A year after being placed in the hot seat for discriminating against low-income renters in New York City, Compass has reached a settlement with the watchdog group Housing Rights Initiative (HRI). Compass will now offer higher commissions for Section 8 lease transactions and launch a tenants’ rights and housing voucher education program for brokers and new landlords.
“This agreement sets an important precedent that will reverberate across the real estate sector and put pressure on other real estate companies to reform their discriminatory business practices,” HRI Founder and Executive Director Aaron Carr told The Real Deal of the settlement on Wednesday.
HRI filed its suit against Compass and 87 other brokerage firms and landlords in March 2021, after a year-long investigation that revealed widespread discrimination against renters using Section 8 housing vouchers to cover a portion of their rent.
HRI investigators, who posed as prospective renters, contacted 477 real estate agents and landlords and asked about the process of applying for a unit as a housing voucher recipient. Investigators’ application requests were often denied, as brokers and landlords refused to work with voucher recipients who they deemed “less qualified” than non-voucher applicants.
According to The Washington Post and a previous Inman article, brokers provided several kinds of responses, including: “No, we don’t do Section 8 vouchers in this building,” “[Accepting a voucher is] not an option that I would even explore entertaining,” and “If she [accepts] what? Oh, no, she would not. She just doesn’t. She wants well-qualified people.”
Although federal law does not prohibit landlords from rejecting housing vouchers, both New York City and New York State have laws protecting renters from income-based discrimination. According to the New York City Housing Authority’s latest estimate, 125,000 households rely on Section 8 Housing Choice Vouchers.
In December 2021, the New York City Council expanded voucher values to account for booming rental growth. The max voucher value for a one-bedroom apartment rose from $1,265 to $1,945 per month, and the max voucher value rose from $1,580 to $2,217 per month. Voucher recipients are responsible for paying the remaining 30 percent of their monthly rent, City Limits explained.
A Compass spokesperson declined to provide a statement about the settlement; however, they pointed Inman to their joint announcement with HRI that outlined the nuts and bolts of their commission and education program plans. Compass will:
- “Provide NYC Compass agents a higher commission for renting apartments to voucher holders;
- Dedicate trained staff to assist Compass agents with voucher holders’ paperwork;
- Conduct regular trainings for Compass agents on the functioning of voucher programs;
- Conduct know-your-rights training to first time home buyers regarding the rights of tenants with Housing Choice Vouchers;
- Recommit to its non-discrimination policy against voucher holders, including 1) a prohibition against income requirements for recipients of forms of publicly-funded rental assistance, other than those income requirements set by the housing voucher programs; 2) a prohibition against requiring that a prospective tenant’s voucher cover the entirety of the monthly rent, unless the voucher program prohibits the voucher holder from contributing to the rent; and 3) a prohibition against consideration of a prospective renter’s credit score if such renter’s Housing Choice Voucher, or the renter’s Housing Choice Voucher plus shelter allowance, covers the entirety of the monthly rent.
- Make it easier for Compass agents to ensure their advertising does not contain language that discriminates against voucher holders;
- Note Compass’s non-discrimination policy on its website;
- Update Compass agent manuals and resource pages with its non-discrimination policies.”
HRI’s legal representatives applauded Compass for going above and beyond the standard settlement agreement with the other defendants, which prohibits discrimination against voucher recipients, requires them to provide educational material about the voucher program, and keep records of how many voucher recipients they’ve successfully helped secure housing.
“While there is still much work to be done to eradicate widespread discrimination against tenants with housing vouchers, this agreement with the largest independent brokerage firm in the country is a step in the right direction,” The Legal Aid Society staff attorney Robert Desir said in the statement. “We are encouraged by Compass’s continued commitment to non-discrimination and its desire and determination to implement these changes quickly, and hope that other real estate companies take note and implement similar changes immediately.”
“The steps that Compass is taking, I am hoping, are going to be game-changers for the industry,” Handley Farah & Anderson partner Matthew Handley told The Washington Post.
Carr told Inman that HRI currently has settlement agreements with 17 companies, including Compass.
“HRI will continue to monitor the policies and practices of all of the defendants,” he said.
Read the full details of the lawsuit below: