The draft guidance would illegally would impose “privileges on the sale or rental of a dwelling unit based on one’s source of funds”, in direct violation of §36-96.3(3), contrary to legislation introduced last year by Delegate Jeff Bourne that passed adding source of income as a protected class. Delegate Jeff Bourne testified in front of the General Assembly that “nothing in this bill requires anyone to take a voucher”. Requests were made to Delegate Bourne to include an amendment for vouchers specifically, but he refused the amendment.
The draft guidance is 180o opposite of what was represented by Greta Harris, President and CEO of the Better Housing Coalition and Heather Mullins Crislip, President and CEO of Housing Opportunities Made Equal of Virginia in the Richmond Times-Dispatch on January 12, 2020, which was to merely add source of funds as a protected class. Greta Harris and Heather Mullins Crislip stated to the public “There are just two core requirements for a landlord accepting a voucher: *Complete two additional pieces of paper – a tenancy addendum and a housing assistance payment contract, and *Comply with inspection – a basic quality inspection is completed within 15 days, with many voucher administrators completing these steps in less time.” Greta Harris and Heather Mullins Crislip also stated to the public “This protection does not mean that a landlord has to accept anyone who has a voucher. Landlords can utilize the same screening criteria (credit and rental history, sufficiency of funds, background check, etc) they do for any prospective tenant.”.
The draft guidance would require discrimination on the source of funds. It mandates that applications without certain source of funds face higher income requirements. Specifically, an applicant that does not procure funds from a government voucher would be required to meet a higher income requirement. Inevitably, that applicant would sue the landlord, the Real Estate Board and the Fair Housing Board for discrimination and violation of §36-96.3(3).
The landlord’s business model requires an assessment of ability to pay rent, and that includes a cushion for unforeseen events, such as medical bills, unexpected higher utility bills, automotive expenses, as well as pet and other damages, etc. These are just a few examples of expenses that all tenants are faced with regardless of your source of funds.
For example, if the rent is $1,000 and if the income requirement is 2X the rent, there is a $1,000 cushion for the planned expenses (cell phone bill, gas for car or bus fare, renters insurance, car insurance, food, clothing, childcare, holiday gifts, etc.) and unforeseen events as mentioned above. Most landlords use a 3x the rent calculation and even with that, the eviction rate in Virginia is HIGH. But if the cushion was calculated, as proposed, if the tenant’s portion is $200 with the requirement of 2x the rent, the cushion would only be $200 and the risk of default and eviction would be MUCH HIGHER.
The draft guidance does not align with the goal of reducing the eviction rate in Virginia. We are setting tenants up to fail knowing that they do not have the funds to pay all expenses as they come due, which could result in eviction and/or tarnished credit that will affect their ability to find future housing.
Similarly, mortgage companies approving someone for a loan require a ratio of income to expenses to protect against default and foreclosures. In fact, when this ratio was tampered with just a decade ago, it caused the collapse of the entire housing industry and the Great Recession.
The cushion is critical to the business model of responsible landlords, present and future.
The requirement itself would discriminate against providers of rental housing if it does not apply to ALL housing providers—including lenders and people who sell their own homes and take back seller-financing.
To impose this requirement on housing providers would mandate that they discriminate on the basis of source of funds—the exact opposite of the representations made by the Better Housing Coalition and HOME. This requirement goes well beyond Delegate Jeff Bourne’s intent as communicated and endorsed by Greta Harris.
It is imperative that this guidance is rewritten to actually benefit both tenants and landlords as well as appear to be an attempt to reduce the eviction rate in Virginia.