What is the Difference Between Section 8 and Public Housing?
July 5, 2023
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The Similarities And Differences Between Section 8 And Public Housing
As a landlord, it’s your responsibility to screen a variety of applicants for eligibility to rent your properties. From time to time, you might encounter a tenant with a government subsidy for rent. It’s important to understand how those subsidies work and what they mean for you as a landlord so that you’re as prepared as possible.
Section 8 is one common type of federal rent assistance that tenants may have. This program is different than the public housing program, but the two are often confused. Let’s discuss the difference between these two programs and what they both mean for you, your tenants, and your rental business.
What is Section 8?
Section 8 is a federal affordable housing program supervised and funded by the U.S. Department of Housing and Urban Development (HUD). It is managed locally by individual Public Housing Agencies (PHAs), which distribute HUD funding to individual renters and families in need of assistance. Section 8 is also called the Housing Choice Voucher (HCV) Program, as eligible low-income families are granted vouchers for approximately 70% of their housing costs (rent and utilities). The family then pays the remaining 30%.
These vouchers are assigned to families directly and are not attached to specific housing units. This means that once a family is issued a voucher, they can use it to rent at any privately owned property so long as the landlord agrees to accept it.
What is Public Housing?
Public housing has the same aim as Section 8: Provide decent, safe, and sanitary housing at affordable rates for low-income families, the elderly, and people with disabilities. However, public housing is owned and operated by the government (local PHAs) rather than by private owners/landlords. The public housing designation is attached to specific buildings/units rather than given to renters individually via a voucher.
PHAs make public housing rent affordable to low-income families, so rents tend to be much lower than market rates. Public housing for low-income families is not free, however—families are responsible for the Total Tenant Payment (TTP), which is an affordable rent price based on the family’s annual gross income (AGI). Families with children, elderly persons, or members with a disability can qualify for further deductions.
Similarities and Differences
The Section 8 and public housing programs are easily confused due to their similarities:
- Both are funded and supervised by the HUD
- Both are locally managed by public housing agencies (PHAs)
- Both aim to help low-income families, the elderly, and people with disabilities
- Both determine eligibility based on annual gross income (AGI) and provide certain deductions/adjustments
- Both use the same HUD income tiers (extremely low-income, very low-income, etc.)
- Both require standards of safety and sanitation for properties
- Both have long waiting lists
- Both programs require tenants to pay a certain amount of rent, called the Total Tenant Payment (TTP)
However, despite their similarities, these two programs are not the same, and only one is relevant to private landlords. The following distinctions determine the difference between Section 8 and public housing:
|Section 8 Housing||Public Housing|
|Vouchers are assigned to individual tenants/families*||Subsidy is attached to particular housing units|
|Tenants can carry their vouchers with them when they move||Family must stay in a designated public housing unit to keep the subsidy|
*Note: There is a project-based component of the Section 8 program, wherein vouchers are assigned to the unit rather than the tenant. However, project-based vouchers still apply to the private sector and aren’t the same as public housing.
How to Rent to a Section 8 Tenant
As a landlord or property manager, only Section 8 is relevant to you, as these vouchers can be used to rent privately-owned rentals. Here’s how the program works in brief.
Accepting Section 8 Vouchers
If you receive an application from a low-income tenant who has been accepted to the program, they will ask you whether you accept their Section 8 voucher. If you choose to do so (here are some reasons for and against doing so), you’ll need to apply online with the HUD to become a Section 8 landlord.
Once your application is approved, your local PHA will send a housing official to your property to conduct an inspection. They’ll check the HVAC system, smoke alarms, water, electricity, and all other essentials to ensure that everything is in working order and that the property is safe and sanitary for the family. If it isn’t, you’ll need to make the required repairs or adjustments and have your property re-inspected.
After getting the green light, you’ll negotiate with the PHA regarding the rent price and sign what’s called a Housing Assistance Payments Contract (or HAP contract). The HAP contract basically says that you agree to house the Section 8 family and keep the property in decent and safe condition in exchange for the monthly subsidy that the PHA will send directly to your bank account every month. The tenant has their own contract with you, the lease, to pay the remaining, unsubsidized portion of the rent.
What Else Should You Know About Section 8?
Here are a few more tips and details to know about Section 8.
Designation – A rental property officially becomes a “Section 8 property” when a Section 8 tenant is living there—if the tenant moves out, the unit is no longer a Section 8 property and can be rented out to traditional tenants as usual.
Tenant Screening – You are entitled to screen Section 8 tenants under the same standards you would any other tenant—credit, criminal, employment, and eviction histories. You have the final say on whether or not any tenant may live in your rental. That being said, if a Section 8 tenant meets all your typical tenant screening criteria, you may not be able to deny the applicant due to their Section 8 status alone. In some states, housing discrimination based on ‘source of income’ is illegal, meaning that you cannot base a denial on the place where a tenant receives their income—including housing vouchers. Check your state’s statutes to find out whether this kind of discrimination is illegal where your properties are located.
Security Deposits – Security deposits are a bit tricky for Section 8. Most landlords require them, but PHAs don’t guarantee funding for them. You can still charge Section 8 tenants a security deposit and require them to pay it to move in, but it’s likely that most Section 8 tenants won’t be able to pay it. It’s up to you to decide what the best practice is regarding deposits for Section 8 tenants.
Inspections and Evictions – Lastly, it’s especially important to keep Section 8 properties up to code. Although Section 8 housing doesn’t need to be luxurious or upgraded with all the latest innovations, properties with Section 8 tenants are reinspected every year for general safety and sanitation standards. If you fall behind on maintenance and don’t keep your property habitable, it won’t pass the inspection—in which case the PHA won’t send you the subsidy, the tenant will fall behind on rent, and the family will lose their home. Then, you’re out a tenant and monthly payments, and you’ll have a vacancy on your hands to fill.
Section 8 and public housing are frequently confused, but hopefully this article has provided insight into the key differences. While Section 8 can be confusing, it’s worth learning about the program in case you receive applications from Section 8 tenants in the future.