Applicants with Section 8 Federal Housing Assistance
The Section 8 Tenant Based Assistance: Housing Choice Voucher Program is managed by the Department of Housing and Urban Development (HUD). Section 8 housing assistance allows tenants to live in an apartment of their choosing. This program is totally separate from subsidized housing projects where hundreds of low-income residents live in numerous units all located within a specific area.
When government assistance is for an entire housing project, the money goes to the landlord or manager for all the tenants living in the apartments. If one family moves out, the money that covered that family covers the next family that moves in.
The focus is completely different with federal rental assistance. In this case the government funding is tied to the tenant. If he moves, the subsidy goes with the tenant for a new home.
If you do decide to take on tenants who have rental assistance, you know you'll get a check every month that will cover a substantial portion of the rent. The balance is paid by the tenant, who has to qualify financially for the federal program. The tenant is also responsible for paying the security deposit.
Benefits and Disadvantages of Section 8
Current law states that you don't have to participate in Section 8. It has been a matter of choice, although that could change in areas where there are housing shortages for low-income families. Then legislators might decide to require that landlords accept tenants qualifying for Section 8. The main advantages of Section 8 to you as a landlord are:
Fair market rental for your unit
Regular payments from the government
Tenants who don't want to lose their assistance and will avoid doing anything to jeopardize it
Government money that not only continues for a while if the tenant has to be evicted but also, through the housing agency, guarantees the tenant's unpaid share of the rent and limited property damage
There are some disadvantages to joining the Section 8 program, too. These include:
A contract with housing authorities that commits you to the program for at least a year
More paperwork to fill out and regulations to be aware of
Tenants who might not be as responsible as those who have higher incomes
A housing agency that might determine low market prices for rent and possibly limit the security deposit to less than what your state allows
Delay of up to a month for the requisite mandatory inspection that qualifies you for the program
If you accept a Section 8 tenant, spell out in the lease what portion of the monthly cost is to be received from the federal government and what portion is the tenant's responsibility. Use the words “housing assistance payment” in describing the government portion. The Housing Assistance Payments Contract (HAP contract) specifically states that the money is not to be considered rent — it is a housing assistance payment. Use those exact words when you fill out your paperwork and receipts.
Don't assume applicants with Section 8 approval have been screened by the housing agency, because they haven't — except for their income. They will not have the income level you would ordinarily require of prospective tenants. But it is still important for you to prequalify them as you would anyone else applying to be a tenant.
Check the credit history, employment history, previous landlords, references, and anything else important to you. If the credit record is not good, is there tangible evidence that they are working to improve it? If so, that might increase their eligibility.
Evicting Section 8 Tenants
Section 8 tenants are no different than other tenants when it comes to evicting them. If you made a mistake and have a problem tenant, you can evict him for the same reasons you would anyone else: for nonpayment of rent, not abiding by the lease agreement, illegal activities, or damage to the unit.
The major difference is that while the eviction process is taking place, you will still receive a housing assistance check from the government. It will come to you, and you can cash it, even though your tenant is not paying rent. So this eviction process will cost you a little less than other evictions.
Landlords in New Jersey must accept Section 8 vouchers if their tenants become eligible for the program. Connecticut, Maryland, and Massachusetts landlords are required to accept vouchers from new and existing tenants, and other states and communities are adopting similar regulations. You can get more information from your local HUD office.
Getting Fair Market Value
The housing assistance agency may think you are asking too much for your unit and offer you less. You can try to convince the agency that the rent that you are asking is the fair market value of duplexes or owner-occupied housing in your area. Be prepared to prove it. Get comparable information for similar units in your area, point out the features that make your unit better, use pictures of your property and the data you collected when you first decided how much to charge for the apartment.