Section 8 (housing) - Summary

Summary

Currently, the main Section 8 program involves the voucher program. A voucher may be either "project-based" (where its use is limited to a specific apartment complex; public housing agencies (PHAs) may reserve up to 20% of its vouchers as such) or "tenant-based" (where the tenant is free to choose a unit in the private sector, is not limited to specific complexes, and may reside anywhere in the United States (including Puerto Rico) where a PHA operates a Section 8 program, PHAs are required to send tenants portion, unless proven budget restrictions prevent them).

Under the voucher program, individuals or families with a voucher find and lease a unit (either in a specified complex or in the private sector) and pay a portion of the rent. Most households pay 30% of their adjusted income for Section 8 housing. Adjusted income is household’s gross (total) income minus deductions for dependents under 18 years of age, full-time students, disabled persons, or an elderly household, and certain disability assistance and medical expenses.

There is an asset test in addition to earned income. Over a certain amount, HUD will add income even if the Section 8 tenant doesn't receive any interest income from, for example, a bank account. HUD calls this "imputed income from assets" and in the case of a bank account, HUD establishes a standard "Passbook Savings Rate" to calculate the imputed income from the asset. This makes the tenant's contribution higher since their gross income is made higher.

The PHA pays the landlord the remainder of the rent over the tenant's portion, subject to a cap referred to as "Fair Market Rent" (FMR) which is determined by HUD. Each year, the federal government looks at the rents being charged for privately owned apartments in different communities, as well as the costs of utilities (heat, electricity, etc.) in those communities. The "Fair Market Rents" are an estimate of the average gross rents (rents plus utilities) for medium-quality apartments of different sizes in a particular community. As an example, 2012 FMR for 1 bedroom housing in San Francisco is $1522 and in New York is $1280 while in many other places it is less than $500.

The landlord cannot charge a Section 8 tenant more than a reasonable rent and cannot accept payments outside the contract.

In addition, landlords, although required to meet fair housing laws, are not required to participate in the Section 8 program. As a result, some landlords will not accept a Section 8 tenant. This can be attributed to such factors as:

• not wanting the government involved in their business, such as having a full inspection of their premises by government workers for HUD's Housing Quality Standards (HQS) and the possible remediations required
• fear that a Section 8 tenant or their children will not properly maintain the premises
• a desire to charge a rent for the unit above FMR
• unwillingness to initiate judicial action for eviction of a tenant (HUD requires that Section 8 tenants can only be evicted by judicial action, even where state law allows other procedures)

Depending on state laws, refusing to rent to a tenant solely for the reason that they have Section 8 may be illegal. Landlords can use only general means of disqualifying a tenant (credit, criminal history, past evictions, etc.).

However, other landlords willingly accept Section 8 tenants, due to:

• a large available pool of potential renters (the waiting list for new Section 8 tenants is usually very long, see below)
• generally prompt regular payments from the PHA for its share of the rent

Whether voucher or project-based, all subsidized units must meet the HQS, thus ensuring that the family has a healthy and safe place to live. This improvement in the landlord's private property is an important by-product of this program, both for the individual families and for the larger goal of community development.