One of the many decisions a landlord faces when establishing a rental property is determining whether the property will accept Section 8 tenants. The Housing Choice Voucher Program (historically and commonly referred to as Section 8 housing) provides assistance to very low-income families to afford decent, safe, and sanitary housing.
This is a great program from the low-income tenant’s perspective, but landlords are often unsure of whether they should accept a tenant with a Section 8 voucher. To help you decide, we’ve provided some information to help you with your decision making process.
What is Section 8 Housing
Section 8 Housing is a federally funded program, administered by your local housing authority, that helps low income families and individuals find housing they otherwise could not afford. Those who meet the income qualifications are given a voucher through the Housing Choice Voucher Program that covers a percentage of their monthly rental payment.
Section 8 Housing is organized by state programs and their local housing authorities. For example, the California Public Housing Authority states on their website that they “receive funds directly from the U.S. Department of Housing and Urban Development (HUD), and uses funds to administer the vouchers to beneficiaries of the program”.
Who uses Section 8 Housing
Renters who qualify must have low to extremely low income levels, typically determined by comparing an applicant’s income level to the local median income level. Renters in the program may be elderly, disabled, or merely those with little or no income.
What’s in it for a Section 8 Landlord?
On the renter side, Section 8 is a great option for those who need housing assistance. And for the landlord, there are other benefits to the program as well.
- Guaranteed On-Time Payments: Each month you will receive a check from your local housing authority for their percentage of your Section 8 tenant’s rent. This can be anywhere from 30-100% of the total rental amount.
- Long Term Tenancy: Most renters who find a Section 8 accepting landlord will remain your tenant for a long time in order to avoid the process of the rental search again. For landlords, this means fewer vacancies and more money in the bank.
What are the negatives to being a Section 8 landlord?
One of the reasons that some landlords don’t like Section 8 is the bureaucracies involved from this government-regulated process. The regulation includes a safety inspection when the tenant moves in and ongoing inspections at least annually. After the inspection process, you’ll need to fix every item on their list before the tenant is approved for move-in. The inspection criteria is more stringent than most landlords expect, so the expense can be costly.
Since Section 8 is a government-subsidized housing program, landlords can expect the process to move slowly. Section 8 workers can be understaffed and over-worked, which may result in a slow process of getting through the inspections, the contracts, tenants moving in, and waiting for your first check to arrive.
Are Section 8 tenants bad renters?
Unfortunately, Section 8 tenants have a bad reputation that stems from people believing that low income/no income=bad tenants. Landlords who have negative experiences with Section 8 renters claim that these tenants are more likely to cause (extensive) property damage, host long-term guests, and complain to management. On the other hand, there are plenty of landlords who have had positive experiences with Section 8 tenants, citing pleasant landlord-tenant relationships and reliable rental payments.
In reality, Section 8 tenants are no different than some renters who do not receive government assistance. There are bad renters out there who do not accept lease terms or respect the home they live in.
Section 8 tenants are quick to respond to forum posts, claiming their responsibility and respect for the rental homes that accept them. Section 8 can help the right people get back on their feet after a hardship, provide safe housing while raising a family, and provide options to individuals who might not be able to support themselves.
Ultimately, it doesn’t matter if a tenant uses Section 8 vouchers, there are bad renters out there not on the program who will make late payments, destroy the property or lie to your face. It is up to the landlord to make a smart decision for the rental property based on thorough tenant screening. Treat every applicant, non-Section 8 and Section 8 renters, to the same process by running background checks to view criminal history, verify landlord references, and pull a credit report. If any red flags stand out during the screening process, you have a legitimate reason for denying the applicant and selecting a responsible tenant to live in your property.
How do I become a Section 8 Landlord?
In order to establish a Section 8 rental, the local housing authority must approve both the landlord and the property. Your local or state housing authority may have special requirements, but typically any landlord or property manager can become involved in the program.
It is a pretty straightforward process that typically includes:
- An application: You provide personal information and details about the property and rental rate.
- An Inspection: Once approved, an inspector visits your rental property to make sure it meets the cleanliness, safety, and habitability requirements. For details about these requirements check out this helpful guide on Section 8 Housing Criteria for Landlords.
That’s it! Once an inspector approves your property you can start accepting Section 8 housing vouchers. From here, you can market your property and find your own Section 8 renters, conduct your normal application process, and complete a lease agreement with them. Upon moving in, the housing authority will mail you a portion of the rent once a month and the tenant will pay you the rest.
Do I have to accept Section 8 tenants?
Depending on what state or city your rental property is located, you may be subject to certain laws that protect Section 8 renters. For example, a relatively recent law in Oregon states that a rental applicant may not be rejected or discriminated against for source of income, specifically the Section 8 program. This new specification falls under other Fair Housing Regulations and anti-discrimination protections that prohibit landlords from rejecting an applicant because of race, color, national origin, familial status, marital status, sex, sexual orientation, disability or religion.
Chicago’s municipal code includes similar protections for Section 8 renters and prohibits housing discrimination ban based on the source of income that includes applicants who have Section 8 vouchers.
While landlords in these areas cannot advertise their rentals at “No Section 8” or deny an applicant because of Section 8 involvement, they may still reject a renter with Section 8 vouchers for other reasons identified during the tenant screening process, like bad landlord references, a negative credit report evaluation or a criminal record that puts the property, neighborhood or other tenants at risk. For more information about legal tenant screening criteria check out How to Create Written Screening Criteria.
Nolo recommends that landlords, search online (start by checking the State Information section of the HUD website) and contact your local fair housing agency to see if the law protects prospects and tenants based on the fact they have Section 8 vouchers. (If you own multiple properties in different states, counties, or towns, be sure to check the law for each location.) If you learn that state and local laws don’t ban this type of discrimination, then it’s up to you to decide whether to accept applicants with Section 8 vouchers.
Bottom Line: There are pros and cons for landlords who want to participate in Section 8 housing. You need to decide what is the best choice for your rental property and always screen every applicant with the same standards and criteria that avoids discrimination and protects your investment, Section 8 or not.