What Michigan Landlords Need to Know About Section 8 Changes

There’s been a lot of buzz lately about Michigan’s proposed legislation (Senate Bills 205-208) that could change the rental game for landlords across the state.

If the bills become law, landlords with five or more properties would no longer be able to decline tenants because they use Section 8 housing vouchers. While the intention is to expand fair housing opportunities, the implications for landlords are significant.

Today, we’re breaking down the potential impact of these changes, using a similar Kansas City law as a roadmap. Plus, we’ll cover ways Michigan landlords can pivot to stay on top of their investments.

Here’s what you need to know.

What Happened in Kansas City?

Kansas City implemented an income-based discrimination ordinance in August 2024, barring landlords from rejecting tenants who rely on housing vouchers.

The ordinance triggered immediate backlash. Landlords weren’t thrilled about being forced into the Section 8 system, which they argue is fraught with complications like delayed payments, extensive inspections, and other bureaucratic red tape.

Case in point—two landlords in Kansas City filed a federal lawsuit to fight the law. Their argument? The ordinance essentially mandates participation in Section 8, which they say breaches their constitutional rights and clashes with federal guidelines.

One landlord claims he stopped accepting vouchers after experiencing the financial burden of the program, while another has refused outright due to inspection delays and administrative hurdles. Both argue the system imposes on their investment rights, forcing them to jump through hoops they wouldn’t face if they rented to non-voucher tenants.

The lawsuit is ongoing, but it underscores a key point—laws like these may aim to increase housing equity but often leave landlords with more questions (and headaches) than solutions.

Meanwhile, Michigan Hits Pause

Now, here’s the twist. While Michigan is talking about forcing landlords to accept Section 8 tenants, the state has stopped issuing new vouchers.

Yep, as of September 2024, the Michigan State Housing Development Authority hit pause on its Housing Choice Voucher program due to federal budget shortages. With roughly 85,000 families stuck on waitlists, new applicants aren’t getting relief anytime soon.

For landlords, this is a confusing (and frankly, frustrating) scenario. If you’re required to accept voucher tenants by law but there are no new vouchers available, how exactly are you supposed to proceed?

It’s a classic case of mismanaged priorities. The state appears to be addressing symptoms of the affordable housing crisis—discrimination in the rental market—without tackling the underlying cause—a lack of sufficient affordable housing and consistent funding for assistance programs.

Lessons from Kansas City

Michigan landlords should also look at how Kansas City’s legislation has affected the rental landscape.

Unfortunately, like many well-intentioned but poorly executed policies, KC’s ordinance created unintended consequences. Instead of opening more neighborhoods to low-income renters, it drove many landlords to raise rents or exit the market completely.

One landlord association survey revealed that over 50% of local professionals said they’d consider selling off properties if forced to comply with the new rules. Think about it—when property owners feel trapped by legislation, they’re incentivized to sell, which further exacerbates housing shortages.

Strategies to Safeguard Your Investments

Sure, the situation might feel overwhelming, but don’t worry—there are steps you can take to protect your properties and adapt to these changes. Here’s how you can stay ahead of the curve.

1. Lease Smart

Switching to month-to-month leases instead of annual ones can be a lifesaver. Many Section 8 programs require one-year leases, so shorter-term contracts could make your property less appealing to voucher tenants while still keeping you compliant with the law.

2. Set Higher Criteria

You can’t base decisions on someone’s income source, but you can refine your financial screening. Shift to setting higher credit scores and stricter minimum income requirements in flat dollar amounts, like $3,000 per month, rather than vague “3x monthly rent” formulas.

3. Master Inspections

Here’s a useful hack—if your property doesn’t meet Section 8 eligibility criteria, it’s not obligated to accept vouchers. Investing in preventive maintenance and documenting your property’s inspection standards can save you from future hassles.

4. Communicate Wisely

Want to stay compliant without over-promising? When asked about Section 8, keep it simple. A response like, “We accept all applications,” can go a long way in ensuring you’re playing by the rules without boxing yourself in.

What It Could Mean for Communities

Proponents of Michigan’s new legislation argue it could create more diverse and inclusive neighborhoods. But if Kansas City’s experience is any indicator, the outcome might fall short of its goals.

Instead of encouraging economic diversity, landlords in KC raised rents to levels beyond voucher allowances—shutting out both low-income renters and moderate-income ones. This reaction isn’t greed; it’s a rational response to a market where incentives don’t align with policy goals.

For sweeping changes like these to work, they need to address the root issues. Offering subsidies or tax breaks for landlords who participate in voucher programs, for example, could make a significant difference. But without those measures in place, Michigan risks creating more problems than solutions.

Final Thoughts

It’s clear that Michigan’s proposed laws stem from a valid concern—ensuring fair access to housing. But the execution leaves something to be desired.

For landlords, the best course of action is to stay informed, stay strategic, and avoid knee-jerk decisions. By rethinking how you structure leases, tighten screening, and manage properties, you can adapt without compromising your investments.

No one said being a landlord would be easy. But with the right approach, it doesn’t have to be a complete legal minefield, either.

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