How to Handle Applicants with Housing Choice Vouchers

You may occasionally get applications from households that want to use their Housing Choice vouchers at your site. The Housing Choice voucher program is a form of rental assistance administered by local public housing agencies (PHAs) that allows households to use vouchers to subsidize the rent of units in the “marketplace.” Like project-based assistance, the voucher program uses very-low income limits to determine eligibility and calculates the assistance amount based on 30 percent of the household’s adjusted income.

But before you accept these households, be careful: HUD rules make clear that households at assisted sites can’t get double assistance [HUD Handbook 4350.3, par. 3-10(C)]. So if they move into units that get Section 8, RAP, Rent Supplement, Section 202/8, Section 202 PAC, Section 202 PRAC, Section 811 PRAC rental assistance, or any Public and Indian Housing rental assistance programs, they may not also use their Housing Choice vouchers in those units. This doesn’t mean you must turn away households who have Housing Choice vouchers. Depending on the type of units you have at your site, some households that apply to your site may be able to use their vouchers, while others may have to give them up.

We’ll explain what HUD Handbook 4350.3 says about handling households with vouchers and go over some program basics you should know about if you do choose to accept those households.

When You Can Accept Households with Vouchers

Whether you can accept households with vouchers depends on the type of assistance, if any, units at your site get.

100 percent of units with rental assistance. If all of the units at your site have some form of rental assistance (Section 8, RAP, Rent Supplement, Section 202/8, Section 202 PAC, Section 202 PRAC, or Section 811 PRAC), HUD says you may not accept a household with a voucher unless it agrees to give up the voucher before moving in.

HUD says you must explain the following three points to households with vouchers before you can admit them to a 100 percent rental assistance site—or rent any assisted unit to them [HUD Handbook 4350.3, par. 3-21 (A)]:

1. You’ll place the household on a waiting list. When the household moves into the site, it must give up the voucher;

2. If the household later moves out of the site, the assistance on its unit won’t move with the household as it does with a voucher; and

3. The household will need to reapply to the PHA if it wants another voucher after it moves out of your site.

Partially assisted sites. If your site is only partially assisted, meaning only some of the units get Section 8, RAP, Rent Supplement, Section 202 PAC, Section 202 PRAC, or Section 811 PRAC rental assistance, what you can do differs, depending on whether the unit in question is unassisted (that is, a market-rate unit) or an assisted unit.

> Unassisted units. You may accept households for the unassisted units at your site without requiring them to give up the voucher [HUD Handbook 4350.3, par. 3-21 (B)(1)].

> Assisted units. You may not rent an assisted unit to a household with a voucher unless it agrees to give up the voucher before move-in. And you must explain the three points discussed above before you can admit the household into an assisted unit [HUD Handbook 4350.3, par. 3-21 (B)(1)].

Section 236, Section 221(d)(3) BMIR, and Section 202 units without rental assistance. If your site has Section 236, Section 221(d)(3) Below Market Interest Rate (BMIR), or Section 202 units that don’t get any additional rental assistance, you may accept households with the Housing Choice vouchers and admit them into these units without requiring them to give up the vouchers [HUD Handbook 4350.3, par. 3-21 (C)].

Of course, if any of these units do get additional rental assistance, such as Section 8 or RAP, you may not accept a household with a voucher to live in these units unless it agrees to give up the voucher before move-in. And you must explain the three points discussed above before you can admit households into Section 236, Section 221(d)(3) BMIR, or Section 202 units that get additional rental assistance.

Can You Refuse Voucher Holders?

HUD rules don’t specifically bar you from refusing to accept voucher holders into your market-rate and other unassisted units. But before you make a blanket policy that you won’t accept voucher holders, check with your attorney. You may be required to accept voucher holders in certain situations, including these:

1. You own or manage a previously HUD-owned site. If HUD previously owned your site, HUD rules require that you give an admissions preference to households holding vouchers [HUD Handbook 4350.3, par. 3-21 (D)(1)]. This means you must not only accept voucher holders, you must give them priority over households who don’t have vouchers. This requirement should have been spelled out in the sales contract with HUD and in the deed for the site. Check those documents to see whether this preference applies at your site.

2. Your state or local law requires it. A number of state and local laws require owners and managers to accept voucher holders.

3. Your site also gets housing tax credits. If you also have units at your site regulated under the Section 42 tax credit program that would be considered unassisted for purposes of the voucher program, tax credit rules require that you accept voucher holders.

4. You’re opting out of your Section 8 contract. If your Section 8 contract is expiring and you’re opting out of it, you must accept vouchers that HUD gives any existing residents who wish to remain at the site after the Section 8 contract expires.

What You Must Do

If you choose to or must accept voucher holders into your market-rate and other unassisted units, here’s what the program requires you to do.

Sign HAP contracts. You must sign a housing assistance payment (HAP) contract with your PHA as the contract administrator. This entitles you to assistance payments for the difference between the contract rent and the household’s share. Your HAP contract spells out your duties and the duties of the PHA. HUD has a separate contract with the PHA to fund its voucher program.

Comply with contract rent limits. To determine the contract rents, the PHA sets a payment standard for the voucher based on local fair market rents for each bedroom size. It uses this payment standard to calculate the amount of assistance it will pay you for the voucher after calculating the household’s share based on income. The PHA will pay you the difference between the household’s share and the payment standard.

If the unit’s rent is higher than the payment standard, you may be able to get paid the difference between the payment standard and the higher rent on the unit. If the household is willing and able and the PHA approves, the household can pay that difference. Or, under limited circumstances, the PHA may grant an exception to the payment standard and pay you the difference between the household’s share of the rent and the rent on the unit.

Certify that rent is “reasonable.” Before it will enter into any HAP contract, the PHA must determine whether your rent on the unit is “reasonable” when compared to similar unassisted units in the marketplace and to similar unassisted units at your site. You’ll have to certify that the rent you’ll charge for that unit is not more than the rent you charge for comparable unassisted units at your site.

Get PHA approval to increase rent. If you want to raise the rent on the unit later, you must ask the PHA for approval. The PHA will determine whether the rent would be reasonable after the increase when compared to rent for similar unassisted units in the marketplace and similar unassisted units at your site.

Conduct screening. In most cases, you’re responsible for screening the household according to your site’s screening criteria. HUD encourages you to check owner references, credit history, and criminal background. Some PHAs have screening criteria that bar households with poor rental histories from getting vouchers, but they generally won’t “guarantee” the household’s past conduct. So it’s a good idea to screen those households as you would any others.

What PHA Must Do

In addition to setting payment standards and contract rents, here are two other important duties PHAs have when administering Housing Choice vouchers:

Conduct unit inspections. Before you can enter into the HAP contract, the PHA will perform an inspection to ensure that the unit meets “housing quality standards.” These standards can differ from HUD’s Uniform Physical Condition Standards, which you may be accustomed to from your REAC inspections, and the process may be different as well. The PHA will also conduct annual inspections. If it finds the unit doesn’t meet housing quality standards, it may terminate your assistance payments.

Recertify households. The good news is that the PHA is responsible for recertifying the household’s income at least annually and adjusting its share of the rent based on its income.