How Section 8 Decides if Your Rent Is Reasonable

How Section 8 Decides if Your Rent Is Reasonable

The cost of living can be high, especially for renters. The U.S. Department of Housing and Urban Development offers Section 8 programs to low-income renters to help them pay their rent. This program has been around since the 1970s and can pay for more than half a person's rent.

Section 8 uses several factors to determine how much of a person's monthly rent they'll pay. Read on to learn how Section 8 decides if your rent is a reasonable amount.

The Location

One of the primary elements Section 8 looks at when deciding if you're paying fair market rent is where your rental property is located. The location of your rental has to fall within one of the areas Section 8 covers. There is some wiggle room if your rental is close in proximity to one of the coverage areas but doesn't fall within its boundaries.

HUD will look at other rentals in the coverage area and how much their rent was for the past 15 months. They typically use a two-bedroom unit as the standard for determining Fair Market Rent.

Fair Market Rent gets set at an amount that's in the 40th percentile for your area. That means that 60% of rentals in your area get rented for more than your rent amount. Forty percent of rentals get rented for less than your amount.

Property Condition

Section 8 will evaluate your rental property's condition because you shouldn't be paying a high rent amount for a unit that's of poor quality. This rule also applies to units where the landlord has made upgrades or offers amenities. They also won't compare an outdated unit to one that's been recently upgraded when figuring out if a rent payment is reasonable.

Tenant Payment

Individuals or families that receive Section 8 vouchers will need to contribute a tenant portion toward their rent. The amount they contribute needs to be of the greatest value out of the following:

  • 10% of their monthly gross income
  • 40% of their monthly adjusted income
  • Welfare rent
  • Minimum rent amount set by the Public Housing Authority (PHA)

Tenants pay their portion directly to their landlords. If a person's rent is higher than the amount set by the PHA, the tenant can opt to pay more.

Number of Utilities

Section 8 will evaluate how many utilities are included in the monthly rent (if applicable). They'll typically include payment for included utilities in the rental voucher.

Section 8 may issue a tenant a separate voucher for utilities if they're not included in their rental payment. They could also issue reimbursement for utilities directly to the utility company.

Get Help Learning the Pros and Cons of Offering Section 8 Housing

Being a Section 8 landlord can give you the chance to increase your rental income if you choose to rent below or at the average rent for your area. It can be challenging to decide if it's the right option for you. A team of qualified property managers can help you make the decision.

PMI Greater Nashville is a leading property management company in Nashville. A property manager can assist with your rental property, including dealing with Section 8 vouchers. Reach out to us to schedule a consultation with one of our staff members.