Families who want to qualify for Section 8 housing in Utah must have incomes at or below 50% of the area median income (AMI). In Salt Lake City, many people can't afford adequate housing, but landlords can help.
Becoming a Section 8 landlord might be on your mind for different reasons. If you are interested in this program, there are some things you need to know first.
Keep reading to find out how Section 8 determines rent prices.
Fair Market Rent
Section 8 determines rent prices in Salt Lake City and other areas with fair market rents (FMRs). Rents for Section 8 properties are set at different prices than those in the private market.
Fair Market Rent rates are established every year by the U.S. Department of Housing and Urban Development (HUD). Put simply, FMR measures what a fair rate would be for a rental property in a particular area.
Each zip code has its own FMR. They are updated each year by the HUD to maintain accuracy as market rates change.
A full-service property management company can help you understand the fair market rent in your zip code.
How Is FMR Calculated?
The HUD defines FMR as an estimate of the amount of money that would cover gross rents on 40% of rental housing units in a particular area. FMR lies near the 40th percentile measurement of the median property rent.
This sounds simple enough, but the calculations are a bit more complex. The HUD will consider these factors to come up with Section 8 housing rent:
- Area median income
- Rent forecasts
- State minimum
- Number of bedrooms
- Previous year FMR
FMR represents the cost to rent a moderately-priced rental unit in Salt Lake City or another specific area.
FMR in the Section 8 Program
FMR is used as a baseline for a public housing agency (PHA) and Section 8 landlords to begin rent negotiations. A Section 8 tenant applies to live at a rental property, but they don't have a say in the final rent rate.
A landlord's goal is to charge as close to the market rate as possible, but the PHA will try to charge as close to the FMR as they can. The final rate might be higher or lower than the FMR.
Once the rate is finalized, the PHA issues Section 8 housing vouchers to the landlord. Vouchers cover most of the finalized rent rate each month. The tenant is responsible for the rest of the rent.
The greatest benefit of being a Section 8 landlord is that you don't have to worry as much about unpaid rent.
Should You Become a Section 8 Landlord?
There are many reasons to become a Section 8 landlord. You'll benefit from predictable rental income and on-time payments. However, there are risks involved as well.
A professional property manager in Salt Lake City can help you through the process of becoming a Section 8 landlord and mitigate some of the risks.
When you work with Utah Property Solutions, you get a full-service property management partner that prioritizes transparency and innovation.
We go above and beyond in everything we do, including applying to be a Section 8 property. Contact us today to learn more about our services.