What Is Section 8?
Section 8 refers to a provision of the United States Housing Act of 1937 that provides rental assistance to low-income individuals and families. It's a federal government program administered by the Department of Housing and Urban Development (HUD). The aim of Section 8 is to assist eligible low-income households with their rent payments for safe and decent housing in the private rental market.
The Section 8 program operates through two main types of assistance:
Tenant-Based Vouchers (TBVs): Under this type of assistance, eligible individuals or families receive a voucher that allows them to find housing in the private rental market. The voucher subsidizes a portion of their monthly rent, with the tenant responsible for paying the remaining portion.
Project-Based Vouchers (PBVs): In this type, the subsidy is tied to a specific rental property. The assistance is provided to eligible tenants who live in a specific building or apartment complex.
Recipients of Section 8 assistance typically pay around 30-40% of their income towards rent and utilities, and the voucher covers the remainder up to a specified payment standard set by the local housing agency.
Landlords who participate in the Section 8 program must agree to provide safe and decent housing that meets HUD's requirements and guidelines, and they receive monthly payments directly from the local housing authority to cover a portion of the tenant's rent. The aim of Section 8 is to help low-income individuals and families obtain affordable housing and reduce the risk of homelessness.
Selecting Section 8 Tenants
When renting to Section 8 tenants, you do not have to accept every tenant, just like in any other lease situation. Of course, there are strict guidelines to keep you from illegally discriminating against a tenant, but you can still put a strong tenant screening process in place to protect your investment.
Establish Minimum Criteria
To mitigate eviction costs, it's crucial to establish specific criteria to ensure that potential tenants meet essential standards.
- Income - It's problematic if a tenant lacks sufficient income to cover their rent. Utilize a rent-to-income ratio calculator to assess if the prospective tenant can comfortably afford the rent.
- References - Gathering referrals from previous landlords and employers is an effective way to gain insights into your potential tenant's character. Are they dependable workers? Do they adhere to payment schedules? These fundamental inquiries can provide valuable information regarding their suitability.
- Credit History - Evaluating their credit history, often through their credit score, allows you to determine their financial responsibility and punctuality in meeting financial obligations.
By gathering this information, you can start to understand your potential tenant with some basic information. In addition to these minimum requirements, it's crucial to include all of this information on a signed, date-stamped application with other general information. By signing and dating documents, you (the landlord) remove any room for doubt and have a record in case of disagreement.
Develop a Rental Application
Creating a comprehensive application enables you to evaluate potential clients efficiently by requiring them to furnish details aligned with your established minimum criteria. Ensure the application is properly signed and dated to address any future disputes.
Submit Request for Approval
Once you have selected a tenant through your screening process, it is time to submit a request to the Section 8 office. To do so, you must send off a Request for Approval of Tenancy form, which requires some basic information about the lease and must be signed by both you and the tenant.
Inspections
Once you have selected and sent off your request for Section 8 approval, HUD will perform a Housing Quality Inspection. This inspection will determine whether or not your unit meets the minimum requirements put forth by HUD and local authorities.
If your unit does not comply, the problem will need to be fixed and reinspected before it can be approved. After the first inspection, Section 8 will perform an inspection every year to ensure that your property is being properly kept up.
Collecting Rent
While Section 8 pays most of a tenant's rent, it doesn't pay 100% of it, nor does it pay a tenant's security deposit. As a landlord, you are responsible for directly collecting any deposits or the rent not paid by Section 8.
There are plenty of details to consider when taking on Section 8 tenants, but overall, the program is a very helpful program that has kept people from experiencing homelessness and assisted them with achieving some upward mobility. If you are considering renting your property, check out our blog, “Why Should I Hire a Property Management Company in Asheville, NC?”
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