The term “Section 8 tenants” refers to renters who qualify for the government’s Housing Choice Voucher Program.
So how do people qualify, and what exactly is this program?
Renters who qualify must have an extremely low-income, and if they do, the program helps them afford local housing by paying for 33%-75% of the rent.
Some people in this program are elderly, some are disabled, and some simply have little or no income.
Landlords are divided on whether they should, or must rent to Section 8 tenants.
Landlords are divided on whether they should, or must rent to Section 8 tenants, and for good reason. The laws vary state to state, and even county to county.
The Fair Housing Act (FHA), a federal law, doesn’t prohibit landlords from discriminating based on Section 8. However, some states, counties and municipalities do, often by prohibiting discrimination based on “source of income” or “public assistance status” – considering them a “protected class”.
Here’s an overview of the pros and cons.
Pros & Cons of the Section 8 Program
Pro: Guaranteed Rent
“Guaranteed Rent” – Two words that are music to a landlord’s ears. It almost sounds too good to be true.
But, under the Section 8 program, you are guaranteed at least a portion of the rent to be paid to you by the government – the U.S. Department of Housing and Urban Development (HUD), to be exact.
And because you’re dealing with the federal government, this could be a mixed bag. Which brings us to our first two cons …
Con: The Approval Process
As with any government agency, red tape is involved, and Section 8 is no different.
First, you must fill out paperwork, and then your local Public Housing Authority, which operates under the Housing Choice Voucher Program, must approve your rental property.
Then, your property must undergo an inspection, and if approved, it must continue this type of inspection annually.
To pass, your property needs to meet acceptable health and safety codes. And whether your house is approved could depend on how stringent the inspector is in your area (meaning – you should expect to repair minor issues).
Con: Subject to Rent Control
If you are approved, the Housing Authority then reviews your lease and often restricts how much you can charge for rent. In other words, you can’t necessarily charge what you like.
You can’t charge whatever you want.
You generally can only charge what other properties in your area charge. So your property will be subject to a sort of appraisal process to determine rent.
Note that sometimes, depending on the area your property is in, you might receive more rent through HUD than you would by going through the open marketplace (but I wouldn’t count on it).
HUD then agrees to pay a certain percentage (this varies by case) of the rent. Your tenant pays the remainder, which usually amounts to 30 percent of their gross income.
Generally, a tenant only pays about 30% of the rent amount.
Pro: Long-term Tenants
Many Section 8 tenants, after being approved for the program and after finding a place to rent, tend to stay put for a while.
Moving is allowed, but Section 8 tenants need to notify the Housing Authority, give you proper notice, and find another place. In other words, it’s a hassle.
Plus, when Section 8 tenants sign a lease, it’s generally for at least one year.
Con: You Hurry Up and Wait
It usually takes a long time to go through the Section 8 process.
By the time you fill out the paperwork, get an inspector to come out, make necessary repairs if required, get the inspector to come out again to check your repairs, get a tenant in, and then receive rent, you might have been able to rent the place to someone else sooner. Meanwhile, you’re receiving no income.
The vacancy caused by delays due to red tape usually outweighs any benefit of the program.
Your Results May (Will) Vary
Section 8 tenants have a bad reputation. And just like any stereotype, there could be some truth to it, but every case is different.
People complain that Section 8 tenants are masters at manipulating the system, and many landlords are left holding the bag.
As with all tenants, there are so many things that can go wrong. For example:
- They lose their voucher, and then won’t leave,
- They destroyed your property, and the housing authority won’t compensate you,
- They moved extra people in despite that being against the rules.
But just as there are horror stories with Section 8 tenants, there are good experiences too.
Some people, whether they are temporarily down on their luck, are disabled, or live on a fixed income, might not be able to afford housing without some help, but they could make wonderful tenants.
The key is for you to run a background check and credit report, and to call prior landlords. Do your due diligence before accepting any tenant.
Some Municipalities Require Participation
Some municipalities (I’m looking at you Oregon) require landlords to accept Section 8 tenants, meaning that whether you want to deal with a government agency or not, you have to, even though this should be the landlord’s decision.
For example, if a Section 8 tenant fills out a rental application in a municipality that requires landlords to accept it, and if that applicant passes your screening process, you need to start the ball rolling to have your property approved… unless you rent it to another qualified applicant first. (After all, the government is not known for moving fast.)
Even California and the city of Chicago protect people in the program, however, many states like Colorado allow a landlord to “opt-in”, rather than being required to participate.
Note that you don’t have to accept an applicant just because they have a Section 8 voucher. In jurisdictions that require you to take Section 8 tenants, you are encouraged to screen them as you would anyone else.
You need to contact your local or state fair housing agency to determine what the law is in your jurisdiction.