Real Estate Investor's Insight: Section 8 Housing - Landlord’s Gold, or Fool’s Gold for Real Estate Investors? Part II of Two

Real Estate Investor's Insight:
Section 8 Housing: Landlord’s Gold, or Fool’s Gold?
Part Two of Two

Please read Part One of this article for the background
on the Section 8 Housing Program.

How does Section 8 work for the Landlords? Must Landlords accept every Section 8 tenant?

One of the core goals of HUD Section 8 Housing Assistance program, is to provide safe, secure, livable, decent and sanitary, yet affordable housing for families through the issuance of Housing Assistance Vouchers, through the local Public Housing Authority. But the local Public Housing Authority never requires a landlord to house a particular family. The Landlord has the right to rent to anyone he wishes. However, the Federal law clearly states that "no Landlord may discriminate against any potential tenant on the basis of race, color, sex, religion, national origin or familial status." The Landlord has the right verify that the tenant is acceptable based on the landlord’s normal and customary screening process which could include:

Credit checks
Employment verification
References checks
Prior landlord checks
Background checks
Criminal checks

All of the above are acceptable provided all prospective tenants complete the same application as a part of the landlord’s screening process, and that the Landlord does discriminate in any way. Important note: The local Public Housing Authority only determines program eligibility for the prospective Housing Assistance applicant. The local Public Housing Authority does not, and is not permitted to, screen tenants for a Landlord. The Federal Section 8 Regulations place the sole responsibility of screening families on the shoulders of the prospective landlord.

What are the responsibilities of a Section 8 Landlord?

Solely responsible for all tenant screening, selection of tenants and
leasing of the unit(s)
Perform all management and renting functions complying with State and
Local law
Perform all ordinary and extraordinary maintenance issues
Must comply with the local Housing Assistance Payment Voucher Contract
Ensures the Section 8 tenants comply with the lease and enforces the lease
Pays for landlord provided or supplied utilities
Though a landlord may not discriminate in their screening of tenants,
landlord does not have to accept all tenants
May not place an advertisement stating “No Section 8 Tenants”
[It is illegal!!]

What are the responsibilities of a Section 8 Tenant?

Complete the Housing Authorities "Housing Assistance Application"
Complete the Public Housing Authority screening process & qualify for the
Section 8 program
Provide the ongoing income and family information needed to verify and
re-certify eligibility, annually and interim re-examination by the local
Public Housing Authority
Find their suitable housing which will accept the Section 8 "Housing
Assistance Vouchers"
Allow the local Housing Authority to inspect the unit and approve the
property.
Abide by all family obligations as defined in the Housing Choice Voucher
Avoid committing serious or repeated violations of the lease (Unreasonable
repair damages caused by a Section 8 tenants or their family may result in
permanent loss of eligibility for the entire Section 8 Housing Assistance
program)

What are the responsibilities of the local Public Housing Authority for the Section 8 program?

Determine tenant's eligibility for Section 8, based on the Federal HUD
Regulations
Process Section 8 applications for certification and manage the annual
re-certification with regards to family participation
Inspect units, approve lease and execute the Housing Assistance Payment
Contract with the Landlord/Owner
Determines and pays housing assistance payments to the landlord/owner on
behalf of the family receiving Section 8 Housing Assistance payments
Explain and disseminate information about program procedures to both
Landlord/Owners and prospective Section 8 Tenants
Assures compliance and performance of Federal, State and Local rules and
regulations.

May a Landlord evict a Section 8 tenant from their Property?

The Section 8 Landlord/Owner may evict a Section 8 tenant from their property provided they provide proper legal notice to the tenant. The Landlord/Owner must provide a written notice of the owner's intent to evict the tenant, based on the landlord providing the proof of either; non payment of rent, tenant caused damage beyond normal wear and tear, illegal use of the unit by the tenant, and/or other serious violations of the lease. The local Public Housing Authority cannot, and will not, evict a tenant from a unit; eviction of a Section 8 tenant is solely landlord/owner’s responsibility.

HUD says to Landlords about renting to Section 8 tenants, from the www.hud.gov web site:

"People who receive Section 8 vouchers go find their own rental housing and use the vouchers they receive from their housing agency to help pay the rent. Basically, the voucher means that the Federal Government will pay a specific amount of the rent.

If you wish to rent to Section 8 Voucher holders, you should inform the local Housing Authority of the availability of your property and also indicate in your advertising that you welcome Section 8 Voucher holders. Ultimately, it is the voucher holder's decision whether or not to rent your property. Of course, as the landlord, you would screen the Section 8 voucher holder just as you would any other prospective tenant."

Summary:

Landlords who effectively utilize the Section 8 Housing Assistance Program will find it an easy and effective way to have their properties fully rented, even in slow retail markets. The local Public Housing Authority can provide the Landlord with possible tenants who have been formally approved for Housing Assistance Payments. The Housing Authority does not “screen tenants” they specifically leave that task to the Landlord to do their regular and customary tenant screening, including credit checks, employment verifications, criminal background checks. The local Public Housing Authority will provide the Landlord with the name and address of the prospective tenant current landlord and one prior landlord. The Landlord will need to check those landlord references, particularly the one prior to their current landlord as they may be more candid than a landlord who hopes the prospective Landlord will take their present problem tenant off their hand by renting to them.

In addition to the solid economics of utilizing the Section 8 program as a Landlord, there is the true benefit to the overall community. With Section 8, a Landlord can help those who could not other wise has clean, safe, sanitary, affordable housing. Section 8 can be a Win-Win-Win for the Landlord, the Tenant and their family, and the local Community!

Invest in yourself and help build both your net worth and a better America!!

Copyright © 2005-2010 Dr. Howard E. Haller. All Rights Reserved.