Providing Affordable Housing to Those Using Government Money

There are many pros and cons in providing affordable housing to those using government money—whether the funds are in the form of Section 8 vouchers or federally insured loans.

All landlords in the United States are expected to abide by the fair housing laws which were instituted to prevent discrimination in housing due to race, religion, gender or national origin; however there is no law that requires a landlord to provide affordable housing as it is defined by the government.  The rental market in the US is largely dependent on levels of personal income—and rents tend to run as high as an individual market will bear.

Unfortunately for the needs of those requiring low cost housing, many landlords will not participate in programs such as HUD’s Section 8 “Housing Choice Voucher” program.  Reasons for this are many but several of the most often cited are:

  • Not wishing to be subjected to government involvement in their property up , especially the mandatory on site inspections which are required to maintain the quality, safety and health of units in the program
  • Distrust of so called “low income” renters and their families to treat the property with care and respect.  Horror stories of properties being trashed by irresponsible program members abound, though in truth many may be apocryphal.
  • In markets where fair market rents are high, the desire to make the most money possible from their rental property
  • Unwillingness to agree to the judicial method of eviction that federal programs require for eviction of a Section 8 tenant.
  • Unwillingness to risk potential loss of property value on the surrounding community due to perceived (and not necessarily real) problems that are inherent in the populations that occupy low income housing, most often cited: crime, vandalism, drug abuse, and littering.

However, many landlords recognize the benefits of participating in the Federal Low Income Housing programs.  There is most generally a backlog on waiting lists for housing assistance, which means that the population of potential renters among those with low income is high.  Also, the programs involved are noted for quick and regular payment of the Housing Authority share of the rent of the property.  There are also tax incentives for landlords who participate in these programs, which make offering at least a percentage of units as low income housing attractive.  Further, the standards these federal programs impose on the quality and safety of low income units and the federal assistance programs that exist to help fund improvement of existing properties to make them suitable for the programs increase the value inherent in the property.

There are benefits too, to selling properties to FHA buyers, under the first time and lower income buyer programs.  While the Department of Housing and Urban Development has rules and regulations in place to ensure that a potential home meets program requirements before financing, the costs and responsibilities tend to fall on the buyer (and are generally allowed to be covered the loan itself), which may not be the case for purchases outside of these programs.  Too often a potential seller will be required to make repairs and upgrades to properties being purchased under non federal loan programs as a condition of the sale; so generally speaking, there are incentives to sell to an FHA financed buyer that may justify the frustration of dealing with federal policy restrictions.

Bottom line, an abundance of low cost housing is the sign of a healthy community, and landlords and prospective sellers should consider cooperation with the federal programs that are designed to make sure that every citizen, regardless of income level is entitled to an affordable, safe, sanity and good quality place to live.