Apartment firms agree to housing voucher policies to settle bias suit

The 23 New York landlords and apartment brokers were among 88 accused of routinely turning away Section 8 applicants

By Jonathan O'Connell

Apartment buildings in the Midtown neighborhood of New York City. New York's residential market is heating up, which experts say makes housing vouchers more critical to low-income families. (Jeenah Moon/Bloomberg)

Twenty-three New York City landlords and apartment brokers agreed to enact reforms to resolve a lawsuit alleging they routinely turned away prospective tenants seeking to use federal vouchers to supplement their rent. The complaint, filed in March 2021, accused 88 landlords and brokers in the city of repeatedly rejecting tenants with Section 8 vouchers, a possible violation of state and local housing laws, though experts say they are rarely enforced.

“As a result of widespread voucher discrimination, voucher holders must frequently accept subpar housing in segregated neighborhoods, or risk losing their voucher altogether,” the complaint claims. The case is ongoing in District Court for the Southern District of New York for the remaining tenants.

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

Among the companies agreeing to a settlement is Compass, the $3.2 billion firm that rents out apartments in New York City and is also the top company for home sales in the country. According to the complaint, a Compass broker told a prospective tenant: “No, we don’t do Section 8 vouchers in this building.” Another Compass broker allegedly told a prospective tenant that accepting a voucher was “not an option that I would even explore entertaining.”

Compass will begin paying agents a higher commission for renting apartments to voucher holders, conduct regular training for agents on voucher programs, and recommit to banning income requirements for voucher holders. The deal compels the 22 other companies to make similar changes, such as setting aside units for voucher holders and maintaining records of inquiries from voucher holders. The companies admitted no wrongdoing under the terms of the deal.

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

The plaintiff in the case, the housing watchdog group Housing Rights Initiative, hopes the reforms outlined by the 23 companies will prompt other landlords and brokers to make changes. “The real estate industry pays attention to what its largest players do,” said Aaron Carr, the group’s executive director.

“The steps that Compass is taking, I am hoping, are going to be game changers for the industry,” said Matthew Handley, a partner at Handley Farah & Anderson, one of the attorneys for the plaintiffs.

Experts say the voucher program is of critical importance to low-income households that cannot otherwise keep up with soaring rents. The typical U.S. apartment now costs $283 more each month than it did a year ago, an increase that has far outpaced wage gains, according to data from the Census Bureau and Realtor.com.

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

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

“Do these steps that Compass has taken on training and recommitting to a nondiscrimination policy, do those really help change practice, and therefore lead to more voucher holders being able to find landlords that accept their vouchers?” she said. “That’s where the proof will be.”

Legal Aid Society attorneys are also representing the plaintiffs.