If you are involved with residential leasing as an investor, renter or landlord, chances are you’ve heard of section 8 at some point. You’re probably at least aware that it’s a form of low-income housing, but beyond that, you might not know much. Well, have no fear: in this post, we’re going to dive into the details of section 8 housing, look at it from the point of view of both tenants and landlords, and discuss the benefits and drawbacks as they apply to each group. There are many myths surrounding section 8, and we’re here to dispel them.
The Development of Section 8
First, a little background: the advent of Section 8 housing dates back to the Great Depression. It was first introduced as part of Franklin Delano Roosevelt’s “New Deal” program back in the 1930s, In fact, the term “Section 8” comes from Section 8 of the Housing Act of 1937. As you might expect, it’s evolved a lot between then and now. The most important development came with the Housing and Community Development Act of 1974, which introduced the Housing Choice Voucher Program.
The Housing Choice Voucher Program is what most people mean when they refer to “Section 8.” It was established in response to criticism of government-owned public housing – people felt the government, while well-intentioned, was just creating poverty-ridden areas that made the problems faced by low-income individuals and families worse, not better.
You’ve probably encountered the term “the projects” before. This phrase is shorthand for “public housing projects,” i.e., housing that is owned by the public sector (that is, the government). This used to be the only kind of section 8 housing available up until the introduction of the Housing Choice Voucher Program. Nowadays, section 8 housing can be in any apartment or house which passes inspection – the tenant has a choice when it comes to the type of housing.
Section 8 For Tenants
Let’s first take a look at section 8 as it applies to tenants. If you find yourself facing financial difficulties, is applying for section 8 housing a good idea for you? You may have become discouraged as people tell you it’s too difficult to get, or that all the accommodations will be dirty and undesirable. These, however, are just more myths surrounding the section 8 program. Plenty of people’s lives have been greatly improved by the help offered by section 8, and they’ve paid low amounts of rent per month for decent or even high-quality dwellings.
To apply for section 8, you will visit a Public Housing Authority office. To find your local office, go to the Department of Housing and Urban Development website at www.hud.gov. Applications are free and can be filled out in person, sent through the mail, or even submitted online.
Section 8 works through vouchers which can be used to pay for a certain amount of rent. There are two types of vouchers: project-based vouchers and tenant-based vouchers. Project-based vouchers, as their name implies, can only be used for projects, buildings or areas that have been specifically set aside to house section 8 tenants. Tenant-based vouchers, on the other hand, are used to pay private landlords who have made their properties available to section 8 tenants and have passed inspections. These are issued under the Housing Choice Voucher Program. Actually, depending on the municipality you live in, landlords may be required to accept section 8 tenants.
Pros and Cons of Section 8 For Tenants
The most obvious advantage of section 8 is that it can help you pay your bills. A lot of people can get to the point where paying for rent is their primary concern – section 8 is here to help alleviate this rent burden so you can pay for other necessities such as food. Section 8 affords low-income families the opportunity to improve their situation
One major drawback of applying for Section 8 is that you will most likely be placed on a waiting list – it may take as long as a year or two for Housing and Urban Development to determine if you or your family qualify. However, during this time you will likely be able to use project-based vouchers.
Although you will most likely be placed on a waiting list – the demand for vouchers is greater than the number of accommodations available – section 8 is not a first-come, first-serve system. There are certain qualifications that can give you preference when it comes to getting housing. Some of these include:
- The family being homeless.
- The family currently living in substandard housing
- The family paying more than 50 % of their income for rent
- The family has been involuntarily displaced
If any of these conditions apply to your situation, be sure to let the PHA (Public Housing Authority) know as you may be able to get housing faster.
How Can I Qualify for Section 8 as a tenant?
Qualification for section 8 is based mainly on your income, and the amount also varies based on whether you’re an individual or have a family to support. It also depends on the area you live in: as a rule of thumb, you can not earn more than 50 % of the median income of the area in which you live in order to qualify. As a section 8 tenant, it’s your responsibility to report any changes in income or family composition to your local PHA.
In general, you must be a US citizen in order to qualify for section 8, though there are certain exceptions.
Section 8 For Landlords
If you are considering becoming a Section 8 landlord, you probably have a lot of questions. First and foremost, you’ll be wondering: “should I become a Section 8 landlord?” Well, there are benefits and drawbacks to accepting section 8 tenants. We’ll start with some of the benefits.
Pros to Section 8 for Landlords
If you’ve been a landlord for any length of time, you’ll know that one of the most frustrating things about being a landlord is overdue rent; you’ve probably heard that rent is guaranteed with a section 8 tenant, and what could be more appealing than this? Well, it’s at least partially true, and one of the biggest advantages of renting out to a section 8 tenant. What do we mean by “partially true?”
Basically, the government will only pay a certain percentage of the rent – this you can expect to receive every month (although when first starting out with a tenant, it might take a few months to get rent; more on this below) Given that the whole point of public housing is for the government to guarantee accommodations to those who can’t afford it, it might seem strange that they’re only paying a portion of the rent, but that’s the way it works, unless the tenant is making no income in which case they’ll probably cover it completely.
As you can see, saying “section 8 means guaranteed monthly rent” is a bit of a misnomer. As with any tenant, it’s your duty to evaluate the section 8 tenant, looking at things like their credit history.
Since the government will be paying most of the rent, market-based rental increases are less traumatic for tenants.
Another benefit of agreeing to accept section 8 tenants is that you’ll be able to fill up vacancies more quickly. Since there is a shortage of landlords who are willing to work with section 8 clients, these apartments and houses are continuously in short supply and high demand: we don’t want to say it’s guaranteed that a vacancy will fill up in a few days, but there’s a good chance that, in a lot of cases, it will be filled more quickly than if it were being rented out the normal way.
Since a lot of landlords will not accept section 8 vouchers, this also means tenants are less likely to leave section 8 housing (ideally, yours) once they’ve found it. Section 8 leases are usually for a minimum term of one year.
Cons to Section 8 for Landlords
Above, we mentioned that apartments or houses that wish to become section 8 housing must pass inspection. As with any federal government program, there can be a lot of red tape! Once a year, an inspector will visit the property to ensure it meets standards and habitability requirements. You may be required to make changes at your own expense, though there are preventative measures you can take to make sure this doesn’t happen.
Of course, although the government pays around 70 % of the rent, the other 30 % is not guaranteed. Obviously, it’s a good idea to look into the history of the person who wishes to become a section 8 tenant – don’t go in assuming that you will get all your rent! Additionally, section 8 tenants are more difficult to evict than regular tenants.
So, overall, there are advantages and disadvantages to becoming a section 8 landlord. Determining whether or not it’s right for you can seem like a balancing act of weighing the benefits against the drawbacks and vice versa. In spite of all the myths you have heard, section 8 is not necessarily a disaster, nor is it a magical, higher-than-average guaranteed rent situation. We recommend really doing your research, taking your time and especially researching the experiences other landlords have had with section 8 tenants so you can learn more about the perks but also be on the lookout for any potential problems.
Section 8 is a valuable program that benefits both tenants and landlords. It can help tenants get back on their feet, saving them from homelessness if they can’t otherwise afford rent, and it helps landlords have steady access to a large supply of potential tenants. Whether you are a person who needs cheaper housing, or a landlord who needs more tenants, section 8 is certainly something worth looking into.