Understanding the “Source of Income” in Fair Housing

Source of income is gaining traction in at state and local levels around the country so how does it apply to the Fair Housing Act

Source of income is gaining traction in at state and local levels around the country so how does it apply to the Fair Housing Act?

By The Fair Housing Institute

The landscape of fair housing is continuously evolving. One of the emerging focal points is the protection against discrimination based on “source of income.” While not federally recognized under the Fair Housing Act, this classification has steadily gained traction at state and local levels, expanding the purview of housing rights.

Defining “Source of Income”

In the realm of housing discrimination, “source of income” pertains to the origin of a resident’s lawful earnings or funds. This can include earnings from employment, pensions, or other regular payments, but notably, it frequently involves rental assistance programs or housing subsidies such as Section 8.

Although it’s not yet a federal mandate, many state and local housing laws and ordinances have recognized and added it as a protected category.

Implications for Property Managers and Landlords

For those managing federally assisted housing programs, such as 202, 811, or tax-credit properties, it’s often mandatory to consider housing subsidies as a valid source of income. This means that refusing a tenant on the grounds that they receive rental aid can have legal repercussions.

However, if a property doesn’t fall under these categories, it’s paramount to delve into local city or county regulations. A deep understanding of local ordinances is essential to ascertain whether “source of iIncome” is protected in your jurisdiction.

Resident Income Screening in the Context of “Source of Income”

When screening potential residents, many property managers and landlords have set income criteria that applicants must meet. When “source of income” is protected, this screening process requires nuanced handling. The focus should primarily be on the tenant-paid portion of the rent. Managers need to:

  • Ascertain the amount of rental assistance the applicant receives.
  • Determine the gap between the assistance and the market rent of the property. This is what the tenant will pay; are they able to do so?

Upon obtaining these numbers, they can be juxtaposed against the property’s income standards to ascertain eligibility.

The Rise of “Source of Income” as a Protected Class

Recent years have witnessed a surge in advocacy for “source of income” protection. Various legislative initiatives have been proposed to elevate its status at the federal level. This momentum is largely attributed to the pressing challenges of housing affordability and accessibility. Incorporating “source of income” as a protected category can alleviate these challenges, enabling a broader segment of the population to improve their housing conditions.

In Conclusion

The intricacies of housing laws go beyond federal mandates. For property management professionals, staying updated with state and local ordinances, along with training, is as crucial as understanding federal regulations. The categorization and acceptance of various income sources can profoundly impact resident selection and rental operations, underlining the importance of comprehensive knowledge in this domain.

About the author:

In 2005, The Fair Housing Institute was founded as a company with one goal: to provide educational and entertaining fair-housing compliance training at an affordable price at the click of a button.