Apartment companies agree to new housing voucher policies to settle discrimination lawsuit

Twenty-three New York City apartment landlords and brokers have agreed to enact reforms to resolve a lawsuit alleging they routinely turn away potential tenants seeking to use federal vouchers to supplement their rent.

The lawsuit, filed in March 2021, accused 88 city landlords and brokers of repeatedly rejecting tenants with Section 8 vouchers, a possible violation of state and local housing laws, though experts say that they are rarely applied.

“Because of widespread voucher discrimination, voucher holders often have to accept substandard housing in segregated neighborhoods, or risk losing their voucher altogether,” the complaint states. The case is still pending in District Court for the Southern District of New York for the remaining tenants.

Experts say the Section 8 program has become more critical for low-income households in recent months as rents have soared to a US median of $1,792 in February, up 17% from a year ago. The program typically pays the difference between the amount of rent a voucher holder can afford and the amount charged by landlords.

Among the companies agreeing to a settlement is Compass Inc., the $3.2 billion company that rents apartments in New York and is also the leading realtor for home sales in the country. According to the complaint, a Compass broker told a potential tenant “No, we don’t do Section 8 bonds in this building.” Another Compass broker reportedly told a potential tenant that accepting a voucher was “…not an option that I would even entertainingly explore”.

Compass will begin paying agents a higher commission for renting apartments to voucher holders, organize regular trainings for agents on voucher programs and recommit to prohibiting income requirements for voucher holders. The agreement requires the other 22 companies to make similar changes, such as setting aside units for voucher holders and keeping records of voucher holder requests. The companies have not admitted any wrongdoing under the terms of the agreement.

Compass representatives declined to comment on the settlement beyond confirming some of the agreed terms.

The plaintiff in the case, the housing watchdog group Housing Rights Initiative, hopes the reforms described by the 23 companies will spur other landlords and brokers to make proactive changes. “The real estate industry pays attention to what its key players are doing,” said Aaron Carr, group chief executive.

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“I hope the actions taken by Compass will be a game-changer for the industry,” said Matthew Handley, partner at Handley & Anderson, one of the plaintiffs’ attorneys.

Experts say the voucher scheme is critically important for low-income households who cannot otherwise afford soaring rents. The typical American apartment now costs $283 more each month than a year ago, an increase that has far outpaced wage gains, according to data from the Census Bureau and Realtor.com.

The spike in rents is even more dramatic in New York, where the median price of a Manhattan apartment hit a record $3,800 in February, up more than $1,000 from a year earlier, according to StreetEasy data. In Brooklyn, the median rent has jumped $400 to $2,800 since last year. Queens and the Bronx also saw increases while Staten Island remained flat.

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Mary K. Cunningham, a housing expert at the Urban Institute, said the settlements were “obviously a step in the right direction”, but determining whether such reforms will have any real impact will take time. Federal and state enforcement of these rules is often very limited, she said, making private sector efforts to combat discrimination more crucial.

“Are these steps that Compass has taken in terms of training and recommitting to a policy of non-discrimination really helping to change practices and therefore allow more voucher holders to find landlords who accept their vouchers?” she says. “That’s where the proof will be.”

Lawyers from the Legal Aid Society also represent plaintiffs

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