What is Section 8 Really and What Landlords Need to Know About It

Section 8 is the industry-standard term used to describe Housing Choice Vouchers. Basically it is federal government money paid to a landlord to subsidize a tenant’s rent. It is supervised by Housing and Urban Development (HUD). Here is how HUD explains it:

What are housing choice vouchers?

The housing choice voucher program is the federal government's major program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. Since housing assistance is provided on behalf of the family or individual, participants are able to find their own housing, including single-family homes, townhouses and apartments.

The participant is free to choose any housing that meets the requirements of the program and is not limited to units located in subsidized housing projects.

Housing choice vouchers are administered locally by public housing agencies (PHAs). The PHAs receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program.

A family that is issued a housing voucher is responsible for finding a suitable housing unit of the family's choice where the owner agrees to rent under the program. This unit may include the family's present residence. Rental units must meet minimum standards of health and safety, as determined by the PHA.

A housing subsidy is paid to the landlord directly by the PHA on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. Under certain circumstances, if authorized by the PHA, a family may use its voucher to purchase a modest home.

How the HUD money flows:

HUD administers funds to different Public Housing Agencies (PHAs). Most people just call PHAs Section 8 offices. Often the PHA is named after a municipality or a region. Near me we have Taylor Housing Commission, Livonia Housing Commission, and Detroit Housing Commission. Originally the municipalities wanted to offer housing for their low-income residents, so the municipality would have their own Section 8 office. But once Fair Housing laws were passed against steering people to live in certain areas, the municipalities no longer could restrict people from living in different areas. Each PHA will have a region they service. The region is usually based on being able to fund the inspector. They try to keep them somewhat close.

Not every PHA is named after a city and not every city chose to have a PHA. In Michigan the largest provider of Housing Choice Vouchers is Michigan State Housing Development Authority (MSHDA). MSHDA then subcontracts with private entities to provide the vouchers. In my area some of them are RPI, CMA and Szjana & Associates.

In another blog and video, I will explain where to make a complaint about your PHA. It isn’t easy! How to Make a Complaint about a Section 8 Office or Section 8 Inspector

Be Sure Your House is Within the Voucher Holder’s Region

When someone wants to rent your house, you always want to ask them the name of their “Section 8 office.” I don’t say PHA in case they don’t know that term. Sometimes they don’t even know the name of their PHA. So then I will ask them where it is. I then ask them if they are new to Section 8. If they are new, they may not know that they are outside of their PHA’s region. The experienced voucher holders are much more certain of their allowable regions. If you are in doubt, you can always check directly with the PHA. I recommend finding an email address though. Getting a PHA to answer the phone can be difficult.

Beware of Porting!

If you find out that your applicant is outside of her region, you then need to decide if you want to go through the porting process with her. Unfortunately for everyone, when a tenant chooses to move to a new region, she is required to secure a rental before she is allowed to “port” her voucher to a local PHA. If you do go through the process with her, expect the port process to take an extra three weeks to two months. You will be waiting on her current PHA to work with her new PHA to get it done. There is really no good financial incentive for the PHAs to take on new voucher holders. Some PHAs used to refuse porting until HUD stepped in and told them to deal with it and do it!

In another video and blog I will explain how a tenant is qualified to have a Housing Choice Voucher. This will help you determine your own criteria when deciding if she qualifies for your standards.

Understanding what Section 8 is is only the beginning. There is so much more to learn about it. Please check out my whole series. Had I known all this from the beginning, I could have saved so much money!