More than 4.8 million American households receive Section 8 housing assistance. This program is run by the federal government which pays a large percentage of rent for participants.
Property owners can expand their pool of renters by participating in the program. They also are almost guaranteed rental income. However, they must meet certain standards, including offering "reasonable rent."
This article explains the different factors that go into Section 8 deciding if rent is reasonable. Keep reading to find out what they are and how they may apply to your Schaumburg rental property.
Section 8 Basics
The Section 8 housing voucher program is run by the U.S. Department of Housing and Urban Development (HUD). It refers to "Section 8" of the Housing and Community Development Act, passed by Congress in 1974. The goal was to ensure that people earning low wages could find a suitable living environment outside of public housing.
To qualify, a family's income cannot exceed 50 percent of the median income for the country or metropolitan area where they choose to live. Specific household income limits can vary depending on family size, location, and other factors.
They also must meet other qualifications. These include being a U.S. citizen and not having an eviction history or certain criminal convictions.
Property Assessment
Participants in the Section 8 housing program can choose any rental unit they like. However, it must meet certain qualifications.
First, property owners must apply to participate in the Section 8 program. After doing so, the local Public Housing Authority (PHA) will examine the property. One of the main goals is to see if it meets standards for tenant rights, including suitable living conditions.
They will also look at the size, condition, and location of your property. They will consider how old and the type (home, apartment) of rental. They also will take into account any amenities and whether utilities are included with the rental.
Since property values change over time, you can expect frequent reassessments. Besides the initial one, the PHA often visits the property when there is a lease renewal, rent increase, or if HUD deems it necessary.
Average Rent for the Area
If your property meets the minimum quality standards laid out by HUD, the next step is to look at the average rent in the area. The PHA uses these assessments to determine if rent is reasonable, compared to the "Fair Market Rent" (FMR).
If it is, then the resident can sign a lease with the landlord for one year. (After the first year, landlords can choose to renew the lease on a month-to-month basis.) Once the agreement is finalized, the resident and landlord receive a voucher for between 90 and 110 percent of the FMR from the government.
Learn More About Section 8 Housing and Reasonable Rent Standards
Now that you understand how Section 8 determines reasonable rent rates, you can have the confidence that you are operating within the parameters of the program. An experienced property management company can give you further landlord advice on regulations that govern housing laws.
PMI Chi-Town is a full-serve property management company serving the Chicago metropolitan area, including Schaumburg, IL. We provide a range of services, including marketing, tenant placement, rent collection, maintenance, and more. Reach out to us today to schedule a free consultation.
