Investing In Affordable Housing - Part 3

In parts one and two of this series on affordable housing, we discovered that landlords could create a lucrative business when opening units up to low-income tenants. We further explored what sort of accountability those property owners assumed with the local housing authority. A third element of this arrangement relates to those individuals and families that qualify for tenancy in such units. What are their rights and responsibilities? Conversely, in what areas is the landlord obliged to affordable housing occupants -- and what reciprocal duties must tenants fulfill?

Evaluating and Accepting New Tenants

While funding for Section 8 vouchers and similar programs comes from the U.S. Dept. of Housing and Urban Development (HUD), individual states have the authority to regulate landlord-tenant interactions. That said, there are many dictates held in common by all U.S. states and territories relative to affordable housing. For example, all state requirements must conform to the planks of the Fair Housing Act. This means that landlords must not reject or impede a lease applicant because of:

Race
Ethnicity
Religion
Disability
Marital/Family status
Sex -- i.e., biological sex, orientation or gender identification

Neither can owner create substantially different lease terms because of the above.

Security Deposit

In many states where subject properties sit, tenants' security deposits are capped at a figure set by the state legislatures, independent of home value. These laws vary in terms of the maximum amount a property owner can keep as a deposit. In New Jersey, for instance, the security deposit may not exceed the equivalent of one and a half month's rent. In addition, landlords must place the deposit in a money market or interest-bearing savings account. Moreover, the owner can only deduct from the deposit for property damage or rental arrears.

Maintenance and Upkeep

Both tenants and owners have responsibilities with regard to maintaining an intact, safe and healthy environment. For their part, tenants must promptly alert the ownership or management of the building if a unit is in need of a repair. Should the defect simply be the result of usual wear and tear, the landlord bears the financial burden; if negligence or intentional damage by the tenant is the cause, the cost should come from the security deposit. Either way, the management is most often duty-bound to address the issue.

The City of New York advises affordable housing recipients to notify landlords by certified mail IF a timely response is not forthcoming. As with any lessee, the tenant can sue if the landlord ignores these advisories. The point is that Section 8 leases spell out the responsibilities of each party when physical repair or restoration is necessary. This goes for peeling paint; loss of hot water; appliance breakdown; and inadequate lighting.

Rent Increases

If home value compels a landlord to want to raise the monthly rental payment, that owner must submit that proposal to the housing authority, not to the tenant. Remember, the tenant's rental obligation is -- in most cases -- held to 30 percent of income under HUD rules. Therefore, the increase is borne by the housing authority and HUD. Meanwhile, the tenant's contribution remains fixed if and until there is a change in revenue. In making the request to the housing authority, the property owner must demonstrate that rents are going up for all units, not just those subject to housing vouchers.