The Housing Choice Voucher Program (commonly called Section 8) provides rental subsidies to low-income tenants to rent from private landlords. This program, established in the 1970s, currently provides assistance to 2.1 million tenants.

Key to the program’s success is the participation of rental property owners and managers, who often have a choice of whether to accept the Section 8 voucher. The program provides many benefits to participating landlords, such as guaranteed rent, free marketing, and long-term tenancies. Despite the benefits, obstacles to universal acceptance of the program by landlords still persist.

New regulatory flexibilities and local innovations that enhance the landlord experience have developed over the last few years. Changes vary from agency to agency. However, if you haven’t been watching, you may find your local housing authority is doing business in a way that encourages greater landlord participation in the voucher program.

Inspections: Love them or hate them. Some landlords find the periodic inspections conducted by the housing authority reassuring. Others feel inspectors are arbitrary and picky. The housing authority will report any tenant damages or housekeeping issues to the landlord. The inspection identifies potential hazards that could result in injury or liability claims against the owner and can also detect minor maintenance issues, like water leaks, that may result in major repairs if left unaddressed.

Regardless of how you feel about the inspection, program regulations now allow housing authorities to conduct periodic inspections on an annual (once per year) or biennial (once every two years) schedule. This regulatory change is fairly new. Some agencies adopted the biennial inspection immediately to save on operational costs. Others are taking a wait and see approach. Santa Ana Housing Authority adopted biennial inspections, and Housing Division Manager, Judson Brown has this to say: “Both our tenants and landlords love our move to biennial inspections.  It is less of a burden on them.  The fact is that if there is an issue in the unit, it is the tenant’s responsibility to report the issue to their landlord without the Housing Authority necessarily needing to get involved.  And the biennial inspections allows landlords to spend less time concerned with on-going inspections by the Housing Authority.”

If you are not sure what your local housing authority is doing, it is time to call. If you don’t like the annual inspection, maybe you will learn to love a biennial one.

Security Deposits: The housing authority guarantees a portion of the monthly rent, but traditionally does not assist with the payment of the security deposit. The security deposit can be a major barrier to securing housing for low-income tenants, especially those with a voucher. Additionally, landlords who are reluctant to try the voucher program are even less enthusiastic when the tenant cannot pay the security deposit. A number of housing authorities understand this problem and are finding ways to fund security deposits for voucher holders. For example, Norwalk Housing Authority provides all new voucher holders with a one-time $2,500 security deposit grant. At the end of the tenancy, any security deposit remaining after deductions is refunded to the tenant.

Losing rent while waiting for the inspection to pass: Before the housing authority can approve a new tenancy for the program, an initial inspection must be conducted. Recent regulatory changes now allow housing authorities to start paying if the unit failed the initial inspection as long as it failed for non-life-threatening items like missing window screens. In such cases, the housing authority could begin paying subsidy for the unit while the landlord makes the repair. This regulation is optional and not all housing authorities may decide to adopt it.

Some agencies are now paying a holding fee to landlords as the Authority refers voucher holders to the landlord for screening. For example, the Housing Authority of the County of Los Angeles is providing up to one month’s rent to hold available units while homeless voucher holders are referred. This program is also being offered by the Housing Authority of the City of Los Angeles and other agencies located in the County who provide vouchers for the homeless.

Tenant-caused Damages: Whether a tenant has a voucher or not, there is always the possibility that the tenant will move-out and leave behind damages and unpaid rent exceeding the security deposit amount. This is why screening all tenants is extremely important. Despite this, landlord concerns about voucher tenants destroying their units persist. To allay these fears, some housing authorities are offering damage mitigation programs. The Housing Authority of the City of Santa Barbara offers up to $2,000 for unpaid unit damages, rent, and related court costs in excess of the tenant’s security deposit. Several southern California housing authorities offer a $2,000 damage claim program for landlords who rent to homeless voucher holders under the Homeless Incentive Program.

Whether or not your local agency is providing a damage mitigation program, it is important to always use good tenant screening practices to prevent problems.

Rent Limitations: Every year HUD publishes Fair Market Rents for metropolitan and other local areas of the country. The housing authority may set payment standards between 90% – 110% of the Fair Market Rent. The voucher holder is limited to paying no more than 40% of their monthly adjusted income for rent at the beginning of a new tenancy. Depending on the final maximum rent calculation made by the housing authority, you may be able get more rent from an unassisted tenant. However, an unassisted tenant does not come with the rent guarantees offered by the Section 8 program. Not only does the housing authority guarantee a portion of the rent to the owner on the 1st of each month, the housing authority will increase the housing subsidy if the voucher tenant’s income declines. This provides added insurance that the tenant’s portion of the rent will remain affordable despite changes to family income. Landlords who accept vouchers recognize that the stability provided by the voucher is worth a small sacrifice in the rent.

Government Bureaucracy:  The voucher program is a model pass-through program.  Rather than the government going through the expense of building, owning, managing, and maintaining housing, funds go directly to private landlords already providing rental housing. This is not to say that there are no extra rules and procedures involved. However, local authorities have been under pressure to streamline operations and become more efficient due to funding cuts. This means that many agencies are beginning to eliminate unnecessary requirements and paperwork. To facilitate improvements, the Housing Authority of the County of Kern established a Landlord Advisory Committee to provide feedback concerning customer service, forms, procedures and policies. The Authority is currently working to implement several improvements based upon the committee’s recommendations.

Changes looking forward: U.S. Department of Housing and Urban Development (HUD) has been working on a new inspection protocol which promises to be less subjective. New inspection rules are expected to be published in 2018.

To improve neighborhood choice for voucher tenants, HUD has been experimenting with Fair Market Rents (FMRs) based on zip code, rather than metropolitan areas or counties. Zip code based FMRs promise to more accurately reflect market variances between neighborhoods within a broader metropolitan area. This translates to higher subsidy payments and higher maximum rents in certain neighborhoods. Regulations just went into effect on January 1, 2018, and initially, the new Small Area FMR (SAFMR) will apply to only a handful of metropolitan areas.

The bottom line is that housing authority transformation can be good for the landlord community. If you have been hesitant to accept vouchers, consider the changes occurring in the program and ask your local housing authority what they have to offer.

 

Kristin Maithonis is the Housing Manager for the Norwalk Housing Authority and former President of the California Association of Housing Authorities.  For more information, call

(562) 929-5653 or email kmaithonis@norwalkca.gov