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Landlords say Section 8 voucher program needs to be fixed

Landlords say a discussion is needed about why owners might be reluctant to take on tenants with vouchers.

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In response to a lawsuit that claims renters are routinely—and blatantly—discriminated against for using housing vouchers, many landlords say it’s time to change the Section 8 voucher system.

Landlords tell Brick there needs to be more discussion about the reasons why owners and leasing agents might be reluctant or even fearful of taking on tenants who are using vouchers. They say they are not condoning this type of discrimination, but say that it is the system that’s the problem. 

It’s illegal in New York to refuse to rent to a qualified tenant who wants to use government housing assistance to pay the rent, however evidence in the lawsuit indicates it still takes place. The lawsuit is based on an undercover investigation spearheaded by Housing Rights Initiative, a tenant watchdog group, which involved hundreds of phone calls to brokers and landlords about apartments found on StreetEasy. For nearly half of the listings, when the undercover investigators mentioned the use of housing vouchers, the brokers refused to rent to them.

“The housing voucher program is well intentioned but as it is administered in New York it is simply not fair,” says Adam Frisch, managing principal at Lee & Associates, which represents small building owners in Manhattan. He points to an onerous bureaucracy, a process slowed by unnecessary inspections, and an imbalance of responsibility. 

Jay Martin, the executive director of Community Housing Improvement Program, a trade association for owners, says the lawsuit presents an opportunity to make significant changes to the way the program is run. “There’s no reason why property owners and the government can’t work together to make a much, much better system,” he says. Though none of his members are involved in the lawsuit, he believes landlords "are discriminating against the system not the individual."

For his part, New York State Senator Brian Kavanagh, who chairs the housing committee, says he is open to efforts to improve the way HPD and NYCHA run the program in New York City. “I am certainly interested in suggestions for how to make the program more efficient and more effective but none of that is any excuse for discrimination,” he says. He is currently sponsoring a bill to establish a voucher program for the state, giving rental assistance to New Yorkers facing homelessness.

Time-consuming bureaucracy

One of the most frequent complaints Martin hears from owners is that apartments end up sitting empty for the two or three months it takes to complete Section 8 paperwork when a non-voucher tenant can move in much more quickly. 

Section 8 is a federal program, so once a tenant finds an apartment they'd like to lease, inspections need to be carried out to confirm it meets specific codes that don't apply to New York City apartments. To many landlords, this can feel arbitrary; for example, a window being an inch too small or not having a sill. Martin says in one case the apartment size was 80 inches too small.

"These are apartments that meet city codes," he says. Landlords say the work involved in meeting these additional code requirements can often cost several thousand dollars. 

Robert Lee, a landlord who owns 19 units and regularly rents to tenants with vouchers, says even with his considerable experience it can be difficult to pass the initial inspection.

"They fail you on anything; a hairline crack in a tile; a door that doesn't close nicely," he says. Then it can take another month to get the follow-up inspection, all the while you are losing rent, he says. 

For mom-and-pop landlords, Martin says the process is particularly arduous.

"You may not even have the staffing to sit on the phone for three hours to coordinate," he says, adding that he's aware of leasing agents having to hire additional staff to process the vouchers. "It takes that long," he says. 

Alex MacDougall, an attorney with Legal Aid, points out there is some flexibility because of the pandemic, with NYCHA currently accepting an owner’s certification for initial inspections. The inspections are required under federal law to establish a minimum standard for safety and habitability. "The reality for many tenants is that they struggle to get conditions fixed, even after their apartment fails inspection," she says.

Quite often the voucher does not cover the full rent and in some cases the owner works with the tenant to apply, only to find there is a gap between the voucher and the rent. While it might only be a few hundred dollars, that's a significant sum for someone needing housing assistance. Martin says it takes time to work through these issues and in many cases the landlord either has to reduce the rent to the voucher amount or accept that the tenant may fall behind on their portion of the rent.

He says he frequently sees large arrears on Section 8 vouchers, not because the voucher isn’t paid but the tenant doesn’t have the money to pay the difference. "It becomes a liability," he says.

An imbalance of responsibility

For landlords, this raises the issue of the imbalance of responsibility. The program bypasses the tenant and gives money directly to the landlord. Frisch says this means tenants aren’t always invested in the building or community.

“When the agency says they are paying the money for the tenant, what they are saying is: ‘We don't trust the tenant to pay the rent themselves.’ If you don’t trust them, why should we?” Frisch asks. 

"There's generally more maintenance and no accountability," says Lee, who has had both good and bad experiences with his tenants.

Martin says when you don’t pay out of your own pocket, you typically have less of a stake in what you are given.

"There’s an impression among tenants that a Section 8 voucher holder isn’t going to be a completely integrated member of the community," he says. His organization runs seminars on the process of accepting tenants with vouchers and says he's not opposed to direct subsidies to renters to give them the financial independence to pay their own rent.

The issue of direct payments to landlords is something Kavanagh says he's never heard complaints about in the past.

"Most landlords think that’s more efficient especially if you have multiple apartments and the system is providing you with direct cash payments," he says, but adds that he's open to efforts to improve the system.

A backdoor to rent-stabilization

When a leasing agent or owner is faced with two qualified tenants, one who has government rent assistance and the other who does not, landlords say the law forces them to accept the tenant with Section 8 vouchers. After that, the requirements of the program mean you all but have to give a Section 8 tenant a renewal. Frisch says it "becomes a form of rent stabilization." 

Getting a tenant to leave is complicated but MacDougall points out, Section 8 voucher holders don't have a right to an automatic lease renewal unless they live in a rent-stabilized apartment.

With apartments sitting empty as a result of the pandemic, Martin says there’s no excuse why someone who has a vacancy wouldn’t want the steady income of a voucher holder that’s close to the market rate, but he points out the voucher will never increase at the same rate as the market. "So landlords are automatically locking themselves into the voucher rate forever," he says.

He adds that many landlords are looking at very thin margins and says, "with Covid you have higher vacancies, late payments, and non-payments. Before you know it you are losing money on buildings and you can only sustain that so long."