Somerville, Massachusetts: Questions about Section 8

[Matt T.]

I am under agreement on a property in which we will inherit a section 8 tenant. She lives in the smaller of 2 units and is interested in moving to the larger one when her lease expires because her voucher has increased to cover the larger rent payment and she can move to a space that fits her needs. We met her and she and her 3 young kids seem great and they lived in this house for 9 years. I would love to be able to keep them living in the house, but I want to be sure I understand how Section 8 works before fully committing. A few questions:

1. The new lease would likely start Feb 1. In Somerville, MA, where this property is located we can get top dollar if we are on September lease cycle. Does section 8 allow for 8 month or 1 year and 8 month leases so that we can get back on that schedule?

2. If government shuts down, will we get paid? If not, when it comes back on, do we get paid for missing months?

3. As for the inspection process, we plan to get it up to code (new windows, fixing fixtures, paint, etc,) , but are there any major concerns we should be aware of? How long does the inspection process take? 

4. If we decided we wanted to raise rents YOY, would that be allowed and how we would go about initiating this? Does the tenant need to apply for a new voucher every year we raise rents and do we need to go through the whole process again?

5. If we decided, we wanted to raise rents to market rate later on and she was not able to afford the increase, and thus not-renew her lease, could there be any complications to that?

6. It states that the security deposit is not paid for by the state and they would not cover any damages to the property.  Can you take a security deposit from the tenant?

7.  Would the state provide an up front last month's rent in place of a security deposit.

8. From the section 8 guidelines in Mass: At the time you submit all documentation, a Program Specialist will review the requested contract rent to ensure that it would not result in the tenant paying more than 40% of their income if approved. If it would, you will be contacted and offered a rent that would be affordable for the tenant. This offered amount is based solely on the tenant’s income and payment standard and is non-negotiable. For more information, please review the attached rent ranges document. Would we be required to accept their rent offer if for some reason she is paying greater than 40% of her income? If she loses her job, would that reduce her voucher amount?

9.  All new unit rents must be approved by a Metro Housing|Boston Market Analyst. Once the initial inspection is conducted, the inspector will rate each unit utilizing the Metro Housing|Boston Housing Quality Addendum grading form. The unit grade correlates with a rent range guide, provided in this packet. The rent range guide establishes ranges based on rents that are paid for similar private market units, taking into consideration unit size, utilities, condition of the unit, location, and amenities. You will be contacted and offered a lower rent if the Market Analyst determines the requested amount to be unreasonable. I think what we are asking is below market rent, but that is up to the discretion of some government bureaucrat called a "market analyst". That is concerning. Any thoughts on that?

Lots of questions! Trying to make an informed decision. Any other advice would be helpful. Thank you!

[Patti Robertson]

Originally posted by @Matt T.:

1. The new lease would likely start Feb 1. In Somerville, MA, where this property is located we can get top dollar if we are on September lease cycle. Does section 8 allow for 8 month or 1 year and 8 month leases so that we can get back on that schedule?

The Housing authority will require you submit as a new payee and put the tenant in a new 12 month lease.  The initial lease with a payee has to be 12 months, but after that it can be any term the landlord and tenant agree to.  You will be able to ask for market rent at this time.  Whoo hoo for you!

2. If government shuts down, will we get paid? If not, when it comes back on, do we get paid for missing months?

Historically during a government shut down, SEC 8 payments continued. The shut down would have to occur for many months in order for SEC 8 to run out of budget. I believe the last time we had a furlow, HUD said the SEC 8 budget is funded 3 months at a time, but I could be wrong about that.

3. As for the inspection process, we plan to get it up to code (new windows, fixing fixtures, paint, etc,) , but are there any major concerns we should be aware of? How long does the inspection process take? 

If you I call the case worker they should be able to tell you the last time the unit passed inspection.  They inspect every year. They won’t likely do a new inspection just to swap out a payee, but if they do it’s no biggie. Just fix what they ask you to fix, and hold the tenant responsible for anything they cause if your want to.  I probably would not during your honeymoon phase with a 9 year tenant if I was about to get a big rent increase.

4. If we decided we wanted to raise rents YOY, would that be allowed and how we would go about initiating this? Does the tenant need to apply for a new voucher every year we raise rents and do we need to go through the whole process again?

You will be able to request your rent amount when you submit as a new payee.  The tenant’s portion will now change, since they should already be paying their maximum budget of 30 or 40% of their income.

5. If we decided, we wanted to raise rents to market rate later on and she was not able to afford the increase, and thus not-renew her lease, could there be any complications to that?

If you don’t do it now, you will have to wait 12 months. Just do it now.  It won’t affect the tenant.

6. It states that the security deposit is not paid for by the state and they would not cover any damages to the property.  Can you take a security deposit from the tenant?

I personally would not bother changing this if the tenant never paid one.  I would check the lease though.  Chances are the seller has a deposit that should transfer to you at closing.  Make sure it does.

7.  Would the state provide an up front last month's rent in place of a security deposit.

HUD does not pay security deposits, but your Housing Authority may have another source of grand or private funding.

8. From the section 8 guidelines in Mass: At the time you submit all documentation, a Program Specialist will review the requested contract rent to ensure that it would not result in the tenant paying more than 40% of their income if approved. If it would, you will be contacted and offered a rent that would be affordable for the tenant. This offered amount is based solely on the tenant’s income and payment standard and is non-negotiable. For more information, please review the attached rent ranges document. Would we be required to accept their rent offer if for some reason she is paying greater than 40% of her income? If she loses her job, would that reduce her voucher amount?

Answering since this is not state specific.  If HUD won’t pay your requested rent, you will get a counter.  If you accept it will go on to inspection.  If you deny, the application will be considered canceled.

9.  All new unit rents must be approved by a Metro Housing|Boston Market Analyst. Once the initial inspection is conducted, the inspector will rate each unit utilizing the Metro Housing|Boston Housing Quality Addendum grading form. The unit grade correlates with a rent range guide, provided in this packet. The rent range guide establishes ranges based on rents that are paid for similar private market units, taking into consideration unit size, utilities, condition of the unit, location, and amenities. You will be contacted and offered a lower rent if the Market Analyst determines the requested amount to be unreasonable. I think what we are asking is below market rent, but that is up to the discretion of some government bureaucrat called a "market analyst". That is concerning. Any thoughts on that?

It is what it is. We have one city in our market that rates everything south of a certain road lower than than the rest of the city.  It’s the area most would call “the hood” but they define it as being further away from key market factors such as shopping and emergency services. Don’t worry too much about it. This just gives the HA an opportunity to pay landlords who really have units in great condition a little more than those who do the bare minimum to squeak by.