Tenant Protection Vouchers – Protects HUD-assisted families from hardship resulting from various actions that occur in HUD’s Public or Multifamily Housing portfolios.
- Vouchers for Persons with Disabilities – Assists families with disabilities and very low-income to lease affordable privately-owned housing.
- Family Unification Vouchers – Helps families rent affordable housing when the lack of housing opportunities is a primary factor in separating children from their families.
- Homeownership Vouchers – Helps very low-income families purchase a home.
- HUD-VASH Vouchers – Combines HUD rental assistance and VA case management to assist very low-income homeless veterans.
- Mainstream Vouchers – Mainstream vouchers offer assistance to non-elderly persons with disabilities.
- Project-Based Vouchers – Encourages investors to construct, rehabilitate, or make available existing housing to low-income families.
- Witness Relocation Vouchers – Provides relocation and financial assistance to witnesses in connection with efforts to combat violent crimes.
Common Questions Regarding Rental Assistance Vouchers
Do landlords need to treat voucher applicants differently?
A tenant with a housing choice voucher will have additional paperwork and steps that the landlord and housing program must take. However, that is where the differences end. That said, whether or not a tenant receives assistance, property owners must treat every applicant the same to comply with Fair Housing Laws.
How do housing agencies pre-screen applicants?
While not a substitute for a landlord’s screening process, voucher programs take steps to vet applicants. That said, program applicants go through a screening process, income verification, and a criminal background check.
How quickly do payments come from the Housing Agency?
The initial payment can take up to 14 business days to process. However, any subsequent payments are paid promptly around the 1st of each month. If the tenant is responsible for a portion of the rent, they must pay per the due date and terms on the lease.
Who sets the rent price?
Owners determine the rent price based on their estimate of perceived worth. That said, voucher programs consider the age, size, property type, local comps, and location when determining a fair and reasonable rental offer. In some instances, this amount may be lower than the owner anticipated or is willing to accept. In addition, once a voucher tenant has signed a lease, any subsequent renewal increases must also be reasonable rates in line with the local market.
Is there a maximum security deposit limit?
Typically, local laws will dictate how much security deposit a landlord can charge. While this is usually one month’s rent, some jurisdictions allow up to two months’ rent. While owners can charge up to the legally allowable amount, they cannot charge more to a voucher tenant just because they have a voucher. In addition, owners must follow all local guidelines, such as placing funds into an interest-bearing account for the duration of the lease.
Can owners refuse to rent to an individual with a housing choice voucher?
Property owners have the right to refuse any applications that do not meet their standard set of qualifications. That said, those qualifications and decision-making processes must comply with all local, state, and federal Fair Housing Laws. For example, in areas where the source of income is a protected class under Fair Housing Law, landlords cannot refuse a tenant solely because they receive housing assistance.
Understanding Fair Housing Laws
Whether an owner chooses to accept housing choice vouchers or not, following Fair Housing Laws is necessary. The Federal Fair Housing Act set up specific guidelines to ensure families and individuals have equal access to fair housing choices. Thus, it is illegal for property owners to discriminate based on any of the federally protected classes, including color, familial status, national origin, disability, race, religion, or sex.
That said, different states or local jurisdictions may have additional protected classes besides what is listed at the federal level. For example, other protected classes may include but are not limited to – marital status, sexual orientation, source of income, or gender identity.
Landlords need to be mindful of Fair Housing laws in communications, interactions, and advertising. However, the best rule of thumb is to remain professional at all times and hold all applicants to the same standards. When owners treat everyone the same, it helps build a successful business while avoiding devastating discrimination claims.
The Benefits of Housing Voucher Tenants for Landlords
A landlord’s goal is to find the best possible tenant for their rental property. Someone who will pay on time, take care of the unit and follow all lease terms. What many landlords may not realize is that the perfect tenant may have a voucher. Read on for some of the benefits of renting to tenants with housing choice vouchers below.
- Guaranteed Rent Payments– The Housing Choice Voucher Program will ensure all or a portion of the rent and pays landlords promptly. In addition, if tenants are responsible for a portion, they risk losing their voucher if they fail to make payments. Thus, providing added incentive to make on-time and complete payments.
- Expanded Pool of Tenants– Maximizing exposure means a greater opportunity to fill vacancies quicker and find the ideal tenant. Moreover, voucher properties can take advantage of additional advertising outlets.
- Added Reassurance– When unexpected financial hardship occurs, housing programs can reevaluate a tenant’s circumstances and provide additional assistance if needed. Thus, helping to ensure the landlord continues to receive timely payment.
- Layers of Accountability– Housing Authority programs can hold tenants accountable to the terms of the lease and program guidelines in addition to the landlord’s efforts. Therefore, if a tenant pays late, causes damage, or gets complaints from other residents, the Housing Authority can assist in disciplining the tenant.
- Helping the Local Community– Rental owners can feel confident that accepting vouchers helps the local community. Local housing programs provide valuable opportunities for individuals or families in need.
The Disadvantages of Accepting Section 8 Rental Vouchers
As with all decisions landlords make, there are advantages and disadvantages. While there are many positives to participating in the Housing Choice Voucher program as a landlord, there are some concerns. So, to help you make an informed decision, read along with the considerations below.
- Additional Inspections – To participate in the program, voucher officials must perform an annual property inspection. This is in addition to all other compliance licensing inspections required by the local jurisdiction. Typically, this is not an issue; however, if maintenance issues are found, owners have a very short window to correct them. Thus, making compliance more difficult for some owners.
- Potentially Lower Rental Rates– Housing programs look at the local rental rates for similar units and offer owners a fair market value. That said, this may not be the same rental rate the owner has asked for. Owners can disapprove the offer if they choose. However, it does equate to lost marketing time waiting for paperwork to process and the initial offer to come.
- Complicated Housing Programs– Not all housing programs are created equal, and thus working with them can run the gamut of stress-free to an absolute nightmare. So, the downside is owners are very much at the mercy of program employees who often side with the tenant.
- Oversight Extends to Landlords– Housing Authority programs have their own contract restricting an owner’s authority and rights as a landlord. Now, instead of a landlord-tenant relationship, it is a party of three. That said, the housing agency will take an active role in decision-making.
Approach Housing Choice Vouchers with Confidence
Owners rely on filling vacancies quickly to ensure vital profits for their business. In Maryland alone, many programs and local agencies connect voucher applicants with suitable housing. As a landlord, choosing to accept housing choice voucher applicants may not be a choice at all. Many jurisdictions now protect sources of income under the Fair Housing Act. That said, whether required by law or not, opening up the possibility of voucher applicants increases marketing abilities, helps the community, and provides rent payment assurance to landlords.
Despite the upside, understanding each program and its specific requirements can be a challenge. Over the years, Bay Property Management Group has established relationships with local programs and understands the complex approval process. Our team of rental experts can guide owners every step of the way with our own applicant screening process adding further layers of protection. This, combined with legally binding rental agreements, can help owners feel confident in their decision to accept housing choice vouchers. So, whether you are interested in learning more about the voucher process or are looking to maximize rental potential overall, give us a call today.