How to Avoid Lawful Source-of-Income Discrimination Charges

A recent lawsuit filed by the Housing Rights Initiative (HRI) against 88 brokerage firms and landlords brought attention to source-of-income discrimination. This discrimination is the illegal practice by landlords, 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.

A recent lawsuit filed by the Housing Rights Initiative (HRI) against 88 brokerage firms and landlords brought attention to source-of-income discrimination. This discrimination is the illegal practice by landlords, 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.

HRI ran an investigation for a year and identified apartments that would’ve been affordable to a renter with a Section 8 housing voucher. Investigators who posed as prospective tenants recorded nearly 500 conversations with landlords and their brokers. When those otherwise qualified “testers” mentioned their Section 8 voucher, the owners and agents ended the conversation 48 percent of the time, according to HRI.

Source-of-income discrimination by housing providers with six or more units has been illegal in New York City since 2008. The law was pushed by then-Councilman Bill de Blasio. Now, as of Feb. 15, 2021, the law was expanded to make most NYC rental properties subject to the NYC Human Rights Law’s source-of-income protections, regardless of the number of units in the property.

The NYC Human Rights Law, enforced by the NYC Commission on Human Rights (CCHR), is one of the strongest anti-discrimination laws in the country. It prohibits discrimination in private and public housing, land, and commercial spaces in New York City, and bars any person selling, renting, or leasing (including landlords, superintendents, building managers, and brokers) from discriminating because of a person’s actual or perceived protected status under the law. The CCHR and HPD are charged with protecting and providing fair housing in New York City.

We’ll go over some income types you may come across with applicants and how to avoid charges of source-of-income discrimination.

What Are ‘Lawful Income’ Types?

Last November, when the mayor signed Intro. 2082-A into law expanding the ban on income discrimination to owners of small buildings with one to five units, the law amended the definition of “lawful source of income” to clarify that the term encompasses other types of lawful income that low-income New Yorkers may have access to, including, but not limited to, “child support, alimony, foster care subsidies, income derived from social security, or any form of federal, state, or local public assistance or housing assistance including, but not limited to, Section 8 vouchers.”

The following subsidies illustrate the types of assistance from federal, state, or local sources that are considered lawful sources of income under the NYC Human Rights Law. It may be that for some owners, participating in these programs may involve extra paperwork and bureaucratic challenges, but these additional steps can’t be used as grounds to deny an applicant.

Section 8 housing vouchers. Created by the Housing and Community Development Act of 1978, the Housing Choice Voucher program, also known as Section 8, provides assistance to eligible low- and moderate-income families to rent housing in the private market. Eligibility for this program is based on a family’s gross annual income and family size.

The program works as a rental subsidy that allows families to pay a reasonable amount of their income toward their rent. Eligible families will receive a voucher to begin searching for housing. Generally, families will pay no more than 40 percent of their adjusted monthly income toward their rent share.

Supplemental Security Income. Both the Supplemental Security Income (SSI) program and the Social Security Disability Insurance (SSDI) program pay monthly benefits to people who are disabled and have met certain other eligibility criteria. In order to receive SSI you must be disabled and have limited income and resources. In order to receive SSDI, you must be disabled and have worked a certain length of time in qualifying jobs.

The SSI and SSDI programs aren’t set up to help directly pay for expenses such as rent and utilities. But there’s no reason someone who receives this income can’t use her SSI and SSDI payments to pay for things like rent and utilities.

HIV/AIDS Services Administration (HASA). HASA assists individuals living with AIDS or HIV illness to live healthier, more independent lives. The program can help clients with individualized service plans to target necessary benefits and provide support that’s specific to their medical situation and that will enhance their well-being. Individuals who receive HASA services can receive cash and rental assistance.

CityFHEPS. CityFHEPS is a rental assistance supplement program to help individuals and families find and keep an apartment. CityFHEPS consolidates seven subsidies into a single program, designed to simplify and streamline the process for recipients and owners.

The program is administered by the Department of Social Services (DSS), which includes both the Department of Homeless Services (DHS) and the Human Resources Administration (HRA). CityFHEPS rent levels are indexed to annual NYC Rent Guidelines Board adjustments for one-year leases and are slightly higher than previous city programs. An owner who has a tenant with CityFHEPS will receive rent payments directly from DSS/HRA.

G.I. Bill Housing Allowances. Under the Montgomery G.I. Bill and the Post 9/11 G.I. Bill, many student veterans receive monthly housing payments guaranteed by the federal government. Student veterans are eligible for such payments when they’re enrolled in Department of Veterans Affairs-approved institutes of higher education, on-the-job training, or apprenticeship programs. Housing allowances under the G.I. Bill offer recipients a stable source of income to pay their rent.

Watch Your Language

Beyond not turning away applicants because they receive some sort of financial assistance, make sure your compliance efforts extend to what you say in your advertising—and how you respond to telephone or online inquiries—about your willingness to accept Section 8 housing vouchers or other forms of public assistance. The wrong message may trigger a fair housing complaint or draw the attention of fair housing enforcement officials or watchdog organizations, who monitor online advertising for compliance.

In the lawsuit filed by HRI, recordings were made of various reasons for rejection. One leasing agent said, “I don’t think this apartment would work for your needs.” And other conversations were more explicit in stating outright that vouchers would not be accepted.

Avoid these phrases. Don’t publish advertisements that say, “No Section 8,” or tell prospects over the phone that you don’t accept Section 8 housing vouchers. If you do, you’re effectively screening out all Section 8 prospects before they even apply.

Other phrases to avoid include:

  • “We don’t take people on Social Security.”
  • “Applicants must provide written verification of employment.”
  • “Even if you have a Section 8 voucher, you still need to earn three times the full rent to qualify.”
  • “You just have alimony? Suppose your husband stops paying?”
  • “Why didn’t you tell me right away that you have a voucher?”
  • “People on public assistance must go to our other office downtown to fill out a different application.”

In addition, it’s unlawful to provide inaccurate or untrue information about the availability of units for discriminatory reasons. Such prohibited conduct includes indicating, through words or conduct, that an available unit has been rented, or limiting information about suitably priced available units, because of the prospect’s source of income.

Avoid “steering.” When meeting with prospects, make sure to tell them about all vacancies that meet their needs, regardless of their source of income. Telling applicants receiving housing assistance about vacancies in only particular sections of the building amounts to unlawful steering, a form of discrimination based on source of income.

Follow Standard Procedures Regardless of Income Source

Follow standard policies and procedures when dealing with prospects and applicants to ensure that every person is treated the same way regardless of the applicant’s source of income. Be consistent in applying your screening criteria—including credit history, rental history, criminal background, and the like—to all applicants, regardless of the source of funds used to pay rent. It’s unlawful to impose procedural hurdles that make it more difficult for prospects with housing assistance to get through the application process.

Remember that source-of-income laws ban discrimination against applicants because of where they get their income—not the amount of their income. So 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.

Owners have the right to rent only to applicants they believe to be responsible and who will pay the rent. You may require applicants to satisfy your screening criteria—such as credit checks, criminal background 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 criminal record, as long as you apply that policy consistently to all applicants. Other legitimate, nondiscriminatory reasons for rejecting an applicant might be bad credit history or prior evictions for nonpayment of rent or damage to the apartment.

And regardless of the applicant’s source of income, you don’t have to accept individuals who can’t demonstrate their ability to pay their rent. You may require all applicants to satisfy minimum income requirements, such as two or three times the rent, and may verify that the applicant can satisfy that standard. Doing so doesn’t violate state or local laws banning discrimination based on source of income—as long as you apply the same income criteria (taking into account their financial assistance) to all applicants. Specifically, if you’re screening applicants with Section 8 or other housing vouchers, don’t require applicants to meet the income requirements for the entire rent; rather, use your standard formula based on the portion of the rent not covered by the voucher.

 

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