Being a landlord involves making judgment calls. When you do this during the tenant screening process, however, you must ensure that you do not discriminate. As a rental property owner or manager, you may encounter or actively solicit Section 8 renters. These households receive a federal subsidy that covers a significant portion, if not the majority, of their monthly rent payment. Proceed with caution when evaluating subsidized against unsubsidized applicants.
You are within your rights as a landlord or property manager to refuse Section 8 tenants. However, it's not a completely clear-cut situation. In most states, you cannot turn down Section 8 renters simply because they receive a subsidy. If you do, the tenant could most likely file a discrimination claim with a city, county or state office of civil rights or housing agency.
The way you go about screening applicants impacts your ability to refuse tenancy to Section 8 applicants. For the most part, HUD leaves the Section 8 screening process up to you. HUD expects you to put prospective Section 8 tenants through the same screening you put unsubsidized renters through. If you run a credit check, call references, verify income and conduct a background check as part of your normal screening process, you can do the same with Section 8 families. If an unsubsidized renter checks out better than a Section 8 tenant on the basis of something other than the existence of the subsidy payment or another factor that suggests discrimination, such as race or religion, you can refuse a Section 8 tenancy.
Federal regulations require your local public housing agency to provide you with certain information about Section 8 applicants. The housing agency that distributes a renter's benefits must tell you the family's current and prior address, provide contact information for the current and prior landlord, offer information about the family's rental history and provide details on drug-trafficking by family members. This is the extent of the housing agency's involvement with Section 8 tenant screening. You handle the rest. If, however, you wish to refuse tenancy on the basis of information you receive from, or through, your housing agency, you may.
If you use an income test -- such as monthly earnings equal to 2 or 2.5 times your rent -- to screen tenants, you might consider making an exception for Section 8 applicants. Because Section 8 renters make just 50 percent or less of their area's median income, they will likely not pass a means test. Instead, calculate their ability to pay on the amount of rent they will actually pay. In most cases, a Section 8 household's share of the rent does not exceed 30 percent of its monthly income.