As a landlord, you must make sure that you are in compliance with HCV rules. The Housing Choice Voucher (HCV) program, a major component of what is commonly known as Section 8, is the federal government’s primary program to assist very low income families, the elderly, and the disabled in renting decent, safe, and sanitary housing in the private market.
HCV is available to qualified low-income residents and requires each resident to pay a percentage of her monthly income toward rent, with the balance paid by the local PHA. You can find complete details of the program in the HCV Guidebook.
Understanding how HCV works
The HCV program has two goals:
To allow low-income households more choice in housing
To reduce the concentration of low-income households in particular buildings and neighborhoods
Various kinds of rental housing qualify for HCV certification, including single-family homes, condos, duplexes, apartments, and mobile homes. The rental unit must comply with HUD occupancy standards guidelines, which generally allow two occupants per bedroom.
HUD allows you to establish your own occupancy standards for your property, which can be higher or lower than the federal standards. But be cautious about establishing standards that are more restrictive because they must be based on legitimate business reasons or be required to protect your residents’ health and safety.
The HCV program provides resident-based Housing Assistance Payments (HAP), which are rental subsidies or vouchers that residents can use to rent privately owned rental housing. Residents with household incomes that are less than the published PHA maximum annual income by family size for a local area are eligible for HCV assistance. The income caps for families are usually set between 50 percent and 80 percent of the local median income.
After qualifying, residents receive HCV vouchers or certificates and have up to 60 days to locate rental units. In certain tight rental markets, residents have up to 120 days to find suitable rental units. The local PHA makes inspections to ensure that the rental unit meets the HUD Minimum Housing Quality Standards (HQS) at the beginning of the tenancy, upon annual renewal, and upon request.
The PHA pays the rental subsidy directly to the rental property on behalf of the program participant. Under this program, the resident must pay whichever amount is greater — the PHA minimum rent (usually $25 to $50) or the Total Tenant Payment (TTP), which is based on either 30 percent of a resident family’s monthly adjusted income or 10 percent of a resident family’s monthly gross income.
Another possibility is if the family receives payments for welfare assistance from a public agency and part of the payments are specifically designated to meet housing costs.
If the resident selects a unit with rent higher than the PHA limits, the program also provides for a maximum initial rental burden limit so that the resident’s share of the rent doesn’t exceed 40 percent of her monthly adjusted household income.
The HCV rental subsidy is based on the HUD Fair Market Rent. At least annually, the PHA surveys the local rental housing market and determines the median rents and utility allowance for each unit type based on the number of bedrooms.
In some areas of the country, the maximum allowable rents are reasonable. But in many areas, the maximum rents set by the local PHA rule out many of the local rental units because they’re too low.
The PHAs have been allowed to adjust the maximum HCV rents up to 10 percent higher than the HUD Fair Market Rent to be consistent with actual rents in the area and allow residents more alternatives.
The maximum rents vary based on whether the owner or the residents pay the utilities. In general, you’re better off having the residents pay their own utilities.
Knowing what to do if you rent to HCV residents
If you participate in HCV, you’re required to enter into a one-year lease with a participating resident using a standardized, HUD-approved lease form or a combination of your lease with a HUD addendum. You’re locked into the one-year lease agreement except for nonpayment of rent or another serious breach. You must also sign a Housing Assistance Payments (HAP) lease authorizing the payment of rent.
Use your own standard rental application, rental contract, and all other forms and procedures. Attach the PHA lease and HAP contract to your paperwork. If your HCV resident doesn’t pay her share of the rent or you have another problem, immediately notify your contact person at the local PHA. Although the PHA is limited in what it can do, it can be helpful in resolving issues.
The greatest benefit to rental owners is that the local PHA pays the majority of the resident’s monthly rent like clockwork, and the resident’s portion is low enough that she usually doesn’t have any problem meeting this financial obligation.
Also, if the resident fails to pay her portion of the rent, you have the right to evict her and apply the security deposit to any unpaid rent or rental unit damage. Some PHAs may have formal or informal requirements to contact them to resolve any issues before beginning an eviction action.
Process an HCV resident’s move-out just like any other resident, but be sure to notify the local PHA.
For most landlords, participating in the HCV program is very easy. Contact the PHA in your city or county for more info or to be sure your rental rates are within their maximum guidelines. If they are, your local PHA will refer eligible applicants to you and prepare the necessary documents should you decide to rent to an eligible applicant.
You can’t charge higher rent for an HCV rental unit than you would if you were renting the same unit to a private, unassisted resident. Most PHAs conduct periodic audits, so be prepared to provide your local PHA with documentation.