Real estate investing

Do California landlords have to accept section 8?

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There are laws in California that govern the relationships between property owners and residents, and one of them deals with what is known as Section 8. 

California implemented new laws at the beginning of 2020 that require landlords to accept Section 8 or housing vouchers as an income source from applicants. 

Rental property owners cannot discriminate against an applicant or deny the application just because of a housing voucher. This existed in certain California cities prior to January 1, but now it is a statewide requirement.

Section 8 applications can be time consuming

Previously, it was common for property owners to advertise that they did not participate in Section 8, and wouldn’t consider any residents who had that housing voucher.

This was common because participating in the Section 8 program was an administrative burden. There are a lot of requirements, including a home inspection, verified habitability, and an approved residency. The delay in getting approved and prepared can be costly.

Section 8 residents have guaranteed income

Most owners weren’t unwilling to accept Section 8 residents; it’s actually a program that many landlords appreciate because it’s a guaranteed source of income.

The rent will come in every month because it’s coming from a government agency and not an individual. 

But for most owners, the Section 8 process wasn’t worth their time.

Advertising must reflect the law

California's property managers, landlords and investors cannot discriminate against anyone with a housing voucher. Printed marketing materials and online advertising must be reviewed to ensure compliance.

Federal fair housing laws require property owners to treat all applicants equally, though a rigorous screening process should be followed.

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Section 8 is treated as income

Investors may be asking why these laws were changed. 

The implication is that Section 8 housing vouchers or any of these vouchers that are described must be considered protected sources of income.

Requiring specific kinds of income can be construed as discriminating against potential residents. Property owners must now view a housing voucher as part of an applicant’s income.

Maintain fair and consistent screening criteria

The laws governing Section 8 do not impact any of the screening processes a property owner has in place. The same credit criteria and income verification steps are in place.

The only change with the income criteria is that a property owner can only look at the portion of the rent that the resident will be paying, not the entire rent. 

Here’s an example: 

If rental criteria says that a resident must earn three times the amount of rent every month, an owner has to consider three times the amount of what the Section 8 resident would be paying.

So if the resident is responsible for only $300 of a rental payment and the voucher takes care of the rest, a resident income that meets or exceeds $900 is sufficient.

Wrapping up

Property owners need to make sure they follow all the legal requirements when considering Section 8 applicants and avoid any possible charges of discrimination.

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