The rental housing industry often feels the ripples of economic change in a direct way. Move outs, unpaid rent, late notices, subletters or roommates, and even evictions can have unintended consequences to long-term unemployment. With most businesses shuttered, many renters are facing financial insecurity due to the coronavirus pandemic.
The multifamily housing industry often feels the ripples of economic change in a direct way. Move outs, unpaid rent, late notices, subletters or roommates, and even evictions can have unintended consequences to long-term unemployment. With most businesses shuttered, many renters are facing financial insecurity due to the coronavirus pandemic.
As of this writing, over 36 million Americans have filed for unemployment benefits since mid-March, and Goldman Sachs predicts the unemployment rate could sour to 25% this year. While many are hoping to recover faster, letting mom and pops finally open for business, we should do what we in the industry do best – prepare for the long-term effects and hope for the best.
Now and within the next year, it’s likely that you’ll see more rental applicants collecting unemployment benefits, and it’s important to know what to do next.
As of this writing, over 36 million Americans have filed for unemployment benefits since mid-March, and Goldman Sachs predicts the unemployment rate could sour to 25% this year. While many are hoping to recover faster, letting mom and pops finally open for business, we should do what we in the industry do best – prepare for the long-term effects and hope for the best.
Now and within the next year, it’s likely that you’ll see more rental applicants collecting unemployment benefits, and it’s important to know what to do next.
Does unemployment count as income when verifying housing income requirements?
This is a tricky question. Technically, if your state and local laws do not prohibit discrimination based on source of income, it can be up to you to decide policy-wise if you accept unemployment funds when verifying if the applicant meets your income requirements. However, we highly recommend you treat unemployment benefits as income. This is because state, city, and even county laws change frequently. With the rising unemployment rate, applicants on unemployment will not be uncommon – and turning away applicants on unemployment during this time might not be the best P.R.
Currently, these are some of the states with source of income protections. Keep in mind this list does not account for city or county source of income protections, which are plentiful across the U.S.
- California
- Connecticut
- District of Columbia
- Maine
- Massachusetts
- New Jersey
- New York
- North Dakota
- Oklahoma
- Oregon
- Vermont
- Washington
Does unemployment count as income when verifying housing income requirements?
This is a tricky question. Technically, if your state and local laws do not prohibit discrimination based on source of income, it can be up to you to decide policy-wise if you accept unemployment funds when verifying if the applicant meets your income requirements. However, we highly recommend you treat unemployment benefits as income. This is because state, city, and even county laws change frequently. With the rising unemployment rate, applicants on unemployment will not be uncommon – and turning away applicants on unemployment during this time might not be the best P.R.
Currently, these are some of the states with source of income protections. Keep in mind this list does not account for city or county source of income protections, which are plentiful across the U.S.
- California
- Connecticut
- District of Columbia
- Maine
- Massachusetts
- New Jersey
- New York
- North Dakota
- Oklahoma
- Oregon
- Vermont
- Washington
How much does unemployment usually get?
Benefits vary widely by state. According to SavingtoInvest.com, the highest maximum weekly benefit amount is in Massachusetts at $823 for individuals to $1,234 for families. On the low end, Puerto Rico’s maximum weekly amount is $190, with Mississippi a close second at $235. Most states administer benefits for a maximum of 26 weeks (a little more than 6 months). Whether or not your applicant meets your property’s income requirements depends on what state you live in, the applicant’s unemployment allowance, and your vacancy’s rent price.
How much does unemployment usually get?
Benefits vary widely by state. According to SavingtoInvest.com, the highest maximum weekly benefit amount is in Massachusetts at $823 for individuals to $1,234 for families. On the low end, Puerto Rico’s maximum weekly amount is $190, with Mississippi a close second at $235. Most states administer benefits for a maximum of 26 weeks (a little more than 6 months). Whether or not your applicant meets your property’s income requirements depends on what state you live in, the applicant’s unemployment allowance, and your vacancy’s rent price.
The CARES Act passed on March 27, 2020, expanded on unemployment by extending compensation to independent contractors and other workers priorly ineligible. It gives an additional $600 a week of aid for up to four months. Since then, additional relief bills have been proposed and some cities and states are considering rent relief programs. While it’s uncertain if unemployment benefits will be expanded upon, if the pandemic continues and the unemployment rate continues to rise, it’s highly likely more legislation will be passed.
The CARES Act passed on March 27, 2020, expanded on unemployment by extending compensation to independent contractors and other workers priorly ineligible. It gives an additional $600 a week of aid for up to four months. Since then, additional relief bills have been proposed and some cities and states are considering rent relief programs. While it’s uncertain if unemployment benefits will be expanded upon, if the pandemic continues and the unemployment rate continues to rise, it’s highly likely more legislation will be passed.
Does accepting applicants on unemployment change the leasing process?
No. Just like with any applicant, your leasing process likely requests proof of income. For some applicants this can be a few months of bank statements or paystubs, for others, it can be unemployment documentation. To avoid Fair Housing complaints, you want your leasing process to stay as consistent and equal as possible.
As you’re navigating leasing decisions in the future, keep in mind being on unemployment doesn’t mean your applicant is a bad renter. With unemployment claims rising weekly, it’s incredibly likely your rental applicants and tenants will be affected. Make sure to stay ahead of the times by hammering out your new leasing plan and procedures now.
Does accepting applicants on unemployment change the leasing process?
No. Just like with any applicant, your leasing process likely requests proof of income. For some applicants this can be a few months of bank statements or paystubs, for others, it can be unemployment documentation. To avoid Fair Housing complaints, you want your leasing process to stay as consistent and equal as possible.
As you’re navigating leasing decisions in the future, keep in mind being on unemployment doesn’t mean your applicant is a bad renter. With unemployment claims rising weekly, it’s incredibly likely your rental applicants and tenants will be affected. Make sure to stay ahead of the times by hammering out your new leasing plan and procedures now.
What do you think? Let us know in the comments below!
What do you think? Let us know in the comments below!
14 Replies to “Does Unemployment Count as Income in Rental Housing?”
I would disagree on counting unemployment as “income.” It is unemployment insurance proceeds and it is limited. How can you approve someone’s ability to pay the rent when they do not have a verifiable job and income? As you mention, many people (possibly 25%) may eventually be on unemployment. Many of those jobs are not coming back. So if you include unemployment as income, then unemployment (or the Federal subsidy) runs out, and now your tenant doesn’t have income, what happens next? Eviction? That is like predatory lending, approving someone who cannot afford what they are asking. It hurts the landlord monetarily and hurts the tenant with an eviction on their record. It’s bad for everyone.
You have a very valid perspective on this, Joe. If unemployment is at 20%+ though then that is still a lot of displaced people who need a home, and who do have income (unemployment) for a period of time. The middle ground is adding lease provisions to re-verify their income after a period of time, and to adjust the length of the lease for as long as it may be verified that will have income for. The hope is that renters will find stable employment before the benefits run out, but if they don’t then the lease will be up.
This guidance isn’t intended to ignore the increased risk this places on you and your portfolio, but it’s a reality that will become more common in the next several months so being prepared for how to handle these situations can just add to the options available to work with applicants.
So what are people who are unemployment supposed to do when their lease is up? Be homeless?
I think that is awesome people as myself and my husband and our 4 girls are soon to be homeless and are struggling to find a place and are stressing on if my husband should apply for unemployment… The online UI one… We need this little extra income to get us into a place since I guess HUD and section 8 voucher program changed there rules a little I thought disabled getting ssi… and Homeles families with children low income based members would get bumped up the list on the top list part.
As usual, always good information for us to review. Thanks
Greedy landlords! make it so difficult to qualify for housing in Central Calif, rents keep moving up but salaries as if we never left the late eighties!
We need rent control NOW or this situation will get worst, so sad to see whole families living on side of freeway ramps as rents move up monthly, but income raises stagnant perfect formula for masses of people living homeless.
I sure hope it is counted because that’s all I have for now for me and my family.
I hope so too!! I just had a baby, my husband lost his job due to his work closing because of covid, & our lease is up in June so I’m not sure what we would do if they weren’t counting it as income. Fingers crossed.
Hello, quick question, can apartments verify if you are getting unemployment? I didn’t mention I was getting unemployment because it is so hard to get through unemployment customer service and I knew they would ask for documents. So yes my question is will they find out if I’m receiving unemployment?
Hi Jaz – the short answer is that it depends. If the property performs income verifications then it’s likely they’ll be able to verify you’re receiving unemployment. If they rely on other methods that don’t go above and beyond to verify your income then you’re more likely to have more control over what sources are provided for the property to base their decision on.
Does unemployment. Count as income. When renting and. Appartment. Received. From. Covid. And does this mean you. Worked. OR was everybody eligible. Regardless
Hi Sharon – if you’re in a state where ‘source of income’ cannot be discriminated against then it’s likely that unemployment will count as income. If you’re in a state without those protections then it’s possible it will vary by property, and you would need to ask the property you’re applying for whether they will accept it.
@Joe. I understand because an apartment complex let me move in on unemployment (which at the time I’m thankful for) and it was March 2020 when I received the additional unemployment, then 4 months later I couldn’t pay rent and now on my credit it’s saying I owe them $3,000 and can’t move because that’s on my credit. Now I don’t know what to do because when I apply places they say due to my debt I got declined.
So basically what it is is you have to be able to afford where you’re living in order to get the initial voucher! This is new where you can use your unemployment as documented income but primarily it’s allowed into the income verification area due to the fact that some people temporarily go on unemployment like my guy. For instance, he is a roofer.. There are usually two to three solid months where it is just not the season for him to be out on a roof.. during that time frame having a voucher renewed. You can use that as countable income and pay 30% of that income with also allowable deductions such as utilities and dependants. With so many people being hit hard financially. Unemployment has obviously been used a lot more in the last few years then it has in a long time. When it comes to being approved for a HUD voucher, you have to prove you can afford when you first receive it. After that the reverification process is a lot different. It’s easy to lose a voucher but it’s hard to get one. Communication is everything with your local housing authority. If you can have taxes removed from it like unemployment than it is taxable counted income! Regardless of the what ifs.. That is for the local ha, state to worry about, when it comes to a specific tenant.. see see even people on vouchers pay taxes! Just because someone receives some assistance. Doesn’t mean it’s coming out of all of your tax dollars! The people that pay the highest amount of rent because they meet the highest end of eligibility.. they Put the most back into the pot and that pays into the local housing authority and voucher assistance program. People have a big misconception that this money just comes from the government and pays for people’s homes! That is false! Each state has their own guidelines and regulations.. and then there are federal regulations things that don’t have a work around! Unfortunately the stigma on receiving any rental assistance or help is going to always be picked upon By others ,because they don’t understand that we all pay our taxes.. We all contribute or at least us that actually want to do it the right way and use this platform as a stepping stone rather than be stuck in a financial box! that’s what it is.. being restricted in a financial box! There are many incentives into homeownership off of utilizing rental assistance. However, I would NOT prefer to have a second insured mortgage..lol There are options out there that work great for certain families. And right now with the way housing is even the HUD homes aren’t necessarily worth the bite as they are sold as is and have very little negotiation. That is the whole point of HUD homes. If you do things the right way, you’re probably going to pay a good little chunk towards rent.. I literally pay exactly what I paid living in. 700 ft² in a half of a house now.. I spent over a decade on that waiting list renewing it every 6 months. And now my daughter in college and my other going in eighth grade finally have their own bedrooms for the first time in a long time! A lot of people are negative Nancy’s and don’t understand the ins and outs and they just think of their tax dollars going to the poor! There’s a lot more to it. My friends, really need to educate yourselves!