Affordable Housing HUD and Section 8 Programs
At the Federal level, housing assistance programs are the responsibility of the Department of Housing and Urban Development. These housing assistance programs are placed by HUD into four categories.
Public housing is low rent housing built by the Federal government and operated by local housing authorities. These are “the projects” which blight many cities. Now that they are recognized as a general failure, they are being slowly phased out. This program is of little interest to landlords as there is no way for them to participate, nor would many want to do so if they could.
Privately owned subsidized housing consists of privately owned buildings, subsidized directly by HUD, with a rent charged to the tenants which is set by HUD.
The third category of affordable housing program is the block grant. In this scheme, money is channeled through Washington to individual States and local governments, who administer programs tailored to their own needs, but approved by HUD. Such programs are growing in popularity because they permit politicians to fulfill the requirement that Federal money be spent as far away as possible from its source. Thus, money from Massachusetts is sent to California to fund housing programs while money from California is sent to Illinois, and from Illinois to New York, and so on. The true cost of the “Federal money,” i.e., the cost of everybody else’s program, is effectively concealed from the people of Massachusetts by this stratagem, that State’s congressional delegation getting credit for the subsidy, without having to explain the cost.
The fourth category of assistance program is what is generally referred to as “Section 8.” We will deal with this in a little more detail below.
In addition to the Federal programs there are state and local programs which are too numerous to list. They should be explored through local government listings. For a listing of links to various of the HUD programs click here.
Within broad guidelines as to procedure and certain economic formulas promulgated by HUD, the Section 8 program is run by individual local housing authorities. While procedures and the format of documents may vary among the local housing authorities, the basic pattern is as follows. A prospective tenant having qualified for Section 8 assistance is issued a certificate and other documents and sent out to find a rental unit. If the landlord agrees to accept a Section 8 applicant, a proposed rental agreement is prepared according to the accompanying instruction sheet. This is turned into the local housing authority which determines whether the rent is within HUD guidelines, inspects the property to ensure it is habitable, then executes the housing assistance payments agreement, a document separate from the lease. If this is all acceptable to the landlord, the housing authority will send a monthly check for the portion of the rent it has agreed to pay, and the tenant will pay the portion of the rent the tenant has agreed to pay. There is no qualification or registration required of the landlord. His only requirement is to fulfill the lease and housing assistance agreement he has signed. Participation in the program is voluntary, and the fact that the landlord has accepted one Section 8 applicant does not mean he has to accept more. For a more detailed explanation of the Section 8 program written from the tenant’s point of view, but still valuable to the landlord. At the end of this document is a list of HUD administrative offices. The landlord who is contemplating participating in the Section 8 program should contact the one closest to him to obtain further information about the program in his locality, and how it is administered.
Whether or not the landlord should participate in the Section 8 program is a different issue. As with all such decisions, there are pro’s and con’s.
Reasons why Section 8 may be good for the landlord:
Practically all the rent is guaranteed by the government. In low end properties, obtaining financially stable and responsible tenants is usually a problem. Section 8 can ameliorate this risk.
There is not appreciably more paperwork involved in a Section 8 lease than in any other.
HUD Section 8 certificates are an extremely valuable commodity to the tenants who have them. Behavior which would create a risk of loss of the certificate, such as cheating, damaging the property, etc., is, therefore, to some extent deterred.
The tenants are, to some extent, pre-screened (but see below).
Reasons why Section 8 may not be a good idea:
The landlord must operate the property according to HUD standards, thus losing some control over it.
The pool of available tenants tend to be less sophisticated as well as poor. While the vast majority will be just fine as tenants, there are some who will not. Perhaps the prospective tenant’s poverty stems, in part, from habits which would not be in the landlord’s best interest to tolerate.
A tenant paying only $100 or so for monthly rent is not likely to have much pride in the premises.
Some local housing authorities have in the past, and still do, impose onerous dispute resolution procedures in the event the landlord attempts to evict for certain reasons.
The landlord must commit to one year of occupancy of the premises during which time he may only evict for breach of the lease, or, in the case of certain lease forms used by local housing authorities, only for certain types of breaches.
Even though the housing authority will, to some extent, screen the tenant, the landlord should not rely exclusively on this, but go through his ordinary screening routine, ensuring the information he verifies is the same as that provided by the housing authority application form.
In the future we will be adding additional information not only about Section 8 subsidies, but also other programs. We would welcome email from visitors who wish to highlight a program in their area.