Section 8 Changes

© Copyright 2002-2014 Landlord.com

By Bob Cain
www.rentalprop.com
Copyright 2000 Cain Publications, Inc., 
used by permission

What are described as "major changes" in the Section 8 program took effect on October 1, 1999. Some housing authorities had instituted the changes earlier, but as of the first of this month, every housing authority in the country is following the same rules.

Some of them have little or no effect on how landlords who rent to Section 8 tenants do business, others have a great deal of effect and are actually a benefit. And some had been temporarily instituted earlier, but have now been made permanent.

1. No more certificates. All the new Section 8 participants will be receiving only vouchers. To landlords who have been renting to only voucher tenants anyway, it makes no difference to you whatsoever. HUD, however, describes this as "the most significant change."

2. End of the three-month delay on reissuance of turnover certificates and vouchers. This piece will have a major effect on landlords renting to Section 8 tenants. Until now, if a tenant didn't renew his voucher or certificate on time, he or she would have his or her place held for three months. Not anymore. If the voucher isn't renewed, the tenant goes back on a waiting list. If there is a shortage of money in your local housing authority, it could mean that you won't get any rent until the tenant has gotten back into the program. It behooves you to keep track of when your tenants' eligibility expires and get them to work doing what's necessary to stay in the program.

3. Elimination of the "Shopping Incentive." This change could mean more rent to you. Until now, new participants in the Section 8 program would be issued an voucher that would pay a specified amount of money, regardless of what the rent was as long as they stayed in the same unit or complex. That means if their benefit was decreed to be $400 a month, they could shop for lower rent and end up paying a smaller amount of money out of their own pocket for rent.

Now shopping won't benefit them in any way. The new rules say that their monthly assistance payment "shall be the amount by which the gross rent exceeds the greater of 30 percent of adjusted monthly income, 10 percent of the family's monthly income, or any other minimum under Federal Law." The end result will probably be a saving of money in rent subsidies.

4. Permanent repeal of the "take one, take all" provision. This one and the next are probably the changes that will benefit Section 8 landlords the most. The old HUD rules said that if you rented to one Section 8 tenant in a multifamily housing complex, you couldn't refuse to rent to Section 8 tenants in all your multifamily units, if participation in Section 8 was the reason you were rejecting them. That provision had been temporarily suspended since 1996, but is now permanent.

This rule worked a real hardship on long-time tenants who had fallen on hard times, wanted to use Section 8, but their landlord couldn't do it because he would have had to open up all his properties to Section 8 tenants. Landlords wanted to, but just didn't want to have that much government interference in their business.

5. Permanent elimination of the "endless lease." All current and future leases may be terminated without cause at the end of the initial term and at the end of any term extension, or at the end of a successive definite term. For example, if the current lease provides for automatic renewal on a month-to-month basis, the owner may terminate the lease without cause at the end of each month (as long as that is permitted under state or local law). Other times, the landlord may only terminate for cause. This provision had also been temporarily in effect since 1996.

6. Permanent elimination of the Owner Termination Notice. Also temporarily in effect since 1996, you no longer will be required to notify HUD and your Section 8 tenants of your intention 90 days ahead of the expiration of the Section 8 contract that you intend to opt out of the program.

If you have questions about, or need clarification of, any of these provisions, get in touch with the Section 8 department of your local housing authority.

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Robert Cain is a nationally-recognized speaker and writer on property management and real estate issues. For a free sample copy of the Rental Property Reporter call 800-654-5456 or visit their web site at www.rentalprop.com .

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