The Myths and Truths of the Section 8 HUD Housing Voucher Program

Circular logo for the US Department of Housing and Urban Development

Section 8.

For some landlords, that’s a dreaded phrase, but for others it’s a solid win for their investment property. One client said he always looks forward to the rent updates that HUD puts out each year, as it is an easy way for him to increase the rents without pushback from his tenants. He said the tenants that receive the vouchers have been the best tenants – rent comes in on time, and they are careful to maintain their unit.

The Department of Housing and Urban Development (HUD) Section 8 Housing Choice Voucher Program provides affordable housing solutions for low-income individuals and families, by subsidizing the rents that a low income family pays.

Some landlords have heard many myths and partial truths about how this program works, so to set forward the truth – here is an overview.

Section 8 Housing Vouchers for Tenants

  1. Eligibility Criteria: To qualify for Section 8 assistance, tenants must meet specific income requirements set by the local Public Housing Authority (PHA). Applicants typically pay around 30% of their income towards rent, and the Section 8 voucher covers the remaining portion.
  2. Application Process: Prospective tenants apply for Section 8 assistance through their local PHA. Upon approval, tenants receive a housing voucher that allows them to search for suitable rental properties in the private market.
  3. Finding a Rental Property: Tenants are responsible for finding a rental property that meets the program’s requirements, including size and rent limits. Landlords must agree to participate in the Section 8 program for the tenant to utilize their voucher.

Section 8 Housing Vouchers for Landlords

  1. Property Eligibility: Landlords can choose to participate in the Section 8 program by ensuring their rental properties meet certain basic quality standards. The PHA conducts inspections to ensure the property complies with health and safety requirements.
  2. Rental Agreement: Landlords and tenants sign a lease agreement, and the landlord receives a portion of the rent directly from the PHA. The tenant is responsible for the remaining portion, ensuring that the rent is affordable for low-income individuals.
  3.  Guaranteed Rent Payments: One of the key benefits for landlords is the assurance of regular rent payments. The PHA directly pays its share of the rent to the landlord, providing a reliable income stream.

Current Section 8 HUD Guidelines

Each year, HUD updates the guidelines for “Fair Market Rents” and publishes their allowed maximums. Below are the Central PA guidelines.

Harrisburg- Carlisle Areas (Dauphin, Cumberland, Perry Counties)

Chart showing the HUD Section 8 guidelines for Harrisburg-Carlisle areas.

Lancaster

Chart showing the HUD Section 8 guidelines for Lancaster area.

York- Hanover

Chart showing the HUD Section 8 Guidelines for York-Hanover areas

These payments standards do not limit and do not affect the amount of rent a landlord may charge or the family may pay. A family who receives a housing voucher can select a unit with a rent that is below or above the payment standard.

The housing voucher family must pay 30% of its monthly adjusted gross income for rent and utilities, and if the unit rent is greater than the payment standard the family is required to pay the additional amount. By law, whenever a family moves to a new unit where the rent exceeds the payment standard, the family may not pay more than 40% of its adjusted monthly income for rent.

Conclusion

If you are a landlord that provides units within the stated ranges, it may be beneficial to you to consider accepting Section 8 vouchers. Reduced turnover and guaranteed rent are certainly significant benefits. In addition, knowing you help others with a hand up is its own reward.

Questions about growing your portfolio? Contact us to discuss the best strategies for longevity.

Sources

hud.gov

https://www.huduser.gov/portal/datasets/fmr/fmrs/FY2024_code/select_Geography.odn

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