Housing subsidies through Section 8 should be a familiar program to all property managers and landlords. Few property managers and landlords, however, truly understand how it works and knowing the details of this program can be more elusive. All San Diego property managers and landlords are required to accept income in the form of Section 8 housing vouchers, as of January 2020, in the process of screening a tenant's rental application. So what exactly does this mean for your rental properties?
If you’re uncertain, don’t worry! North County Property Group has created a guide to help you understand Section 8 and your responsibilities under these regulations.
What Exactly Is Section 8?
As discussed in Episode 59 of our Property Management Brainstorm podcast, this program helps people with low incomes to find suitable housing through what is more broadly known as the Housing Choice Voucher (HCV) program. Ultimately, Section 8 is a type of rental assistance that falls under HCV.
What Are the Necessary Qualifications for Section 8 Assistance?
Since the program is run by HUD’s private housing agencies (PHA), the application process for seeking a Housing Choice Voucher is done through San Diego Housing Commission (SDHC). As such, North County Property Group does not determine if an individual is eligible for an assistance subsidy.
Applicants to this program must apply only to the San Diego community in which they want to live, , even if they don’t currently reside there. A new location tends to be chosen when the tenant wants access to better services or must live near relatives for help with transportation or childcare.
In general, Section 8 applicants must fall under one of these categories:
Those who live or work in San Diego
Families or individuals with an income that’s below 80% of their chosen San Diego county’s AMI (Area Median Income)
Those in active military duty or veterans
Seniors who are 62 years old or above
People with recognized disabilities
Families or individuals who are homeless
It’s also worth noting that an individual or at least one member of a family has legal documentation. Background checks will be implemented by SDHC to verify their status, in addition to screening for potential criminal records.
Those with a convicted felony may be approved for financial assistance by SDHC, but they cannot be on the lifelong sex offender list, have been convicted of meth production in federal housing, or have been evicted on the basis of drug crimes up to 3 years prior to applying.
70% of rent and utilities are covered by those who are eligible for housing assistance as approved Section 8 applicants. This is done through vouchers, though the tenant must pay the remaining 30%. Yet to get a voucher, potential applicants must register with the nearest public housing agency: the San Diego Housing Commission (SDHC). Once they have received a voucher, the approved applicants must search for a home themselves.
The home must be in accordance with the voucher’s terms, and the applicant is tasked with doing their own search for a rental property, viewing the home, as well as the rent and lease negotiations. Once these are settled, a HUD-associated official will then determine if the selected home, is within the HUD’s chosen price range, meets requirements for condition and livability, and overall meets the guidelines for HUD approval.
How Does Section 8 Impact Property Managers and Landlords?
Rental applicants cannot be denied on the basis of their Section 8 status alone. As previously stated, Section 8 must be counted toward applicant income through the normal income-to-rent ration used to qualify every rental application Though a few property managers and landlords may feel wary about renting to someone with Section 8 status, consideration is required by law, and there are many benefits to this program for them as well.
Renting under Section 8 means secure, on-time rent payments each month. There is minimal risk that these rent payments won’t be on time as the extensive waiting list means these tenants will avoid losing their Section 8 status at any cost.
Additionally, while you can’t deny someone for a Section 8 voucher, you are not forced to accept any applicant from this program. You can still implement your normal tenant screening criteria.
Accepted Section 8 tenants also come with bonus benefits such as regular property inspections, electronic signature software, self-certification for repairs, and a 24/7 online landlord portal.
How Does Section 8 Work with Income?
Section 8 vouchers are added to regular wages and any other possible sources of financial aid, which estimates how much the potential tenant can afford.
Factors that impact affordability for tenants involve the inclusion or exclusion of utility payments, the maximum rent based on zip codes, voucher size (ex: a studio vs 2 bedrooms), annual income, and household size.
What Comes After Tenant Rental Application Screening?
Approved Section 8 rental applicants do not fall under the usual time limit for lease signing and security deposit payments due to governmental processing times for each step of their rental process. It often takes 20-30 days to even reach the inspection stage. This can make it extremely challenging for both the tenant and the landlord during the current rental market during which properties are often leased in just a few days.
What Is the Leasing Process Like for Section 8 Applicants?
Following approval of a Section 8 participant who has applied to rent one of your rental properties, you have several steps to take when it comes to the leasing process. They are as follows:
1. Request the Tenancy Approval Packet
The move-in process begins with this packet as it contains the required forms to be returned to the SDHC.
2. Wait as the SDHC Reviews The Submitted Papers
The above-mentioned paperwork will be reviewed by the SDHC for approval. This is to confirm the following criteria:
The individual or family can afford the rent
Nothing goes against the Section 8 program rules
State and local laws are being followed
6 months is the minimum initial lease term
The lease agreement lists who is responsible for certain utilities and appliances
3. Have Your Rental Unit Inspected
Following approval by the SDHC, your unit will have an inspection, as arranged between you and the SDHC staff.
This is to ensure your unit meets all health and safety standards for the Section 8 tenant, which are outlined by the Department of Housing & Urban Development (HUD). Tenants should not sign the lease prior to inspection.
4. Inspection and Documentation
After SDHC inspects your unit, final documents will be mailed to both you and your tenant. You must also sign and return the Housing Assistance Payments Contract/Lease Addendum prior to the first rental payment.
5. Handle the Payment Process
Lastly, upon receiving your documents, you will be given your first payment from the SDHC. It’s deposited directly into your account on a monthly basis. These payments will continue as long as you maintain health and safety standards, and the individual or family meets eligibility requirements. Once payment is received, the Section 8 tenant can take possession through your normal move-in process.
Can I Raise the Rent?
Given that Section 8 is a financial assistance program, you may expect you’ll get blocked from raising the rent on your San Diego unit. In actuality, this is not the case: you can request to raise the rent within normal State of California legal guidelines.
A request for raising the rent must be submitted to the SDHC who will then analyze your unit’s pricing compared to similar properties in the area. They also factor in utilities provided, unit quality, location, and unit type. The SDHC will report back to the property manager or landlord with their decision. If it’s not to your liking, you can submit your own comparison to 3 similar units within a couple of miles of your rental property for a second review.
The property manager or landlord must provide both the SDHC and the tenant with a 60-day written notice when moving forward with new pricing. This rent increase can come into effect on the date specified in the notice, but it must be on or after a 60-day period of them receiving the written notice.
There you have it, an overview of Section 8 in San Diego! If you’re feeling overwhelmed by this process, consider hiring an experienced San Diego property management company like North County Property Group. We know the ins and outs of Section 8 and can ensure the entire process follows the correct guidelines. Contact us today to learn more!