Section 8 Voucher Reform

On July 12th the House passed the Section 8 Voucher Reform Act of 2007, H.R. 1851. The legislation will change Housing and Urban Development's (HUD) Section 8 public housing programs - expanding rental assistance opportunities, improving program efficiency, and encouraging family self-sufficiency. The bill expands the number of families receiving vouchers by 20,000 a year for each of the next five years and ensures the program works effectively for the nation’s low income working families with children, elderly and disabled.

This legislation will:

• Reform the voucher funding formula to increase eligibility and eliminate inefficiency. The bill reforms the formula used to allocate Section 8 voucher funds to housing agencies in order to increase the number of families receiving vouchers - through the elimination of inefficiencies that have resulted in $1.4 billion in unused funds and through incentives for agencies to use funds to assist more families.
  
  
• Authorize 20,000 incremental Section 8 vouchers in each of the next 5 years, for a total of 100,000 new vouchers.
  
  
• Encourage Economic Self-Sufficiency. The bill includes provisions to encourage economic self-sufficiency for low income voucher and public housing families, including:
  
  • Reducing rent disincentives related to increases in earned income
  • Making it easier for low income working families in rural areas to receive a voucher
  • An improved funding mechanism to help families find employment
  • Income exemptions for adult full time student dependents and for education savings accounts
  • Helping low income families improve their credit score by allowing reporting of voucher and public housing rent payments
  
  
• Promote Homeownership. The bill permits housing agencies to let families use a housing voucher as a down payment on a first-time home purchase.
  
  
• Simplify the voucher, public housing, and Section 8 programs. The bill changes rent calculation, recertification, and inspection rules for the voucher, public housing, and project-based Section 8 programs, to reduce costs and compliance burdens for public housing agencies, landlords, and families. These changes are made while maintaining rules that target scarce resources to those families most in need and while maintaining rent calculation rules that ensure that rents are affordable.
  
  
• Increase tenant protections. The bill makes a number of changes for the benefit of federally assisted families, including provisions to preserve voucher families’ ability to move to other areas, to address excessive voucher rent burdens, to provide for more accurate fair market rent calculations, and to protect voucher holders in units that are in need of repair.
  
  
• Expand the Housing Innovation Program. The bill expands and renames the Moving to Work Program, which gives a limited number of housing agencies flexibility to experiment with development and rent policies, and strengthens the program’s evaluation process.
  
  
• Attach vouchers to housing units. The bill includes changes to make it easier for housing agencies to attach vouchers to housing units – an important option in tight rental markets and in developing supportive housing for seniors, disabled persons and homeless persons.

Financial Services Committee Passes Section 8 Voucher Reform Act of 2007 on May 25, 2007

Washington, DC - The House Financial Services Committee today passed H.R. 1851, the Section 8 Voucher Reform Act of 2007. The bill passed by a wide bipartisan margin of 52 to 9. The legislation would reform the Section 8 funding formula to make it more efficient, revise the rent calculation process for Section 8 and public housing to expand work incentives and reduce administrative costs, increase flexibility to use vouchers for homeownership, amend voucher targeting rules to increase voucher opportunities for lower income working families in rural areas, and authorize an expansion in the number of families receiving vouchers by 20,000 a year for each of the next five years.

“It is important that we move forward on Section 8 Voucher reform, if for no other reason than to restore our responsibility for the program. Many important aspects of the program like the funding formula have had to be addressed by the appropriators because we did not reauthorize the Section 8 Voucher program. Several weeks ago the funding formula was put in the Continuing Resolution without any vetting of the issue within our Committee,” said Rep. Waters.

“A program of this importance to American communities needs to be more efficient to be effective. H.R. 1851 represents consensus around a federal housing program that can work for the nation’s low-income working families with children, and the elderly and disabled, as well the Public Housing Authorities (PHAs).”

The Financial Services Subcommittee on Housing and Community Opportunity held a hearing to examine Section 8 voucher issues on March 9, 2007. Rep. Waters introduced H.R. 1851 on March 29, 2007, with Committee Chairman Frank, Ranking Housing Subcommittee Member Biggert, and Rep. Shays as original cosponsors.

The full committee also voted today to adopt Rep. Waters’ Manager’s Amendment that would provide for the following provisions:

Using Vouchers for the Purchase of manufactured homes
Permits vouchers to be used for the full cost of purchasing manufactured homes on leased land.

Protecting Vouchers Reserved for Persons with Disabilities
Requires HUD to issue guidance to ensure that the 50,000+ vouchers created for persons with disabilities continue be reserved for such persons.

Breaking the Cap on the number of families a housing authority can serve
Permits housing agencies to exceed their limit on the number of voucher holders they can serve, thus encouraging more efficient use of voucher funds.

Voucher Reserves
Increases from 2% to 5% the percentage of reserves housing agencies can retain for the voucher program.

Portability
Provides for full funding for the cost of housing agencies accepting voucher holders from other communities, to strengthen the voucher program’s feature that lets families move from one community to another.

Family Self-Sufficiency Coordinators
Provides for a more reliable funding source for the cost of family self-sufficiency coordinators that assist public housing residents in finding employment.

More Accurate Market Rent and Funding Adjustments
Requires HUD to establish smaller areas for the purpose of calculating Fair Market Rent levels and providing annual voucher funding inflation adjustments, in order to improve the accuracy of such calculations.

Housing Innovation Program
Expands the number of public housing agencies that can participate in the Housing Innovation Program [renamed from “Moving to Work”], which lets agencies experiment with development, financing, and work incentive proposals, while also adding substantial tenant protections to the program.

Subsequently, the Committee passed a number of amendments, as follows:

• A Waters amendment to expand the permissible number of Housing Innovation Program agencies by 20, plus a second category of 20 additional agencies under expanded tenant protections, including expanded resident participation in any proposals to demolish public housing units.


• A Green amendment, modified by an amendment by Rep. Bachus, to authorize 20,000 new incremental vouchers in each of the next five years.


• A Waters amendment to strengthen protections for voucher families in units that fail to meet federal housing quality standards.


• A Lynch/Murphy amendment to strengthen voucher provisions to address areas when families face high rent burdens.


• A Watt amendment to ensure that families seeking public and assisted housing are only screened based on their ability to meet lease obligations.


• A Murphy amendment to exclude income from Coverdell and Section 529 educational accounts from rent calculations.


• A Moore [WI] amendment to increase voucher work incentives for severely disabled persons, in conjunction with State demonstration programs.


• A Capuano/Lynch amendment to protect families making less than 95% of median income from being evicted from “Demo Dispo” and Section 8 limited equity cooperative developments.


• A Green amendment to authorize 15 year contract terms for vouchers used in housing tax credit projects, to help facilitate financing for such projects.


• A Capuano amendment to protect “empty nesters” from eviction from certain buildings when their units are oversized.

How to be an Effective Landlord - Rights and Responsibilities, by Bob Seigerim

Many investors are wary of the idea of renting property and the responsibilities that go with it. Unfortunately, this keeps them out of a profitable investing arena.

Following is a basic guideline for good rental management effectiveness and profitability.

Choosing Tenants

Your primary responsibility is to the maintenance and use of your property. Select your tenants carefully. It's unlawful to discriminate against an applicant because of race, national origin, religion, marital status, sex or physical disabilities. Beyond this however, it's still your property and you can pick and choose who you want living there. Never rent to the first person through the door. Prospective tenants will be shopping around, and you should too.

Make sure all applicants completely fill out an "Application for Rental" form. Forms like these are available at stationary and office supply stores.

Perform a thorough check of each applicant. Call the applicant's employer to verify employment, contact the landlord of the applicant's current or previous residence. This is the most important phone call of all. Check credit references if necessary.

"For Rent" signs and newspaper ads are not the best ways to attract trustworthy tenants. If this is how you advertise for tenants, make sure you screen them well. It's usually best to find a family or a person that can be recommended by a current tenant of yours. You may offer your current tenants an incentive for recommending strong prospects.

When writing a newspaper ad to rent your unit, make sure to give accurate descriptions. This includes the monthly rental amount, any deposits if required, description of the property or unit, and any restrictions that you maintain, such as children, pets, number of occupants, etc.

Don't be overly eager to get a tenant in. Indicate to all applicants that they will receive full consideration. Select a tenant that meets your requirements.

Collecting Deposits

Even though most tenants do not like paying deposits, it is in your best interest as a landlord to collect the last month's rent in advance. If the tenant fails to live up to the terms of the agreement, this deposit will help you to defray some of the costs of evicting the tenant. Defraying the legal costs is the only reason for this payment or deposit. You can also collect a cleaning deposit and a security deposit. These deposits are applied to any damages that occur while the tenant is occupying the unit.

Returning Deposits

If a tenant has in any way damaged your property beyond what would be considered normal wear and tear, you have the right to keep funds considered as security deposits and/or cleaning deposits. Try to use good judgment when determining what is and what is not normal. Normal use will age any property to some extent. Don't attempt to keep a tenant's money merely for this sort usage. You should, however, use the funds in these deposits to repair any damage caused by the tenant and/or to clean the property sufficiently so as to have it ready to show.

Inspection

A good rental agreement should have the tenant give a 30 or 60 day notice of vacating the property. Include a statement in your rental agreement that requires an immediate inspection at the time the tenant gives notice of his leaving. An immediate inspection helps you plan your strategy early if the property is not in good condition. It also lets you tell your tenant right up front what will be necessary in order for you to return his or her security/cleaning deposit. Include a final inspection the last day the tenant occupies your property.

Unannounced Entry

There has been an increasing number of restrictions put on unannounced entries in the past few years. Do not trespass unlawfully. Enter to make emergency repairs if you have to, otherwise wait until you get approval from the tenant for all other work. Don't abuse your privilege, you could end up with a legal battle.

Setting the Rental Amount

Your main consideration for determining the rental amount is based on rents of comparable rental units in the area. Common sense dictates that similar units rent for similar amounts.

Make sure your tenants know exactly when the rent is due. If you extend a grace period, make sure the tenants do not exceed that date for payment. Make it clear that you expect prompt payment.

Non-Payment

Even though you carefully selected your tenant from all the other applicants, things can go wrong. Job loss, illness, divorce, all kinds of things can hinder someone's ability to make timely rental payments. You may want to go easy on a tenant with a good payment record. A new tenant who can't pay, however, you should want to evict immediately.

Converse with your tenant. Try to determine when the rent will be paid. Tell your him that it's not personal, but a matter of operating your business. How long you wait to collect your rent is up to you. Clearly, the sooner the better.

Eviction

When all attempts to resolve your tenant problems fail, you must evict. Select your best course of action. Do you need an attorney, or can you start the process yourself for less money? If you choose not to use an attorney, you may want to use a "Notice to Pay Rent or Quit" form. This is used only to recover unpaid rent. The notice tells the tenant that he has only three days to pay the rent or leave the premises. If the tenant pays the rent within that three day period, things revert to business as usual. You collect the rent and the tenant doesn't have to leave.

A tenant with chronic offensive behavior may be served a "Notice to Quit" form. Use this form to begin eviction of a tenant who is disturbing and constantly breaking the rules. If the tenant is in violation, you have the right as the property owner to reclaim your property. The tenant must be "served" in person or by registered mail. Both of these notices are available in stationary and office supply stores. Consult an attorney to obtain knowledge of local, state or federal laws, alternatives and his professional advice.

Crowd Control

The more people who live in a unit, the more wear and tear, noise, damage, etc. One way to keep the crowds down is to limit the number of tenants per unit. Have this stipulated in your rental agreement. You can also stipulate an additional charge for each extra person occupying one of your units. If booze and drug parties, loud noise or music, or property destruction occurs, you may have grounds for eviction. Other than that, try to select the best tenants to avoid problems. Do not interfere in your tenants lives. Rent to them, reject them, evict them, or deal with them.

Maintenance

To determine how much maintenance will be required for your properties, just multiply the number of rental units you have, times the number of headaches associated with each unit. You must be proficient in repairing cracks in walls, painting, plumbing, yard work, electrical, etc. You will save a lot of time, money and stress from tenants if you can do this work quickly and efficiently.

If you can't do this work yourself, consider a good handyman. A really good handyman may be hard to find, but is well worth the search. Make sure the person you hire can be on call when you need him. Make certain the work is done well and is competitively priced. A good handyman can make you a better landlord.

Pest control is the landlord's responsibility. Shop around for the best combination of service and price. If there is a pest problem due to unsanitary conditions caused by a tenant, you have the right to demand that they clean up or otherwise correct the unsanitary condition.

Conclusion

Always start with good tenants. Use common sense and good judgment to avoid future, costly problems.