Renting to Tenants under Section 8
If your rental unit conforms to certain quality and affordability standards, you may be able to rent to families who qualify for Section 8 housing assistance. As a landlord or property owner, there are several advantages to participating in this program. For one thing, Section 8 rental housing generally has lower turnover and shorter vacancy periods. Also, since rental payments are subsidized by the federal government, payments are more likely to be dependable and on time. This article will answer your questions about renting your property under Section 8, and direct you to a few government resources where you can find out more.
What is Section 8? Who is Eligible for Section 8?
Under Section 8, families with very low incomes are eligible for financial housing assistance from the U.S. Department of Housing and Urban Development (from here on referred to as HUD). HUD allocates funds for housing assistance to local housing authorities, also known as PHAs (or public housing agencies). Then, the local housing authority distributes these funds in the form of Section 8 vouchers.
To be eligible for Section 8 housing assistance, a family must meet several requirements. They must be citizens or have eligible immigration status, and they must qualify as a "very low income" family, according to local income standards. Generally this means that their family income is below 50% of the median income for the area. These median income levels are determined annually by HUD. According to federal law, 75% of Section 8 vouchers are to be given to families whose income level is less than 30% of the local median income.
Once a family receives a Section 8 voucher, it is their responsibility to find a privately-owned rental property which qualifies for subsidy assistance. When they find a unit which meets certain program requirements, the local housing authority or PHA will enter into a contract with the landlord or owner of the property, and the owner and tenants will sign a lease. For properties to qualify, they must be safe and in decent shape, yet relatively affordable. Rent prices are regulated through a government instituted standard called "Fair Market Rent". To qualify as Section 8 housing, a rental property must be within 90% to 110% of the local Fair Market Rent.
What is FAIR MARKET RENT? And how can I find out the FMR for my rental property?
Fair Market Rent, or FMR, is the general payment standard which HUD
and PHA's use to calculate the maximum monthly subsidy for rental
properties. For your rental property to be eligible in the program, it
must be listed at or around (+/-10%) the local Fair Market Rent. FMR's
are calculated annually by HUD.
FMR's are estimates which include both rent and the cost of utilities. The FMR is intended to be high enough to make a wide selection of properties available to tenants receiving assistance, yet low enough to distribute assistance funds among as many families as possible. HUD calculates FMR based on the range of costs of all local standard quality rental properties. The FMR is generally the 40th percentile cost, or the 50th percentile in some metropolitan areas.
You can visit the HUD website to find out the FMR for your rental property, based on location and the number of bedrooms in your unit. View fair market rent for 2019 .
What types of properties are eligible for Section 8?
Your property must be available at FMR for your area. It must also conform to certain safety and health standards (as determined by an inspection, previous to Section 8 tenants moving in). Some types of properties are not eligible for PHA assistance. These include public housing, nursing homes, dorms, facilities which provide psychiatric or medical assistance, or properties which are partially occupied by the owner.
How can I qualify my house for Section 8? Who do I contact?
If your property meets the requirements above, qualifying it for Section 8 is fairly simple. The first step is to inform the local housing authority or PHA that your property is available, and that you would like to rent to tenants with Section 8 vouchers. The PHA may be able to place your property on a listing of qualified units, which would be distributed to potential tenants. To find your local housing authority, visit the following HUD web address: http://www.hud.gov/offices/pih/pha/contacts/. There you can select your area from a list or a map, and find the appropriate contact information.
You can also mention in your advertising that you are willing to rent to Section 8 tenants. When approached by an eligible family, you should screen them just as you would any other applicant. Before renting, your property will be inspected to make sure it complies with HUD standards. If your property passes inspection, you will enter into a HAP contract (Housing Assistance Payment) with the local housing authority. You will also sign a lease with the family. HUD requires certain information to be mentioned on this document. You can either use one of their leasing forms, available on their website or from your local PHA, or can add an addendum to the leasing form that you typically use. You will then furnish a copy of this lease to the PHA.