6 Problems Landlords Face Renting to Section 8 Tenants

Frequent Inspections, Security Deposit Issues and Damage

© The Balance 2018

There are certain unique challenges a landlord could face when renting to a tenant with a Section 8 voucher. These problems are deal breakers for some landlords, while other landlords feel the advantages of renting to a Section 8 tenant far outweigh the disadvantages. Here are six negatives for you to consider. 

6 Potential Problems Section 8 Tenants Create: 

1. Frequent Section 8 Property Inspections

2. Do Not Receive Rent Until After Tenant Moves In

3. Section 8 Does Not Pay Security Deposits

4. Wear and Tear Concerns/Possible Property Damage

5. Non-Section 8 Tenants May Not Want to Live in Building

6. Maximum Amount Section 8 Will Pay

1. Frequent Section 8 Inspections

One major issue many landlords have with the Section 8 program is how often they inspect your rental property. These inspections are performed by your local Public Housing Authority. A Section 8 inspector will come to your property once a year to carry out the inspection. Even if there has been no tenant turnover, this inspection has to be done..

The inspector is making sure your unit meets HUD’s Housing Quality Standards. There are 13 areas the inspector will look at to determine if the unit meets HUD’s safety and health standards. These areas include sanitary system, lead-based paint, water supply, electrical and smoke detectors.

Each of the 13 areas must meet certain requirements. For example, the “sanitary facility” must be located in a private area of the home and must only be for the use of the occupants of the home.

It is not uncommon to fail a Section 8 inspection. An example of a hazard that could cause you to fail a Section 8 inspection would be a hot water leak in the bathroom. This leak could cause potential burns to the tenant.

If you do fail the inspection, you will be given a list of items that need to be fixed. Once you fix all items on the list, you can schedule a re-inspection with the Section 8 office. They will once again send the inspector to determine if all issues have been fixed.

2. Receive Rent After Tenant Move In

Another problem with Section 8 is when you will receive your first rental payment. Typically, you will not be paid by the Section 8 office until after the tenant moves into the property. Due to administrative backups, there have been cases where landlords have had to wait as many as three or four months to receive payment from Section 8. Once you receive the first payment, however, you should expect consistent payment each month.

The delay in payment is something to keep in mind when considering renting to Section 8 tenants. If you do not have the financial ability to be able to wait a couple of months to receive rent, then Section 8 may not be the right choice for you.

3. Section 8 Does Not Pay Security Deposits

Section 8 provides housing vouchers that pay the tenant’s monthly rent. These vouchers do not include an amount for the security deposit. If a landlord wishes to collect a security deposit, he or she has to get this deposit directly from the tenant. This could be an issue as the tenant has already shown to have income problems by being approved for a Section 8 voucher in the first place.

If they are not able to pay on their own, Section 8 tenants are often able to appeal to other agencies that will provide them with the money for the security deposit. As with any other tenant, you should never allow a Section 8 tenant to move in without first collecting a security deposit from them. The maximum amount you can collect is determined by your state security deposit limit.

4. Wear and Tear Concerns/Property Damage

Another disadvantage of renting to a Section 8 tenant is the belief that Section 8 tenants are very destructive. There have been horror stories about floors being destroyed, cabinets being pulled off the walls, toilets being cracked, garbage and filth everywhere and many more people living in the unit than are listed on the lease. Certainly, this can happen. However, these problems can happen with any tenant you rent to.

There are good Section 8 tenants and there are bad Section 8 tenants. This is why it is so important to screen all tenants, including Section 8 tenants, properly.

5. May Discourage Non-Section 8 Tenants From Living in the Building

Tenants who do not collect rental assistance may be turned off by the fact that you allow Section 8 tenants in your property. They may believe that you are a “slumlord,” that the property will be dirty or that the tenants will be disrespectful and noisy.

In these situations, the only thing you can do is make sure you place quality tenants in your property and that you keep up with property maintenance. If non-Section 8 tenants see that your property is quiet and in pristine condition, they may change their beliefs about Section 8.

6. Maximum Amount Section 8 Will Pay

The final disadvantage of renting to Section 8 tenants is that there is a maximum amount that Section 8 will pay. Each year, HUD puts together a list of Fair Market Rents for over 2,500 areas of the country. The amount that you will receive from Section 8 will be calculated using the Fair Market Rent for your area for the number of bedrooms you are renting out, such as a one bedroom or a two bedroom.

The amount of the housing voucher will be between 90 percent and 110 percent of the Fair Market Rent. Depending on the condition of your property and the Fair Market Rent HUD has calculated for your area, you may be able to rent your property for a higher amount to a non-Section 8 tenant.