Source of income discrimination describes when landlords refuse to rent to tenants using housing vouchers or other government assistance. Housing advocates argue the practice keeps vulnerable communities from accessing housing, although landlords point to lack of protections for tenants as their right to refuse service.
In the United States, housing vouchers fall under Section 8 of the Housing Act of 1937. Section 8 housing vouchers provide housing assistance for low-income, elderly, and disabled individuals or families. [1] The term “source of income discrimination” is used by housing advocates [2] to describe a phenomenon that is legal nationwide in the United States but is increasingly being banned on the state [3] and city level. [4] [5] Participation in the Section 8 Housing Voucher Program is largely voluntary for landlords. [6] The Biden Administration acknowledged the practice is currently legal federally but promised to address the issue. [7] State laws banning source of income discrimination vary widely with some including protections for tenants using section 8 housing vouchers and some not. [8] Advocates, such as the NAACP, argue renters have been unfairly denied usage of their housing voucher and that acceptance of housing vouchers leads to more diverse communities. [9]
22 states, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota*, New Jersey, New York, North Dakota, Oklahoma*, Oregon, Rhode Island, Utah, Vermont, Virginia, Washington, and Wisconsin*, have statewide policies banning source of income discrimination. [10]
Arizona, Indiana, and Texas preempt the passage of source of income discrimination laws; however, city ordinances may differ. Phoenix, Arizona passed an ordinance in March 2023 banning source of income discrimination. [11]
*Excludes section 8 housing
There are more than two million households in the United States that participate in the Section 8 Housing Choice Voucher Program (the Section 8 voucher program) to afford privately owned rental housing. [12]
When a Section 8 voucher participant rents from a participating landlord, the local PHA “pays the difference between the household’s contribution (set at 30 percent of income) and the total monthly rent.” [13] The Section 8 voucher program does not set a maximum rent, but participants must pay the difference between the calculated subsidy and actual rent. [13] Landlords receive the subsidy directly from the PHAs.
In the first study, in the early 1980s, 50 percent of the Section 8 Housing Voucher participants were able to find housing. This number increased to 68 percent from 1985 to 1987. [14] There was a rise to 81 percent by 1993. However, the figures dropped to 69% success in 2000. [14] The low success rates can be attributed to landlords declining to accept the vouchers either because of discrimination against the participants in the program or because of the burdens the program places on housing providers.
In a study conducted by U. S. Department of Housing and Urban Development, researchers examined the landlord denial rate of individuals with a housing voucher in neighborhoods with varying poverty rates. The researchers found that in areas where people with vouchers are considered a protected class, the denial rates are significantly lower. The areas with less outright denial of people with vouchers often tend to be the neighborhoods with higher poverty rates. Specifically, denial rates were 11 to 27 percent higher in low-poverty tracts compared to high-poverty tracts. [15]
In addition, while the refusal to accept the vouchers appears racially neutral on its face, many housing advocates contend that the acceptability and legality of Section 8 discrimination enable landlords to use it as a proxy for other legally prohibited kinds of discrimination, such as that based on race, ethnicity, national origin, gender, family status, or disability. [16] For example, studies show that the discrimination against Section 8 voucher holders increases if the recipient is African American or Latino. [16] Because of discrimination against voucher holders, many subsidy recipients can only find housing in neighborhoods where they already are in the racial majority. [17]
One way in which discriminated parties have dealt with discrimination is by bringing disparate impact claims. In disparate impact claims, a prima facie case of discrimination is established by showing that the challenged practice of the defendant actually or predictably results in racial discrimination. [18] This analysis focuses on facially neutral policies that may have a discriminatory effect. Federal courts will allow claims to be made under the FHA on a disparate impact theory by analogizing the FHA to Title VII because they both share a goal of reducing discrimination. [18]
However, courts are dividing on how they rule when it comes to allowing disparate impact claims under the FHA for voucher discrimination. A few federal courts have allowed plaintiffs who were denied housing because of their vouchers to assert these claims. Other courts have limited or prohibited them. Thus, the courts are not uniform when it comes to addressing disparate impact claims for voucher discrimination. Congress has recognized that refusing to rent to families with children violated the FHA, and it should extend that protection to people who use vouchers. Without more legal protections, voucher discrimination can continue, and the Section 8 Housing Voucher Program can be in danger of not meeting its intended goal of increasing the quantity of options and quality of housing for low-income individuals and families. [19]
The Federal Housing Administration (FHA), also known as the Office of Housing within the Department of Housing and Urban Development (HUD), is a United States government agency founded by President Franklin Delano Roosevelt, established in part by the National Housing Act of 1934. Its primary function is to provide insurance for mortgages originated by private lenders for various types of properties, including single-family homes, multifamily rental properties, hospitals, and residential care facilities. FHA mortgage insurance serves to safeguard these private lenders from financial losses. In the event that a property owner defaults on their mortgage, FHA steps in to compensate the lender for the outstanding principal balance.
The United States Department of Housing and Urban Development (HUD) is one of the executive departments of the U.S. federal government. It administers federal housing and urban development laws. It is headed by the secretary of housing and urban development, who reports directly to the president of the United States and is a member of the president's Cabinet.
The Low-Income Housing Tax Credit (LIHTC) is a federal program in the United States that awards tax credits to housing developers in exchange for agreeing to reserve a certain fraction of rent-restricted units for lower-income households. The program was created under the Tax Reform Act of 1986 (TRA86) to incentivize the use of private equity in developing affordable housing. Projects developed with LIHTC credits must maintain a certain percentage of affordable units for a set period of time, typically 30 years, though there is a "qualified contract" process that can allow property owners to opt out after 15 years. The maximum rent that can be charged for designated affordable units is based on Area Median Income (AMI); over 50% of residents in LIHTC properties are considered Extremely Low-Income. Less than 10% of current credit expenditures are claimed by individual investors.
The Civil Rights Act of 1968 is a landmark law in the United States signed into law by United States President Lyndon B. Johnson during the King assassination riots.
Section 8 of the Housing Act of 1937, commonly known as Section 8, provides rental housing assistance to low-income households in the United States by paying private landlords on behalf of these tenants. Approximately 68% of this assistance benefits seniors, children, and individuals with disabilities. The Department of Housing and Urban Development (HUD) oversees Section 8 programs, which are administered locally by public housing agencies (PHAs).
An FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan that is provided by an FHA-approved lender. FHA mortgage insurance protects lenders against losses. They have historically allowed lower-income Americans to borrow money to purchase a home that they would not otherwise be able to afford. Because this type of loan is more geared towards new house owners than real estate investors, FHA loans are different from conventional loans in the sense that the house must be owner-occupant for at least a year. Since loans with lower down-payments usually involve more risk to the lender, the home-buyer must pay a two-part mortgage insurance that involves a one-time bulk payment and a monthly payment to compensate for the increased risk. Frequently, individuals "refinance" or replace their FHA loan to remove their monthly mortgage insurance premium. Removing mortgage insurance premium by paying down the loan has become more difficult with FHA loans as of 2013.
Subsidized housing is government sponsored economic assistance aimed towards alleviating housing costs and expenses for impoverished people with low to moderate incomes. In the United States, subsidized housing is often called "affordable housing". Forms of subsidies include direct housing subsidies, non-profit housing, public housing, rent supplements/vouchers, and some forms of co-operative and private sector housing. According to some sources, increasing access to housing may contribute to lower poverty rates.
Disparate impact in the law of the United States refers to practices in employment, housing, and other areas that adversely affect one group of people of a protected characteristic more than another, even though rules applied by employers or landlords are formally neutral. Although the protected classes vary by statute, most federal civil rights laws consider race, color, religion, national origin, and sex to be protected characteristics, and some laws include disability status and other traits as well.
Mortgage discrimination or mortgage lending discrimination is the practice of banks, governments or other lending institutions denying loans to one or more groups of people primarily on the basis of race, ethnic origin, sex or religion.
Rent regulation in New York is a means of limiting the amount of rent charged on dwellings. Rent control and rent stabilization are two programs used in parts of New York state. In addition to controlling rent, the system also prescribes rights and obligations for tenants and landlords.
Housing discrimination refers to patterns of discrimination that affect a person's ability to rent or buy housing. This disparate treatment of a person on the housing market can be based on group characteristics or on the place where a person lives.
In the United States, subsidized housing is administered by federal, state and local agencies to provide subsidized rental assistance for low-income households. Public housing is priced much below the market rate, allowing people to live in more convenient locations rather than move away from the city in search of lower rents. In most federally-funded rental assistance programs, the tenants' monthly rent is set at 30% of their household income. Now increasingly provided in a variety of settings and formats, originally public housing in the U.S. consisted primarily of one or more concentrated blocks of low-rise and/or high-rise apartment buildings. These complexes are operated by state and local housing authorities which are authorized and funded by the United States Department of Housing and Urban Development (HUD). In 2020, there were one million public housing units. In 2022, about 5.2 million American households received some form of federal rental assistance.
The Coalition for Economic Survival (CES) is a grassroots, non-profit community organization. CES works in the greater Los Angeles area to influence policy makers to improve the lives of low and moderate income people.
Housing discrimination in the United States refers to the historical and current barriers, policies, and biases that prevent equitable access to housing. Housing discrimination became more pronounced after the abolition of slavery in 1865, typically as part of Jim Crow laws that enforced racial segregation. The federal government didn't begin to take action against these laws until 1917, when the Supreme Court struck down ordinances prohibiting African-Americans from occupying or owning buildings in majority-white neighborhoods in Buchanan v. Warley. However, the federal government as well as local governments continued to be directly responsible for housing discrimination through redlining and race-restricted covenants until the Civil Rights Act of 1968.
"'Tenant screening'" is used primarily by residential landlords and property managers to evaluate prospective tenants. The purpose is to assess the likelihood the tenant will fulfill the terms of the lease or rental agreement and will also take great care of the rental property in question. The process culminates in a decision as to whether to approve the applicant, approve the applicant conditionally, or deny tenancy.
The District of Columbia Housing Authority is an independent government agency whose mission is to provide affordable housing to extremely low- through moderate-income households, foster sustainable communities, and cultivate opportunities for residents to improve their lives throughout the eight wards of Washington, D.C.
The Rental Assistance Demonstration is a federal housing program that was enacted as part of the Consolidated and Further Continuing Appropriations Act, 2012, and is administered by the U.S. Department of Housing & Urban Development (HUD). Broadly, the purpose of the Rental Assistance Demonstration is to provide a set of tools to address the unmet capital needs of deeply affordable, federally assisted rental housing properties in order to maintain both the viability of the properties and their long-term affordability. It also simplifies the administrative oversight of the properties by the federal government. Specifically, RAD authorizes the conversion of a property's federal funding from one form to another, where the initial form presents structural impediments to private capital investment and the new form is not only familiar to lenders and investors but, since its enactment in 1974, has leveraged billions in private investment for the development and rehabilitation of deeply affordable rental housing.
Eviction in the United States refers to the pattern of tenant removal by landlords in the United States. In an eviction process, landlords forcibly remove tenants from their place of residence and reclaim the property. Landlords may decide to evict tenants who have failed to pay rent, violated lease terms, or possess an expired lease. Landlords may also choose not to renew a tenant's lease, however, this does not constitute an eviction. In the United States, eviction procedures, landlord rights, and tenant protections vary by state and locality. Historically, the United States has seen changes in domestic eviction rates during periods of major socio-political and economic turmoil—including the Great Depression, the 2008 Recession, and the COVID-19 pandemic. High eviction rates are driven by affordable housing shortages and rising housing costs. Across the United States, low-income and disadvantaged neighborhoods have disproportionately higher eviction rates. Certain demographics—including low income renters, Black and Hispanic renters, women, and people with children—are also at a greater risk of eviction. Additionally, eviction filings remain on renters' public records. This can make it more difficult for renters to access future housing, since most landlords will not rent to a tenant with a history of eviction. Eviction and housing instability are also linked to many negative health and life outcomes, including homelessness, poverty, and poor mental and physical health.
Affordable housing is housing that is deemed affordable to those with a median household income as rated by the national government or a local government by a recognized housing affordability index. A general rule is no more than 30% of gross monthly income should be spent on housing, to be considered affordable as the challenges of promoting affordable housing varies by location.
The term "affordable housing" refers to housing that is considered economically accessible for individuals and families whose household income falls at or below the Area Median Income (AMI), as evaluated by either national or local government authorities through an officially recognized housing affordability index. However, in the US, the term is mostly used to refer to housing units that are deed restricted to households considered Low-Income, Very Low-Income, and Extremely Low-Income. These units are most often constructed by non-profit "affordable housing developers" who use a combination of private money and government subsidies. For-profit developers, when building market-rate developments, may include some "affordable" units, if required as part of a city's inclusionary zoning mandate.
