Does Unemployment Count as Income in Rental Housing?

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Does Unemployment Count as Income in Rental Housing?

Does Unemployment Count as Income in Rental Housing?

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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.

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4 Replies to “Does Unemployment Count as Income in Rental Housing?”

  1. 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.

    1. 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.

  2. 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.

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4 Replies to “Does Unemployment Count as Income in Rental Housing?”

  1. 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.

    1. 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.

  2. 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.

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The nation’s most trusted tenant screening for real estate agents, landlords, and property managers. No cost background checks available 24/7.

©2018 ApplyConnect. All rights reserved

ApplyConnect marks used herein are trademarks or registered trademarks of applyconnect.com. Other product and company names mentioned herein are the property of their respective owners.