The Section 8 program will determine the amount it will pay for each voucher based on a number of factors. The maximum amount they will pay will vary based on criteria such as the city you live in and your income level. The Section 8 voucher amount may be more or less than the amount that the landlord could receive for rent in the open market. Below are four key criteria that Section 8 will consider:
Calculating Fair Rent
The first step in determining the voucher amount is calculating the fair rent for the area. The Department of Housing and Urban Development (HUD) sets this number annually for over 2,500 areas nationwide. When calculating this number, HUD looks at all the units that have been rented in that specific area over the past 15 months. They exclude the following units:
- Units that are less than two years old.
- Assisted living units.
- Units that have been rented for an amount considered below market rent.
HUD uses two-bedroom units as a benchmark for calculating fair rent. They then derive rents for all other bedroom sizes from the fair rent for two-bedroom units. Fair rent is set at a level that is at the 40th percentile of rents in the area. This means that 40 percent of the units in the area have been rented for less than this amount, and 60 percent of the units in the area have been rented for more than this amount. Thus, it is slightly below the median rents for the area. In some urban areas, fair rent may be set at the 50th percentile instead of the 40th percentile.
Payment Standard for Each Area
Next, each local public housing authority will use the fair rent determined by HUD as a guideline. The local housing authority will consider factors in its specific area, such as how long it takes for Section 8 families to find housing. The local housing authority will define its payment standard or the maximum amount it is willing to pay for each number of bedrooms.
Note: This payment standard will be between 90 and 110 percent of the fair rent.
Tenant’s Contribution
Tenants receiving housing vouchers must contribute a portion of the amount toward the rent. The amount the tenant must contribute will be the greater of the following:
- 30 percent of their adjusted monthly income.
- 10 percent of their gross monthly income.
- Welfare rent.
- The minimum rent amount set by the local housing authority.
The tenant’s contribution will be paid directly to the landlord by the tenant. If the rent for your unit is determined to be higher than the payment standard set by the local housing authority for the unit, the tenant may choose to pay more. They are allowed to increase their share as long as the amount they will pay is approved by the local housing authority and does not exceed 40 percent of the tenant’s adjusted monthly income.
Utility Allowance
If utilities are included in the monthly rent, the local public housing authority typically includes an amount for utilities when issuing the housing voucher. If the monthly rent for your unit does not include utilities, the local housing authority may issue a separate voucher for a utility allowance or may directly issue utility compensation to the tenant or directly to the utility company.
Benefits and Drawbacks of Section 8 Vouchers for Homeowners
Homeowners who have properties that can rent for amounts equal to or less than the average rent in the area can benefit from accepting Section 8 tenants. This is because they may be able to receive higher rents from these vouchers opting for housing through choice vouchers rather than the open market. Additionally, they will receive a continuous payment every month from the local housing authority.
For owners,
For homeowners with units that can rent for more than the average rent in the area, participating in the Section 8 Housing Choice Voucher program may be a disadvantage. This could result in receiving a monthly rent that is less than what they could receive in the open market.
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Source: https://www.thebalancemoney.com/how-much-will-section-8-pay-landlords-2124978
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