Another Assault on Virginia Landlords

HUD listening session soliciting input from landlords.

by James A. Bacon

The Office of the Attorney General has filed lawsuits accusing 13 Richmond-area real estate companies of discriminating against prospective renters who receive federal housing vouchers.

“Every single Virginian has the right to a safe, comfortable home, regardless of whether they have some assistance paying their rent,” said Attorney General Mark Herring. “Blocking Virginians who would use a [voucher] to pay their rent is outright housing discrimination and will not be tolerated in Virginia.”

Housing vouchers allow recipients to escape public housing projects and move freely in the private rental market. But participation in the federal Housing and Urban Development (HUD program is voluntary, and many landlords opt out. Herring views such behavior as a form of housing “discrimination,” a way to screen out potentially undesirable tenants, reports the Richmond Times-Dispatch. While federal law does not prohibit discrimination based on the source of income, the practice may violate a state anti-discrimination law enacted in 2020. These lawsuits put the Virginia law to the test.

What could go wrong?

Herring collaborated with a nonprofit group, the Housing Rights Initiative, which conducted calls to 29 real estate companies. Callers posed as prospective tenants. In recorded calls, the companies told the callers they don’t accept voucher holders.

“We hope our investigation, this lawsuit, Virginia’s anti-discrimination laws, and our partnership with the Attorney General’s office serves as a housing enforcement model for the rest of the country,” said Arron Carr, executive director of the Housing Rights Initiative.

The challenge of persuading landlords to participate in the voucher program is national in scope. Indeed, the Department of Housing and Urban Development (HUD) reports that between 2009 and 2016, the number of landlords enrolled in the program nationally has declined from 775,000 to 695,000.

That should be a tip-off that something ain’t right.

Think about it. Landlords should prefer renting to voucher recipients — Uncle Sam stands behind two-thirds of the average the rent check. Tenants pay up to 30% of their income, and the Department of Housing and Urban Development (HUD) pays the balance. In 2017 the HUD housing voucher program assisted 2.2 million households with an average subsidy of $753 per month and an average family contribution of $370 per month.

Reasons for the declining interest in the program remain a mystery to HUD, whose Office of Policy Development and Research acknowledges in a 2019 report, “Little research exists on the role of landlords in the HCV program, limiting stakeholders’ understanding of how landlords decide to participate in the program and how they interact with and treat voucher holders.”

The limited research available suggests that a number of factors could come into play. One is the risk that tenants might fail to pay their share of the rent. Another factor is the unwillingness to put up with the rules and regulations.

Negative experiences … typically involve some combination of frustration with the bureaucratic elements of the program, costs associated with inspections, and conflicts with tenants that were difficult to address because of the constraints related to the program. Landlords might be uncertain about which responsibilities toward tenants belong to them and which belong to the [Public Housing Agencies], and they may expect to be more involved than they are obligated to be.

In other words, many landlords may conclude that public housing tenants are lousy tenants and not worth the hassle.

HUD has pursued a variety of strategies to increase landlord participation, such as landlord-outreach programs, tax incentives and hotlines where landlords can get answers. In the Richmond/Petersburg metro, the Communities of Opportunity Program issues tax credits to landlords in low-poverty areas. Programs in other states pay holding fees, rental application fees, vacancy loss claims, and damage claims.

It’s a sad day when federal law is more accommodating of marketplace realities than Virginia state law. But Democrats in the General Assembly are highly receptive to the blandishments of social-justice advocates who think that complex economic and social issues can be fixed by legislative fiat. Unintended consequences are inevitable. The prosecution of Virginia landlords may encourage some to sign up for the voucher program, but it may drive others out of the rental marketplace. The supply of affordable housing is tight. It could get tighter.

As an alternative to filing lawsuits, Herring could consider looking for ways to make participation in the voucher program more attractive to landlords. But that’s not his style. Some people seem to prefer wielding the stick to offering a carrot.