Urban Landlords and the Housing Choice Voucher Program: A Research Report

Landlords and the Housing Choice Voucher Program

New HUD research explores the role that urban landlords play in shaping housing outcomes among participants in the Housing Choice Voucher (HCV) program. The willingness of landlords to accept vouchers significantly influences the housing opportunities available to program participants. Although one promise of the program is that it could create housing opportunities in neighborhoods with low poverty rates, this outcome is determined in part by a landlord’s willingness to participate. Through interviews with landlords in Baltimore, Dallas, and Cleveland, along with other data sources, this research provides new insight into how landlords in urban markets perceive the HCV program and how this perception affects HCV households’ access to housing choice.

There is an emerging consensus among researchers on the effect of housing and neighborhood quality on life chances, but little research exists on how landlords decide whether to rent to low-income families and, in particular, to households with vouchers. This research is particularly important considering the substantial power that landlords have in selecting tenants, investing in maintenance and repairs, and abating environmental hazards such as lead paint, and thus, in determining the location and quality of housing opportunities available to voucher holders.

Research Methods

To better understand landlord preferences and priorities in selecting tenants, the researchers interviewed 127 landlords and property managers who own or operate rental housing in Baltimore, Cleveland, and Dallas and combined these responses with ethnographic observations of the respondents and key players in the rental market in each city as well as HUD administrative records. The interviews lasted approximately 2 hours and focused on the landlords’ business strategies and their preferences for, and perspectives on, the HCV program. The researchers reported that many landlords enthusiastically participated and were eager to provide policy recommendations. One-third of the interview sample allowed ethnographic researchers to accompany them on their day-to-day business operations.

The cities were selected because of their representation of a range of cities across the country. Baltimore and Dallas have similar poverty rates (24.1% and 24.2%, respectively), whereas Cleveland’s rate is 35.9 percent. The housing stock in Baltimore and Cleveland is much older than the housing stock in Dallas — less than 20 percent of the housing in Baltimore and Cleveland was built after 1960, whereas nearly two-thirds of the housing in Dallas was built after 1960. Approximately 60 percent of the rental stock in Cleveland and Baltimore is composed of single-family homes compared with only 30 percent of the rental stock in Dallas.

Landlord Characteristics

The research demonstrates a diverse and varied mix of landlords operating in the three cities. Of those interviewed, approximately 40 percent are black, and an additional 13 percent are nonblack minorities. Sixty percent of the landlords are male and 40 percent are female. Small “mom and pop” owners made up one-fifth of the sample, and 40 percent of the sample was composed of owners of moderate portfolios. The remainder of the sample consisted of landlords with large or very large portfolios. Overall, Cleveland and Baltimore had more owner fragmentation, with most of the sample being of moderate or “mom-and-pop” size. The Dallas market was composed of larger owners, which is not surprising considering the number of multifamily properties in the city.

Landlords and the Housing Choice Voucher Program

Landlord participation in the HCV program is shaped heavily by the local market contexts. In Baltimore and Cleveland, landlords’ HCV portfolios are small, with 42 and 57 percent, respectively, owning fewer than six units. In Dallas, most HCV rental units are in large multifamily properties. Understanding the incentives and disincentives for landlords to participate in the HCV program is critical to understand how landlords’ decisions can affect program participants’ access to housing.

For many landlords who rent to low-income families, financial incentives are a key motivator for participating in the HCV program. Among the main challenges that arise from renting to poor families are late rental payments, partial payments, and nonpayment of rent, which disrupt cash flow to the business. In addition, a protracted process to collect the rent owed is time consuming and labor intensive for the landlord. Renting to an HCV tenant can substantially mitigate this risk because some or all of the rent payment comes from the voucher administrator. In Baltimore, renting to voucher holders can allow the landlord to capture a rent that exceeds the standard market rent, but this is not true in Cleveland and Dallas. Although approximately 25 percent of landlords in Baltimore report higher rents as a key incentive to participate in the HCV program, 33 percent of Cleveland landlords reported that rents for voucher tenants are lower than those for nonvoucher households.

Many landlords view the rent stability afforded by the HCV program as a benefit, but some still worry about the quality of tenants participating in the voucher program. In Baltimore, 20 percent of landlords viewed voucher tenants as worse than nonvoucher tenants; in Dallas, 30 percent of landlords had a negative perception of voucher tenants. In Cleveland, approximately 45 percent of landlords felt voucher tenants were worse than nonvoucher tenants. Still, many landlords perceive voucher tenants as not different from or slightly better than their market tenants.

Despite the varying perception of voucher tenants among landlords, a significant portion of landlords in all cities were motivated to participate in the program through a desire to “do good” for their tenants. Fifteen percent of the Dallas landlords, 21 percent of the Baltimore landlords, and 22 percent of the Cleveland landlords said that they participated in the program in part out of a desire to help others.

Among the landlords who participate in the HCV program, the annual inspection (housing quality standard inspection) of units rented by voucher tenants represents one of the major interactions with public housing agencies. Approximately 50 percent of the landlords in both Baltimore and Cleveland described the annual inspection process as burdensome. Landlords in Dallas were less concerned about the inspection, partially because of the city’s newer housing stock. Landlords reported the inconsistency and unpredictability of inspection outcomes as being the primary reasons for their frustration with the process.

Program Experience and Nonparticipation

Among the 127 landlords interviewed, 37 reported not renting to HCV households. Of these landlords, 68 percent had reported renting to voucher tenants in the past and based their decision not to participate in the program on this previous experience. Generally speaking, landlords cited frustration with the inspection process; overall frustration with the bureaucratic process; and frustration between tenants and landlords, which landlords felt the program made more difficult to resolve, as reasons for their nonparticipation.

Conclusion

Overall, the research provides key insights into the motivations and detractions for landlord participation in the HCV program. Although reliable rental payments are a motivating factor in program participation, working with the local public housing authorities that administer the program can be frustrating and a deterrent to participation.