Section 8 Housing & rent control.

[Jeffery Hall]

As I understand it, "Section 8 Housing" is a Federal subsidised housing program that manages and subsidizes rents for qualified renters.

But "Rent Control" is local in nature. Right?

Is the property considered to be under "Rent Control"?

I'm doing a Small Res. Inc. reoprt, and the subject is Section 8. I'm trying to decide if it is or is not rent control.

Any help is appreciated.

 

[Restrain]

In Section 8, there are often loans made for the construction or renovation of the project if the project provides X percentage of the units under Section 8 housing. However, there is usually a set period. During that period, there is very limited marketability of the project due to the presence of the Section 8 housing. Let that time frame roll past, and the owner will sell the project, and the new buyer says "hasta" to all the Section 8 tenants, jacking up the rents to market level.

So, what you can do is look at a DCF over the holding period of the remaining life of the Section 8 units, with a reversion at the end of the Section 8 requirements. Just a suggestion.

 

[Walter Kirk]

It depends, there are several different section 8 programs. If the property was developed with federal financing and a condition that the units be rented through the section 8 program local rent contrals do not apply. If the unit is rented to an tenant with a section 8 certificate some contrals may apply but they are probably minimal since most rent control schemes have a vacancy decontrol provision.

I'm suprised that you have rent control at all. I thought that it only occured in the peoples republics of New York and New Jersey and in socialist cities like San Francisco.

 

[DTB]

If you're doing a 2-4 w/Section 8 tenants in place it is most likely a "tenant based" program rather than a "project based" program. As such it is not rent control. on the contrary, my experience is that the rents are typically slightly above market due to the PITA factor.

I just go with market rents and comment on the above.

 

[Brian Weaver]

Section 8 rents don't automatically pass with ownership. Both the tenant AND the landlord must be approved in the program.

As for rent control, here in Chicago, most...not all...but most disappeared after the Korean War. Rent control was measure used to mitigate the dramatic housing shortages sparked by WW2 & the Korean War.

There was SOME rent control in tiny sections of Chicago up through the 1980s...but I believe it has all vanished.

 

[Mr Rex]

Here's a slightly different version for single family existing properties. The tenant has a section 8 voucher. The government "guarantees" the landlord a certain portion of the rent, the tenant provides the rest (if any) depending on the tenants income. There is a cap on the total rent, called FMR (Fair market Rent) which is calculated by HUD for the specific area.

 

[DTB]

Section 8 rents don't automatically pass with ownership. Both the tenant AND the landlord must be approved in the program.

As for rent control, here in Chicago, most...not all...but most disappeared after the Korean War. Rent control was measure used to mitigate the dramatic housing shortages sparked by WW2 & the Korean War.

There was SOME rent control in tiny sections of Chicago up through the 1980s...but I believe it has all vanished.

Are you sure about landlord approval? I think it is property/unit based, could be wrong.

 

[Jeffery Hall]

Thanks, all...

Thanks to all...

Your info. helped me considerably.

The subject property is four small, individual houses on a single parcel. None of them are under 50 years. They range in size from about 500sf to 1000sf. The renters were willing to tell me what the actual rents are. Funny how the total rents they reported (both shares, Gov't share and their share) were less than what the owner reoprted to me.

The owner says she is interested in becoming an appraiser. After she lied to me about the rents? Yeah, right! Train a skippy from the starting gate? Ethics or morality - either way, she don't got it.

 

[Mr Rex]

Mr Neff is correct, Google Section 8 and you get plenty of data. There is even a decent Wikipedia definition and description. I think 50%+ of the rents here are paid with some sort of section 8 voucher, with a backlog of hardworking (cough,cough) folks waiting to get their voucher.:new_all_coholic:

 

[Robert Hronek]

I would find out if they have a section 8 contract and what it requires. I know an apartment complex I did a rent study was required to rent to section 8 tenants and could not back out during the contract period.