A study by the Poverty and Inequality Research Lab of Johns Hopkins University, Urban Landlords and the Housing Choice Voucher Program, examined the participation of landlords in the Housing Choice Voucher (HCV) program in Baltimore, Cleveland, and Dallas. The authors found that landlords’ acceptance of vouchers is affected by financial considerations, perceptions about tenants, and bureaucratic factors. The majority of landlords who chose not to participate in the HCV program did so due to negative past experiences with the program related to property inspections, frustration with program bureaucracy, and tenant-landlord conflicts.
The HCV program helps low-income families afford rental homes in the private market by covering the difference between their own contribution toward rental costs (30% of the family’s adjusted income) and total housing costs. Landlords play an important role in the success of the HVC program and the experiences of voucher holders, yet few studies have examined their participation and behavior.
The study’s authors interviewed and observed owners and property managers, local housing institutions like housing courts, and housing authorities, and analyzed HUD HCV administrative data in Baltimore, Dallas, and Cleveland. They selected a sample of owners from three months of rental listings at or below 150% of Fair Market Rent (FMR), and supplemented the sample with additional landlords whom they learned were influential players in the local housing market. By design, 73% of landlords interviewed in the study were willing to accept vouchers. Twenty percent of the sampled landlords who accepted vouchers were owners of fewer than five rental units, and another 40% were landlords with moderate-size portfolios of between five and thirty units.
Landlords faced multiple challenges in the low-end rental market. Collecting rent on-time from tenants who had limited financial resources was a central challenge, particularly for landlords who were financially unstable or without financial reserves. Evictions, meanwhile, result in legal costs and the loss of one or two months’ rental income. Although more than 90% of the landlords had executed evictions, 83% took steps to avoid them when possible. Unexpected costs related to repairs, maintenance, and utilities were also a challenge.
Landlords used their tenant-selection process to try to minimize collection and turnover problems. Tenant screenings usually included reviews of the prospective tenants’ residential history, credit score, and criminal background. Few low income applicants have good credit and rental histories, however, so those factors do not necessarily distinguish one applicant from another. Landlords often acknowledged that finding the “right” or “good” tenant who would likely pay the rent on-time and take care of the home came down to a “gut” feeling. Such “gut” feelings, however, may be based on preconceived notions about applicants and result in discriminatory selections.
Financial considerations played a major role in determining whether or not landlords participated in the HCV program. Landlords cited reliable rent payments from the public housing agencies (PHAs) as a strong motivating factor for participation (48% in Cleveland, 59% in Baltimore, and 61% in Dallas). In Baltimore, 26% of landlords were motivated to accept vouchers by a belief that voucher rents were higher than market rents; only 5% and 3% of landlords were motivated by this belief in Cleveland and Dallas. Baltimore is a low income city surrounded by wealthier suburbs, so the metropolitan-wide FMR provides a higher voucher payment than what the unsubsidized market can provide.
Between 51% and 74% of landlords, depending on the city, cited “tenant quality” as a factor in their decision to rent to voucher holders. Forty-five percent of landlords in Cleveland, 30% in Dallas, and 21% in Baltimore thought voucher holders were worse-quality tenants than other renters in their market. With regard to landlord interactions with PHAs, 60% of landlords in Cleveland and 50% in Baltimore thought unit inspections were burdensome and costly, with a number of landlords complaining about the lack of consistency in the inspections. Only 12% of landlords in Dallas thought inspections were burdensome, likely because of the area’s newer housing stock.
Of the 37 landlords who were not participating in the HCV program, 51% cited issues with inspections, including the time and repair costs associated with them; 41% cited lack of support from the PHA during previous tenant conflicts; and 41% cited paperwork and bureaucracy as reasons for their nonparticipation. Sixty-eight percent of them had accepted vouchers in the past.
The study’s authors recommend landlord training about their legal rights and obligations, and the role of the PHAs. Landlords’ negative feelings toward the HCV program tended to come from unrealistic expectations of PHA staff support to the landlord during tenant-landlord disputes. Trainings could help manage expectations that PHAs support landlords during disputes when PHAs are neutral parties. The trainings could also cover topics like tenant screening, weatherization, or inspections for inexperienced landlords. The authors also recommend housing mobility programs to conduct landlord outreach. If conducted under a different program name, PHAs may have an opportunity to use outreach to encourage landlords who had stopped taking vouchers to resume accepting them. They also recommend reforms to the inspection process. Short inspection times could reduce move-in delays for new tenants, and standardized inspections would give landlords an ability to predict what repairs would be needed, leading to proactive repairs.
Urban Landlords and the Housing Choice Voucher Program is available at: https://bit.ly/2Mn0iyq