3 Tips to Navigate City’s Efforts to Increase Fair Housing Testing

The city commits funds to fight source-of-income discrimination.

New York City recently announced that it’s directing $3.1 million to combat source-of-income discrimination for New Yorkers who rely on rental assistance. Source-of-income discrimination is the illegal practice by owners and brokers of refusing to rent to current or prospective tenants seeking to pay for a rental unit with housing vouchers, subsidies, or other forms of public assistance. Nearly all rentals are covered under NYC Human Rights law or the state law prohibiting source-of-income discrimination.

With the recent announcement, starting in Fiscal Year 2024, the city will dedicate $3.1 million over four years to contract with an external provider to conduct testing investigations to identify instances of housing discrimination and related enforcement work. The Department of Housing Preservation and Development (HPD) will oversee the contract, complementing ongoing work by the NYC Commission on Human Rights (CCHR). CCHR enforces the Human Rights Law’s antidiscrimination protections, including the prohibition on source-of-income discrimination. HPD and its partners will design, test, and implement strategies for testing and enforcement to more effectively combat discrimination in the housing market.

Recent ruling goes against owner. The announcement comes at a time when nonprofit housing groups and the city are highlighting source-of-income discrimination as a key area of concern for homeless and formerly homeless New Yorkers. In a recent decision, a court ruled that a nonprofit housing group that utilized testers could sue an owner for source-of-income discrimination against prospective tenants. The group said that the defendants willfully and intentionally refused to rent apartments to people who intended to pay rent with CityFHEPS vouchers for advertised apartments. CityFHEPS is a rental assistance supplement program that consolidates seven subsidies into a single program. It’s administered by the Department of Social Services (DSS), which includes both the Department of Homeless Services (DHS) and the Human Resources Administration (HRA).

The judge ruled the group's use of fictitious applicants didn't prevent the group from suing the owner because the owner’s complete refusal to deal with any applicants using a voucher removed the need for the housing group to plead specific violations [Housing Rights Initiative Inc. v. Elliman, January 2023].

While the city employs its strategy to ramp up legal and testing resources to root out discrimination and elevate the issue in the public’s eye, owners need to be more diligent in offering rental applications and applying the same screening policy to prospective tenants regardless of their source of income or other protected characteristics. Here are three tips to help you navigate potential scrutiny from fair housing testers.

Tip #1: Treat All Prospects as If They’re Fair Housing Testers

Prospective tenants may contact you via phone calls, emails, or visits to your building or leasing office. There may be inquiries about advertised vacancies or the availability of certain types of units at your building. However, because enforcement agencies and fair housing organizations generally exercise caution in selecting and training fair housing testers, you may never know when one of these encounters is part of a fair housing test.

Even if you have an inkling that a particular prospect is a tester because of the type of questions being asked, there’s no way to be sure if a given encounter is part of a fair housing test. Fair housing testers will be trained to pose as prospective tenants and go through the rental application process. Since you aren’t sure whether it’s an actual renter or a fair housing tester, you should always treat potential applicants with professionalism and courtesy, starting with the initial contact—whether online, on the phone, or visits to your building.

Tip #2: Don’t Answer Discriminatory Questions or Heed Discriminatory Demands

You should keep in mind that testers posing as prospects won’t only be seeking information about whether or not you will accept vouchers; they also will be looking for other signs of discrimination. They’ll be looking for any signs of misrepresenting the availability of units or offering unique sets of terms and conditions depending other protected characteristics such as race, national origin, familial status, and more.

In doing so, they may ask pointed questions about, say, the race or color of tenants in the building. Another subtle way to pose such a question could be to ask, “Do you think I’d be comfortable in this building?” Remember that prospects who ask these kinds of questions are probably either testers or genuine bigots. In either case, make sure that leasing agents don’t take the bait. Specifically, make sure they understand that discussing the protected characteristics of other residents with a prospect is a form of illegal steering, even when the prospect brings up the topic.

The same principles apply when a prospect makes discriminatory demands, such as insisting on being shown only units on floors where none of the residents are of a particular race, color, etc. The best practice for these situations is to politely decline to answer the discriminatory question or heed the discriminatory demand and tell the prospect of your building’s commitment to fair housing and refraining from discrimination.

If instead of a direct question about a protected class, prospects ask whether they’d be comfortable renting from you, you can turn the question around and ask the prospect what he or she means by “comfortable.” If the prospect’s response is nondiscriminatory and not based on the characteristics of the people in the community or neighborhood, you can proceed to answer the question. But if the prospect’s response suggests any discriminatory biases, such as “I’m comfortable with young people” or “I’m uncomfortable around kids,” you should refuse to answer and reiterate your building’s commitment to fair housing. 

Tip #3: Be Consistent in Providing Information About Your Units, Screening Criteria

Testing is often focused on differences in the information provided to prospects about the availability of units, so it’s important to ensure everyone in the leasing office has accurate, up-to-date information about vacancies. If, for example, you tell a couple without children about a vacant unit a short time after telling a single mother of a young child that nothing is available, it may appear that your building is discriminating against families with children. If these prospects are testers, they may get the wrong impression about why you told the first prospect that an advertised unit wasn’t available, since it’s impossible for them to know whether it’s because of discrimination, poor record keeping, or simply that a vacancy just opened up.

Similarly, make sure prospects receive the same information about the terms and conditions of tenancy, such as screening criteria, rental terms, security deposits and fees, and any other relevant information. Quoting differing lease terms or rental payments to prospects based on their membership in a protected class is a violation of fair housing law.

Prospects Must Show Ability to Pay Rent

It’s important to note that source-of-income laws ban discrimination against applicants because of where they get their income—not the amount of their income. Even with a fair housing tester, you may ask about the source of the applicant’s income, as long as you don’t discriminate or impose different screening policies and procedures based on this information.

You have the right to rent only to applicants you believe to be responsible and who will pay the rent (taking into account any financial assistance). If you’re screening applicants with housing vouchers, don’t require applicants to meet the income requirements for the entire rent; rather, use your standard formula for income requirements based on the portion of the rent not covered by the voucher.

Also, you may require applicants to satisfy your screening criteria such as credit checks and rental history as long as you apply the same standards to all your applicants, regardless of their source of income. For example, you don’t have to accept an applicant who receives financial assistance if you have other nondiscriminatory reasons for rejecting him such as a bad credit history or prior evictions for nonpayment of rent or damage to the apartment.