Section 8 of the 1937 Housing Act, Uncle Sam’s main program for helping low-income renters find suitable living arrangements, aids some two million renters every year. But because many landlords still refuse to take on Section 8 tenants, the assistance program has not been nearly as successful as it could be.
To combat the lack of landlord participation, the Department of Housing and Urban Development has launched a campaign to persuade more property owners to accept Section 8 Housing Choice Vouchers, which pay a healthy portion of the rent directly to landlords instead of their tenants.
The situation with landlords
Most landlords don’t accept voucher holders, according to two new academic studies that found the disdain is based largely on the program’s administrative requirements and complaints against public housing authorities which manage the program at the local level.
One study (by the non-partisan Urban Institute), which won’t be released until next month, found that landlord involvement varied across five test cities. Researchers found would-be tenants are “hard-pressed” to find a landlord who will accept a voucher, especially in a so-called “opportunity area” with access to high-quality schools, jobs and transportation.
The other paper, this one from Johns Hopkins University, examined three urban rental markets, finding that many landlords like the idea of reliable payments. At the same time, though, they expressed frustrations with government-required inspections and disappointment in how local housing authorities handle disputes with tenants.
Implementation of a task force
Now, HUD Secretary Ben Carson has created a department-wide task force as part of a larger campaign to encourage more landlord participation in the Section 8 program.
“These studies tell us that we have a lot of work to do to engage more landlords so our Housing Choice Voucher Program can offer real choice to the families we serve,” Secretary Carson said in a press release announcing the effort. “We will be traveling the country to hear directly from landlords about how we can make this critical program more user friendly.”
The landlord engagement campaign will kick off on September 20th in Washington, D.C., where the findings of the two aforementioned studies will be presented. Afterward, individual landlord forums are planned for Philadelphia, Atlanta, Dallas, Los Angeles, Salt Lake City and Salem, Ore.
After completing the forums, the task force will provide policy recommendations to Secretary Carson on changes needed to increase landlord involvement.
Under Section 8, families apply to their local public housing authorities for a housing choice voucher. Once approved, a family can choose any privately owned rental property rather than being shunted off to a low-income housing project. But once it finds suitable accommodations, the landlord must agree to accept the voucher as at least partial payment.
If he does agree, the Public Housing Authority (PHA) or other administrating local government agency, using federal funds, pays the landlord the difference between 30 percent of the family’s adjusted gross income and the monthly rent. The tenant pays the remaining 30 percent — or, in some cases, 10 percent of gross income, or the portion of whatever welfare assistance the family is receiving that’s designated for housing.
To be eligible, the household collectively must have an income no greater than 80 percent of the median income for its area. HUD annually determines median income levels for each area.
But the yet-to-be-released Urban Institute study found that “the process of finding an available unit, reaching landlords, finding a landlord to accept vouchers, and then meeting with them to view the available housing was extremely difficult.”
“It takes a lot of work to find housing with a voucher,” the authors said in an executive study released by HUD.
Why landlords should accept vouchers
There are some good reasons for landlords to accept the rental assistance vouchers, and some reasons to stay away from them.
On the positive side, the government’s portion of the rent is guaranteed and consistent, save for a glitch here and there. Thus, the payments are seen as more reliable than payments from some private tenants. Once a lease is signed, the landlord should begin receiving regular payments after a 30- to 60-day delay for processing.
Section 8 also permits annual rent increases by as much a 8 percent a year. So, over time, the landlord could be charging more rent than private tenants are willing to pay. And Section 8 tenants are likely to stay longer than private payers, particularly if they like the property, the location and the management.
Therefore, a landlord’s vacancy rate can be lower than it would be in the private market alone.
And why they shouldn’t
As for negatives, landlords will be dealing with government bureaucracy, regulations and red tape, which is always difficult, no matter the issue or program. So expect things to move at a glacial pace.
Indeed, the approval process itself can be slow and laborious. There can be delays, not just with the initial rental payment, but with just getting a tenant into the property. And the time and effort dealing with issues can be expensive and time-consuming.
In addition, properties qualifying for Section 8 must pass strict inspections, often making it easier to rent properties to private pay tenants. And any rehab that’s required can be more expensive because of the strict standards, “with the best rehabbers often failing the first inspection,” according to one report.
Also damage can be greater in a Section 8 property, if only because the tenant is not terribly invested in it because Uncle Sam pays most of his rent. So the property can be more expensive to maintain than if it were rented only on the private market. More problematic, perhaps, is that you have little recourse to recoup your repair cost for damage.
One other important drawback: If the tenant doesn’t pay his share of the rent, you have to go through the Section 8 eviction process, which can be long and drawn out. Then, you have to start the Section 8 rental process all over again.
Lew Sichelman’s weekly column, “The Housing Scene,” is syndicated to newspapers throughout the country.