Landlords, pay attention! So, I was enjoying my Easter Weekend and saw an email from a colleague of mine. The subject line was, “Section 8 cuts landlords rents 10%”. I thought, OK, this is an April fools joke (just a day early). So this morning, I made some calls, and it is true! If you are participating in any Housing Assistance Payment (HAP)
or Housing Choice Voucher (HCV) program, get ready! Not only are your taxes going up (property, payroll, and income), your income is about to be dramatically cut, with no promise of an end in sight!
Below are some excerpts from the attached letter. This letter is identical to letters I have seen mailed to over 10 landlords. The key point I want to make with this unplanned, one-off post is this: When you put your future and/or income in the hands of the government, or a “boss”, be ready to be executed at a moments notice!
Let’s examine what this does to the Landlord by looking at a couple of quotes:
- Now the Housing Agency is willing to “remove non-compliant families”. Hmm, isn’t that something we have asked for from housing for years?
- “Reducing payment standards” – This is another item that a responsible agency should be doing, and something landlords support. This additional subsidies that housing agencies pay out are beyond absurd.
- “You have 10 days” – Now landlords have ten days to decide to either accept a 10% loss, or terminate the contract within 29 days! Can you imagine the losses?
- The best part, “We do not know what the funding future will look like, but if we receive additional HAP funding we will consider recalibrating the contract rents.” WOW! They will consider paying what they originally promised!
How will this effect the housing market?
- Some underprivileged low-income occupants will now be forced out of their homes.
- Landlords will now be in a negative cash-flow situation, causing mortgage delinquencies.
- Maintenance personal and property managers will lose income through reduced rents, and landlord cutbacks.
- Property values could decline due to lower lease rates.
- About 125,000 individuals and families, including elderly and disabled individuals, could lose benefits from the Housing Choice Voucher program and be at risk of becoming homeless.
- These cuts would also result in more than 100,000 formerly homeless people, including veterans, being removed from their current housing and emergency shelter programs, putting them at risk of returning to the streets.
- Sequestration would result in 75,000 fewer households receiving foreclosure prevention, prepurchase, rental, or homeless counseling through Housing Counseling grants.
- The impact of sequestration would force public housing agencies to defer routine maintenance and capital repairs to Public Housing, leading to deteriorating living conditions and, over the long-term, risking the permanent loss of these affordable units that serve 1.1 million of the nation’s poorest residents.
- These cuts to the Housing Opportunity for Persons with AIDS program would result in 7,300 fewer low-income households receiving permanent and short-term supportive housing assistance, including rent and/or utility assistance.
- The reduced funding from the sequester would prevent state and local communities that receive HOME grants from building and rehabilitating 2,100 affordable housing units for low-income families.
- The sequester will also result in significant cuts to community development funding for public services, facilities, and infrastructure improvements, reducing jobs and adversely impacting confidence in the long-term sustainability of the private market rental housing that HUD supports.
My feelings are that this is a welfare program that has needed significant overhaul for a long time. Now, as a result of complete incompetence, the deserving families that need this assistance, could be removed from their homes by nature of economics. As a landlord, I intend to terminate every HAP contract (I only have one left, because I do not trust the government). In my market, rents are increasing by 10% per year in some areas. I have seen some apartment rents go up by 25% over the past several years.
So, my question is, is this good, or bad? Would you choose a 10% reduction of income, or a vacant house?