If you want to rent your property to Section 8 tenants, your unit must meet certain Section 8 criteria. This is usually a two part process that involves examining the price of the rental, as well as the health and safety of the rental. To determine if the rent on your property is reasonable, the local Section 8 office will use several criteria to compare it to other properties in the area. Here are eight things they look for.
5 Times Section 8 Looks at Rent Reasonableness
There are certain times when a Public Housing Authority must decide if a unit is rent reasonable. These include:
- When a landlord is trying to get their unit approved for a Section 8 tenant to live in.
- When the landlord of a current Section 8 tenant wants to increase the tenant's rent.
- When a tenant's lease is up for renewal, the Section 8 office must compare the Fair Market Rent from one year ago to the Fair Market Rent that is in effect 60 days before the contract expires. If the Fair Market Rent decreases by at least five percent compared to the previous year’s Fair Market Rent, the unit must be reexamined to determine if the amount that will be paid to the landlord is rent reasonable.
- Under HUD's orders– This often occurs when HUD wants to review how the PHA is allocating funds and conducting operations.
- When the Public Housing Authority feels it is necessary to do so.
Criteria for Determining Rent Reasonableness
In order to determine if a unit is rent reasonable, the Public Housing Authority will compare that unit to similar units in the area. This is done to determine if the rent that the landlord is charging is reasonable compared to a similar unit. For a comparable unit, the PHA will look for a unit that is similar in:
- Location- The unit must be in an area that the Section 8 office covers. If the unit is in a nearby area, the PHA has to make appropriate adjustments.
- Is Comparable in Size- Even if the units have the same number of bedrooms, a one bedroom that is 600 square feet is not comparable to a one bedroom that is 1200 square feet. The units must therefore be similar in number of bedrooms and in square footage.
- Similar in Type- The units must be located in the same type of property, such as in a single family home, a multifamily home, an apartment building or a high-rise.
- Date of Construction- The PHA will not compare a newly constructed home to a home that was built in 1900.
- Condition of Property- A rundown property will not be compared to a well-maintained property.
- Quality of Renovations- The PHA will not compare an upgraded unit to one that has not been renovated. For example, a unit with brand new kitchen appliances and hardwood floors will not be compared to a unit with 50-year old carpet and only a working stove.
- Property Amenities and Services- The Public Housing Authority will compare units with similar amenities and services, such as a washer and dryer, central air conditioning, designated parking spot, outdoor space, elevator or doorman.
- Number of Included Utilities- The PHA must take into account any utilities that are included in the price of the rental. They must make the necessary adjustments in order to accurately compare the units.
2 Types of Comparables
When the Section 8 office is determining rent reasonableness, they are comparing the unit to similar units in the area. Comparables are pulled for two types of properties:
- Properties in the Area that Are Similar-The PHA will compare the unit that is trying to be approved for Section 8 to units in the area that are not part of public housing assistance programs.
- Similar Units on the Premises- If the unit that is trying to be approved by Section 8 is located in a property that has one or more similar units which are not part of a public housing assistance program, the PHA will compare the units. The landlord has to certify that the Section 8 housing choice voucher amount will not be more than the amount of rent the landlord collects for the other comparable units on the premises.
What if Your Unit Is Not Considered Rent Reasonable?
If the Section 8 office determines that your unit is not rent reasonable, your unit will not be eligible to house the Section 8 tenant. You will not be able to collect the housing choice voucher, even if the tenant is willing to pay more out of their own pocket to live in your unit. The Section 8 tenant will be allowed to begin searching again for a unit that is considered rent reasonable.