Section 8 Rent

[David Heckman]

I use a property manager that says they've worked with Section 8 tenants plenty of times. The tenant agreed to a rent of $2,400 and there is a signed lease, even though IHA approved $1,902. Does anyone have experience with this and know if this is even allowed? If not, what should I do going forward?

[Drew Sygit]

Quote from @David Heckman:

I use a property manager that says they've worked with Section 8 tenants plenty of times. The tenant agreed to a rent of $2,400 and there is a signed lease, even though IHA approved $1,902. Does anyone have experience with this and know if this is even allowed? If not, what should I do going forward?

 Let me guess, the tenant is offering to pay the difference?

NONE of this is allowed!

Find a NEW PMC!!!

They do not know what they're doing.

Here's copy & paste info about S8 program:
_________________________________________________________________________

The Section 8 program is a Federal Housing Administration (FHA) subsidy program that is managed at the state level. FHA also allows various housing agencies to manage the program in their jurisdictions, so you have individual Housing Commission entities.

Section 8 makes housing payments directly to landlords, so many landlords like the program for this reason alone. A landlord must be careful though, as a tenant may still be required to pay a portion of their housing expense and may also cause damages. Technically a tenant may be terminated from the program if they refuse to repair damages they are responsible for.

REALITY: we have not seen this occur very often. So, landlords should still screen applicants with Section 8 and require security deposits to avoid ending up with property damages that exceed any rent collected.

Section 8 doesn’t just cover rent, the program actually covers the cost of housing. This means that in addition to rent they also cover utilities like electric, gas and water.

We’re not aware of a Section 8 program that doesn’t have a long waiting list of applicants. Who wouldn’t want their housing paid by the government? Demand is so high that many programs have closed their waiting lists and are no longer accepting applicants.

How Section 8 Qualifies Program Applicants

To determine if an applicant qualifies for government assistance and how much, Section 8 looks at the family size and the household income.

Family Size: The number of family members is used to determine how many bedrooms Section 8 will base their maximum allowed housing expense on. Many housing authorities have recently adjusted how they calculate the maximum number of bedrooms. They used to count one bedroom for a single parent, but now require each bedroom to have two occupants. This means a single mother with two male & one female children that used to qualify for a three bedroom home, now only qualifies for a 2 bedroom home.

All family members that will occupy the home are counted, no other occupants are allowed.
REALITY: we’ve found that many single parents have a significant other that resides in the home in violation of the program. While a landlord can report this and try to keep the extra person out of the home, it’s hard to prove and harder to stop. A landlord reporting this issue may also end up with a tenant that is terminated from the program that the landlord then must evict.

Household Income: Household income is calculated to determine what portion of the allowable housing expense will be subsidized.

Applicants are required to report all income for all occupying family members. This includes working children, even if under the age of 18.

REALITY: we’ve experienced prospective tenants showing up in expensive cars who tell us they have a cash-based business on the side.

Voucher: both qualifications above are used to issue a voucher that tells the tenant and the landlord the following:

1. The minimum number of bedrooms a home must have (a home can always have more than the minimum)

1. The maximum housing expense including rent and utilities

1. The portion of the maximum housing expense Section 8 will cover

Challenges for Landlords

1. Most tenants don’t understand their vouchers: they think the maximum housing expense can be fully applied to rent, forgetting that it MUST include utilities. Section 8 case workers rarely take the time to really explain this to tenants and don’t supply the rent-only amount unless persistently asked to do so.

1. Tenants Wanting to Make Side Deals: many tenants want to rent homes with rents that exceed the maximum allowed and pay the landlord any difference outside the Section 8 program. They don’t understand, or care, that doing this may lead both them and the landlord being banned from the Section 8 program.

1. More Bedrooms = Higher Utilities: tenants often want to use their 2-bedroom voucher to rent a 3-bedroom home, not understanding that Section 8 bases the estimated utilities expense on the number of bedrooms. So, the more bedrooms, the LESS amount of the allowable housing expense will be allowed to go towards the rent.

1. Abuse of Utilities in Rent: by default, Section 8 expects landlords to include utilities in the rent. In our opinion that just leads to tenants abusing the use of utilities: keeping the heat very high during the winter leading to high gas bills, ignoring leaking faucets & running toilets causing high water bills, etc., all at the landlord’s expense. For this reason, we NEVER include utilities if we can avoid it!

1. Section 8 Doesn’t Sign Leases: this means they have no legal obligations to the landlord. The lease is only between the tenant(s) and landlord. All Section 8 does is pay rent on behalf of the tenant, which they can cancel at any time.

1. When Section 8 Starts Paying Rent: many tenants want to move into a home right away, but Section 8 won’t start paying rent until a home passes their inspection. Often it can take a week or two to schedule this inspection and if repairs are required, the process can take several weeks. If a tenant is allowed to move in prior to passing inspection, the landlord must collect per diem rent from the tenant (if possible) or not get it at all.

1. How Long Initial Rent Payment Takes: Section 8 states a landlord should get their initial rent payment within 30 days of a home passing inspection and all paperwork approved. Unfortunately, we’ve experienced overworked S8 staff taking 60 days or more to process everything, so that rent funds are sent. Mistakes on per diem amounts related to #4 above, can take just as long to correct as overworked staff seem to make correcting mistakes a low priority.

1. Tenant Nonpayment: if a tenant doesn’t pay their portion of the rent a landlord a Section 8 caseworker can do nothing until a landlord goes through the eviction process. Some case workers will warn the tenant if they are evicted for nonpayment, the tenant will lose their voucher. Realistically, few tenants actually lose their vouchers for this.

1. Tenant Caused Damages: as mentioned previously, technically Section 8 is supposed to force a tenant to repair any damages they cause, normal wear & tear excluded, or terminate the tenant’s voucher.

REALITY: what most often happens is that Section 8 comes in for their annual inspection and forces the landlord to repair obvious tenant caused damages or they won’t pass the home and will stop Section 8 payments. The landlord then has to try to collect the repair costs from the tenant. Even if Section 8 holds the tenant accountable, a landlord is forced to evict a tenant if they won’t make the repairs.

1. Evictions: because Section 8 doesn’t sign leases, they can’t be held accountable for much. Any issues resulting in a tenant having their voucher terminated, means Section 8 stops paying rent to the landlord. If the tenant doesn’t pay their rent on their own, and most can’t afford to do so, the landlord is the one who must start the eviction process.

1. Annual Inspections: as already mentioned above, Section 8 requires annual inspections to confirm a home still meets the program requirements. If a tenant takes good care of the home, this is usually not an issue as only minor repairs may be needed, if any. If a home doesn’t pass inspection a landlord must either make the required repairs or Section 8 will tell the tenant they will lose their voucher if they continue to live in the home.

1. Rent Increases: Section 8 only does annual leases so, a landlord can only ask for a rent increase once a year. Section 8 will often approve small increases of $25 or so, but not in excess of average rents for the area.