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Housing Choice Voucher Program (HCVP) – Section 8: Potential opportunities for Baltimore County owners and property managers

The Housing Authority of Baltimore City (HABC) administers the federally funded U.S. Department of Housing and Urban Development program for individuals and families qualifying for affordable housing.

The program, previously known as “Section 8”, is now administered as the Housing Choice Voucher Program (HCVP). Capacity for accepting HCVP applicants continually varies, with HABC recently (Q1 2021) adding 50 Housing Choice Vouchers to the count.

As a landlord, or someone new to the Baltimore County property management business, it helps to know what Section 8 is all about, and how you can do your part to support deserving members of your local community get safe and affordable housing.

So, what exactly is HCVP, and what risks and opportunities does it offer landlords and property managers?

On any given day as of January 2020, the State had 6.360 citizens experiencing homelessness. So, what does that mean to the broader communities where these individuals and families live? Well, let’s put that in context. With a statistic of 104.6 people per 100,000 population, Maryland ranks 27th on the list of homelessness in U.S. cities. While that’s still a large segment of the State’s population, there is some comfort that the rate of homelessness is well below the national average – 174 individuals per 100,000 population.

Entities such as the HABC are doing what they can to reduce Maryland’s homelessness challenge even further through its involvement with the HCVP. The initiative is a rental assistance program designed to assist low-income individuals and families, senior citizens, and people with special needs and disabilities afford safe, livable housing in the private market.

FREEDOM OF CHOICE

Voucher recipients are free to choose any type of housing, from among a pool of participating rental properties, that meets their and their families’ needs. Likewise, professionals involved with property management in Baltimore, as well as landlords, property owners and do-it-yourself property managers, are under no compulsion to participate in the program.

And, those who do list their properties for voucher-holding renters, there’s no requirement to rent to every renter who might seek an apartment. HCVP administrators encourage each landlord to do their own diligence, as they would with non-assisted tenants, and decide whether to rent or not to do so.

DILIGENCE AND PROTECTIONS

Like in every other city, Baltimore City voucher-holders must comply with the prescribed process laid out by the program administrators, and must meet the minimum requirements set out for program participation, including:

• Qualify as a category of individual/family deserving of rental assistance
• Demonstrate proof of income that meets the threshold set out by the U.S. Department of Housing and Urban Development (HUD)
• Satisfy background check requirements, including criminal checks and verification of previous compliance with any other rental assistance program rules

HCVP administrators designed these requirements to provide some additional level of safety and protection to participating landlords viz. the quality of pre-screening for deserving tenants. However, landlords and property management companies in Baltimore MD are free (and encouraged!) to conduct their own diligence.

As advocates for low-income housing, the administrators of the HCVP also safeguard the interests of voucher-holding renters. They do so by conducting various property inspections to ensure the rental units comply with city, county and State rental unit laws and standards.

Additionally, HCVP oversight on asking rent prices acts as a safety net for renters against paying unreasonably higher rents than those paid by renters in the same location and for similar units.

HCVP participants pay the landlords no more than 30% of their income for rent and utilities. The balance of the asking rent, if any, is subsidized by HUD, and paid to the landlord directly, as long as the tenant occupies the landlord-owned rental unit.

Landlord In Control

Section 8 is not about the government imposing it’s will on landlords to supply rental units to less fortunate community members. The law’s primary objective is to provide safe, affordable housing to those who need it the most. Nothing in its provisions usurp control of property from landlords.

If you are new to Section 8, you may have misgivings about what assisted-rental support entails. Many landlords have the idea that vouchers entitle renters to lower rents than non-assisted tenants. Wrong! Section 8 does not interfere with your right, as a property owner, to determine what you should charge as rent. If you are considering enlisting in the HCVP, it might be prudent to speak with professionals in property management in Baltimore County, or with a realtor first, to determine your rate structure.

Under Section 8 provisions, you – the landlord or property owner – determine what your asking price of rent is. Of course, because HCVP works with HABC to administer the program on behalf of HUD, it carries out its own assessment of the reasonableness of your asking rental price. However, there is no expectation that landlords offer steep discounts to HCVP participants.

The purpose of HCVP’s reasonableness determination study is to ensure housing affordability for financially distressed individuals and families. It also protects renters from price gouging when they are in a financially vulnerable state. The rent you charge to assisted tenants must compare favorably to rent charged for other units of similar size, location, quality, and type.

The HCVP review may determine that, based on your asking price, the renter’s share of the rental payment may exceed 30% of their monthly adjusted income. In that case, HCVP opens a dialogue with the property owner, and will negotiate for a lower asking price. This makes it equitable for voucher holders, while also keeping the program financially viable for property owners.

However, as a landlord-participant in the program, you are under no obligation to rent to a voucher holder. You are always in control of your rental decisions, as long as they aren’t discriminatory or targeted against any groups of renters – including financially stressed individuals and families.

A Win-Win for Landlords and Assisted Tenants

So, why would anyone consider volunteering to support Section 8 housing initiatives? Well, one of the best reasons for participation in the HCVP is a sense of community service. Whether you own rental units, or are involved in property management in Baltimore MD on behalf of landlords, supporting those less fortunate than you is considered a civic duty – one that has it’s own rewards.

However, HCVP participation does have several tangible, and financial, rewards too:

1. Free Marketing Opportunities: As a participating landlord, you’ll be able to list your property on the HCV program website, as well as post flyers and signage at HABC offices
2. Additional Layer of Tenant Screening: Participation in the HCV program does not preclude your rights to screen voucher-holder tenants to your same standards as you would non-assisted renters. However, HABC also conducts its own criminal background check
3. Partially “insured” Income: The way the program is set up, voucher holding renters pay you, the property owner, the agreed rent directly in accordance with your landlord-tenant agreement. However, the subsidized portion of that rent is guaranteed by the HUD, and you receive those payments under a separate contract between you and the HCVP administrator. So, even if the tenant paid portion of your rental income suffers a temporary interruption, the subsidized part is unlikely to stop while the tenant occupies your unit
4. Loss Protection: If HCV renters suffer unanticipated financial setbacks – loss of a job, unexpected financial liabilities etc. – that prevents them from paying their agreed rent, there are mechanism within the HCVP to compensate participating landlords for any decrease in income

One interesting advantage of program participation, from property owners, is that it helps landlords diversify the quality of their tenant base. Overly depending on a single source of tenancy – such as millennials working in nearby tech companies – may pose a risk to continuity of rental income, especially when such employers resort to large scale down staffing as occurred during the COVID-19 crisis.

On a balance of considerations, would you rather rent to non-assisted tenants than voucher holders? Well, there are no statistics to show that HCVP tenants pose an overly excessive financial risk to landlords and property owners. On the contrary, partnering with a governmental agency, to get tenants into your apartments, provides just that additional bit of financial protection not available with non-voucher renters. Plus, it delivers you the satisfaction of going the extra mile – in supporting your community.

Doing More

Many landlords and property managers already support their local communities in various ways. This has come to light during the pandemic,

when property owners and managers supported financially-stressed tenants through various rent and utility relief programs.

But you might be able to do more. If you own multiple rental properties across Baltimore, or you are one of the many property management companies in Baltimore MD that want to get involved in supporting low-income tenants, then you should consider becoming an HCVP landlord.