How easy is to terminate a Section 8 (housing) lease?

Question

I want to buy a multi-plex property, but it has 5 lease contracts under section 8 of housing in Texas with rents well below the market value. Is it possible to terminate the lease contract once the term expires? With this I would search for new tenants who pay the rent at market value. Does someone has been doing this recently?

Jacob Sampson · Answer

There is no section 8 contract. There is a contract between a tenant and landlord. In this case the tenant happens to receive financial support from the government. Meaning, the process to end a contract is the same whether the tenant pays rent from W2 income or receives support from the government. In most cases that means once the current lease time frame is up you need to give at least 30 days notice. You will want to check into your local laws, to be sure.

Julio C. · Answer

Thanks Linda for this. I will get in touch with my local section 8 office and ask them directly. Currently the rents are almost 30% below market value, so I am not sure if section 8 office will approve that kind of increase. I'll ask them and if this works there will be no need to not renew the lease.

Brittany R. · Answer

I have section 8 tenants and I agree with what the other members said. Just make sure that you look up the rental property laws in your state, to find out how many days you must notify you tenant before their lease expires and how it must be done. It could be 30, 60 or even 90 days prior to their lease end date. I just sent a certified letter (Notice of lease termination and Nonrenewal) to one of my tenants a few days ago. She has consistently paid late for the last year (think a month late, for every month). I've been sympathetic, waived a few late fees and now I'm just tired. Since she has lived in the apt for over 2 years, I am required by my state's law to give her 90 days notice. I sent it about 108 days....Mail takes a while to travel and since I also sent it return receipt (extra cost to have her sign for it), I wanted to give her a few extra days, in case she missed the delivery and would have to go to the post office to pick it up. I'm making sure that if I have to evict her, I am not giving her any opportunity to get to stay longer because I messed up by not following the law correctly.

Karen O. · Answer

Actually, there is usually a separate HAP contract between the S8 office and the landlord. So, you have to look at both (they may required 60 day notice prior to end of lease as notice, for example, which takes precedence over a lower notice in the lease). That said, they'll also keep paying the old owner unless you "sign up" yourself (and sign those contracts) and get your name, W9 and payment info changed (which can take 60-90 days to take effect).Generally, they renew for a year, so you have to send that notice 60+ days prior to the contract anniversary date (definitely not AFTER that date, unless you want to wait for months).

Julio C. · Answer

Bjorn Ahlblad · Answer

@Julio Cordero You actually give notice prior to expiration of the lease; some places are 30 days, others 60. You would send out a "notice of non renewal" either 30 or 60 days prior to end of lease. You can find a notice on Google, your State LL Association or an REI group.

Patti Robertson · Answer

When you submit your paperwork to be a new Payee you should also be able to submit a rent request. The Housing Authority will likely ask you to put tenants in new leases. I would leave them in place rather than move them all out. It will cost way more to rehab all the units to get them rent ready. It is much better to just get SEC 8 to raise the rent. In almost every market they will pay at least 100% of market rents - some as high as 110%. Chances are the seller just didn't ask. The majority of SEC 8 landlords don't understand the program enough to take advantage of the strengths. I wrote a blog about the benefits of SEC 8 if you want to check it out. https://www.biggerpockets.com/member-blogs/9232/55313-intro-to-section-8---your-perceptions-vs-my-realities

Linda S. · Answer

@Julio Cordero,Read the leases-- section 8 must be for a least 1 full year. Check with your local section 8 office, it's likely a 60-day full calendar month notice of non-renewal, so if you tell them March 2nd, they will have all of April and May to move out, so June 1 would be the start of their new lease somewhere else. If you have tenants in place, and they are taking decent care of it-- why not just raise their rent to market and see if they want to stay? It will be a lot easier than renovating and fixing it up. I'd strongly push for that, so much easier for both parties.

Julio C. · Answer

@Brittany R. Thanks for sharing this and good luck.

Julio C. · Answer

Thanks a lot Bjorn. I was afraid of being forced to renew the leases or be penalized hardly.