This past August, the San Diego City Council issued a new ruling that affects property owners and property management companies across the city. Starting in August 2019, you are no longer able to deny section 8 vouchers or any other rental assistance programs as a reasonable source of income. All properties must treat applicants with government assistance the same as those without.
So what does this mean for your rental property? We’ll go over what rental assistance programs are and how you will be affected by them in 2019.
What is Section 8?
Section 8 is a form of government rent assistance. It was designed to assist low-income, elderly, and disabled people get adequate housing. Those that apply and are accepted into the section 8 program are given a voucher, which allows them to apply for properties that accept these vouchers (soon to be all properties in San Diego). Typically the government will pay up to 70% of the tenant’s rent, leaving the tenant to be responsible for the remaining 30%.
What is the New Ruling on Rental Assistance?
In the summer of 2018, San Diego City Council ruled that property owners can no longer discriminate against section 8 or other housing vouchers as a form of income. The law expands to say that landlords are not allowed to refuse to enter into or renew tenancy due to source of income. This means that you cannot deny a section 8 tenant a lease renewal simply because they are on section 8.
You also cannot misrepresent the status of the property. For example, if a section 8 applicant wants to view or apply to a specific property, you cannot tell them that it is unavailable if it is open for applications. Additionally, you cannot have any advertisements or marketing for the property that insinuates or states that the property does not accept section 8 applicants.
Lastly, if the property owner or management company has any sort of rent-to-income ratio they use to select tenants, this ratio must incorporate the entire income, including any government assistance. The only other properties that are exempt from the ruling are those that are owner-occupied.
This new ordinance only applies to the area defined as the City of San Diego. Outlying cities and unincorporated areas are not affected.
How Does Rental Assistance Work?
When someone applies and is accepted into the section 8 (or other government housing assistance) program, they receive a voucher. This voucher enables them to apply to properties that accept those vouchers. Prior to the new ordinance going into place, these vouchers were only accepted at specified properties and landlords were allowed to refuse them.
When an applicant applies with a form of rental assistance, they are first processed the same way as any other applicant. You will still run a background check and review their sources of income, you will just include their voucher as a form of income. Once you approve them, there will be a few additional steps.
From here, the procedure can differ depending on what city or county your property is in. You’ll likely have to confer with the applicant’s housing specialist or counselor. For more information on city-specific programs and guidelines, click here.
Are section 8 tenants bad?
There is a common misconception that people on section 8 or other rental assistance programs are always unsatisfactory tenants. However, as previously stated, these tenants are still screened via your tenant screening process. This means that should they have a violent crime on their record, you can still deny them for that. Your standard rental criteria can still apply, so long as you do not discriminate against them for their income.
Can I Evict a Section 8 Tenant?
Section 8 tenants do not receive special treatment when it comes to lease violations and evictions. If the tenant violates any part of the lease or does not pay their rent, they are still subject to an eviction notice.
Pros of Accepting Section 8 Tenants
Typically section 8 tenants, once accepted into a property, stay there for extended periods of time. This can be a great thing if they pay their rent on time and don’t cause any issues for you. You’ll be guaranteed rent in a timely manner and won’t have to worry about replacing a tenant every year. Additionally, there is a years-long waitlist for section 8, meaning there won’t be a shortage of tenants.
Guaranteed Annual Inspections
The housing agencies are required to inspect the property at least once a year to ensure that the home is being maintained.
Because roughly 70% of the rent is paid by the government, you will always get this portion of the rent on time.
Additional Marketing Opportunities
Because you now accept rental assistance, there are new websites you can advertise your property on. This can lead to shorter vacancy and more applicants on each property.
To be accepted by a rental assistance program, the tenant has to be screen by the housing authority. This means that by the time they apply for your property, there has already been an initial screening test that they have passed. This initial screen is primarily to check for criminal record and past dues to a previous housing agency. You will still need to conduct your standard tenant screening, but this allows you to already have an idea of what this tenant is like.
Cons of Accepting Section 8 Tenants
A Portion of the Rent May Be Late
Since only the government’s portion of the rent is guaranteed, you may run into issues getting the remaining amount from the tenant if they encounter an issue. This can be a headache if it routinely occurs.
Security Deposit Issues
Rental assistance programs do not cover a security deposit, they only cover the monthly rent. If you want to collect a security deposit from your tenant, it will be entirely up to the tenant to pay it. This can result in a delayed payment.
Compensation for Damages & Repairs
If there is tenant-caused damage in the home, it can be a struggle to get the funds from the tenant to repair the issue. Again, the vouchers only cover rent payments, so anything outside of that (like repairs) fall strictly on the tenant’s income, which can result in delays or nonpayment.
We hope that we were able to provide some insight on rental assistance, section 8, and the upcoming San Diego law going into place. If you're considering hiring a property manager to assist in managing your home, download our free guide to hiring a property manager.