Created to help low-income, elderly, and disabled households afford decent, safe, and sanitary private housing, the Housing Choice Voucher Program (HCVP), commonly known as Section 8, provides a federally-funded subsidy to eligible families, paying for all or a portion of their rent and utilities costs. The Program provides not only significant benefits to these families, but also an opportunity for those landlords who chose to participate to potentially make their property more profitable.
Unfortunately, the process of application, approval, and compliance under the Program (for both landlord and tenant) is confusing and complicated, often causing people to look elsewhere for seemingly easier opportunities. This article will clarify the confusing aspects and simplify the complicated ones, discussing:
- What Section 8 does
- Its advantages and disadvantages for landlords
- What a property owner must do to participate
- What households are eligible for the Program
- The tenant application, screening, and housing process
- Ongoing obligations for landlords, tenants, and the housing agencies administering the Program
One quick note: Section 8 is most commonly thought of as helping low-income families pay their rent, but it also provides rent subsidies for elderly and disabled families and can even assist eligible households with the purchase of a home. We’ll touch on the rules for elderly and disabled households, and also take a brief look at HUD’s Homeownership Voucher Program (HVP), but will focus primarily on HCVP’s rental assistance for low-income families.
Background of the Housing Choice Voucher Program
The Housing Choice Voucher Program, created as a part of the Housing Act of 1937 and administered by the U.S. Department of Housing and Urban Development (HUD) and local housing agencies, seeks to address the difficulty of low-income families finding and being able to afford decent housing. As noted in our Complete Guide to the Low-Income Housing Tax Credits Program (LIHTC), according to the National Low Income Housing Coalition, “in 2013, for every 100 extremely low-income renter households, there were just 31 affordable and available units.”
The Coalition then noted, “in no state can an individual working a typical 40-hour workweek at the federal minimum wage afford a one- or two-bedroom apartment for his or her family” without paying more than 30% of their income in rent. While the specific percentage is up for discussion, historically personal finance experts have suggested that a family should pay no more than 30% of their income toward their housing, and the failure to do this can cause dire, long-term financial consequences.
As explained in a 2016 NY Times article, Jessica Yager, executive director of the NYU Furman Center, explained, “Housing is one of many basic needs. The more you pay for housing, the less income you have left over for food, child care, health care, and clothing.”
Advantages of Section 8 for Landlords
For landlords, participating in the Section 8 program can provide a range of benefits:
- Guaranteed Income: Section 8 vouchers guarantee rent payments to landlords. This can provide peace of mind for property owners, particularly when dealing with financially vulnerable tenants.
- Reduced Vacancy Rates: With a steady demand for Section 8 housing, landlords may experience lower vacancy rates as many eligible families are looking for homes.
- Increased Property Value: Properties that accept Section 8 vouchers can attract a broader tenant pool, rendering them potentially more profitable in the long run.
Disadvantages of Section 8 for Landlords
However, there are also disadvantages to consider:
- Regulatory Compliance: Landlords must comply with program regulations and undergo inspections, which can be time-consuming and cumbersome.
- Poor Tenant Screening: Some landlords report challenges in tenant screening, as properties may attract applicants with varying financial backgrounds.
- Limited Rental Increases: Rent increases in Section 8 can be regulated, potentially limiting a landlord’s ability to increase rental income as market conditions change.
Eligibility for Households
To qualify for Section 8 assistance, applicants must:
- Meet income requirements, typically below 50% of the area median income.
- Pass a background check and assessment of criminal history.
- Comply with additional local criteria set by housing authorities.
The Tenant Application and Screening Process
Eligible households must complete the Section 8 application process, which includes filling out forms, attending interviews, and providing documentation on family income and composition. Housing authorities will then conduct screenings to determine eligibility.
Ongoing Obligations
Once housed under the program, both landlords and tenants have ongoing obligations. Landlords must maintain their property to meet health and safety standards, while tenants must pay their share of the rent on time and report any changes in income or family size to the housing authority.
Conclusion
Understanding the Section 8 Housing Choice Voucher Program is crucial for both landlords and eligible families seeking assistance. While the process may seem daunting, knowing the advantages and navigating the complexities of the program can lead to improved housing outcomes for low-income households.
