lease assignment vat

VAT issues for lease assignments and terminations

Produced in partnership with martin scammell.

This Practice Note is about the VAT issues to consider on the assignment or termination of a lease.

In this Practice Note, unless stated otherwise, termination means any form of termination of a lease, including surrender, exercising an option to break, forfeiture and disclaimer on insolvency .

Must the seller account for VAT?

VAT will be chargeable on a payment to a departing tenant (the seller) on an assignment or termination of a lease for consideration if the seller has opted to tax, unless:

the option is disapplied because of the type of property or its intended use (see Practice Note: Option to tax—disapplication for residential and other property)

the option is disapplied under anti-avoidance rules (see Practice Note: Option to tax—disapplication under anti-avoidance rules), or

it is a VAT-free transfer of a going concern (TOGC) (see Practice Note: Transfers of a going concern involving land and buildings)

If the seller has not opted to tax, an assignment or termination for consideration will be exempt unless:

the property is such that mandatory standard-rating

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Martin Scammell is an independent VAT consultant, specialising in property and construction matters, who works with tax departments in major corporates and universities, and with a number of law and accountancy firms. He is the author of the leading reference work on VAT and property. Martin started out in VAT Policy in Customs & Excise, was a Partner at Ernst & Young, where he headed up the VAT real estate group, and then became head of indirect tax at Eversheds. He has been involved in the development of VAT legislation and policy over many years, and regularly serves on working parties established by HMRC. He was a member of the Office of Tax Simplification’s consultative committee for their review of VAT in 2017, and in 2018-19 of HMRC’s external stakeholder group considering the proposed reverse charge for building work. Martin currently works with HMRC as technical secretary to the British Property Federation’s VAT Committee, as an adviser to the British Universities’ Finance Directors’ Group and as a member of HMRC’s Joint VAT Consultative Committee and VAT Land and Property Liaison Group. He is a member of the Chartered Institution of Taxation’s indirect taxes and property taxes committees.

Related legal acts:

• Agricultural Tenancies Act 1995 (1995 c 8)
• Landlord and Tenant Act 1954 (1954 c 56)

Key definition:

Forfeiture definition, what does forfeiture mean.

Forfeiture is the lost right to possession.

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How to assess the VAT on the assignment of a car lease?

1. What is the assignment of a lease?

The assignment of a lease involves the transfer or surrender of the leased object (such as a car) and the associated obligations (most commonly, instalment payments) to another party. In legal terms, the new lessee acquires receivables from the assignor and becomes the possessor and user of the leased object.

2. Lease assignment and VAT

A lessee who has been using a leased asset under a lease agreement, in exchange for transferring rights from the lease agreement to a buyer, should receive compensation. The amount of compensation for the lease assignment (also known as consideration) should be treated as a sale subject to VAT at the standard rate of 23%. Consequently, there should be no correction of past tax settlements. The lessee also does not need to include lease instalments or deducted VAT in the cost of revenue. However, the buyer of the leased asset will have the right to deduct the VAT charged on the lease assignment agreement, subject to general rules (with a deduction limit of 50% if the vehicle is used for both business and private purposes).

3. VAT correction

In particular, in the case of the assignment of an operational lease agreement, there will be no possibility of correcting the input tax, as provided for in the case of a change in the intended use of the vehicle (i.e., for use exclusively in business activities, not in a mixed manner – this presumption occurs in the case of selling a car). The correction involves the ability, when using a car for both private and business purposes, to deduct 50% of the VAT charged on invoices related to the use of the car, including invoices for vehicle lease instalments. In the case of changing the vehicle’s intended use to be solely for business purposes, there is an opportunity to deduct 100% of the charged VAT. If such a change from mixed use to exclusive business use occurs during the lease, there is a possibility of an increasing correction of VAT. The increasing correction involves increasing the deductible VAT on the purchase of the car by the amount of VAT when changing the vehicle’s use.

• In January 2021, the taxpayer purchased a passenger car for a net amount of 100,000.00 PLN + 23,000.00 PLN (23% VAT). The vehicle was used by the taxpayer for both private and business purposes. They were entitled to a VAT deduction of 50%, amounting to 11,500.00 PLN. The car was sold in May 2022, and the sale was subject to 23% VAT.
• The correction period is 60 months (from January 2021 to December 2026). The taxpayer has 42 months remaining (from May 2022 to December 2026).
• The VAT that has been deducted so far, i.e., 11,500.00 PLN, is subject to correction.
• The correction should be calculated as follows: (deducted VAT / 60) x the number of remaining correction months.
• In this example, it would be (11,500.00 / 60) x 42 = 8,050.00 PLN.

The taxpayer will have the option to correct the input VAT on the purchase of the car in January 2021 by 8,050.00 PLN. Similarly, in the event of a change in the vehicle’s designated use, from solely business to both business and private, the taxpayer will need to reduce the deducted VAT at the time of vehicle acquisition. The aforementioned correction could be carried out by the taxpayer based on Article 90b of the VAT Act when, from the acquisition, import, or commencement of use of the car until its sale (or change in use in another way), no more than 60 months have elapsed.

In such a case, it is necessary to make a correction to the input tax (deducted at 50%) for the remaining period until the end of the correction period. However, Article 90b(1) of the VAT Act, as mentioned earlier, refers to the correction of input VAT that was deducted at the time of the acquisition, import, or production of the car.

The VAT correction, therefore, applies only to the purchase of the car. It does not include the input tax from leasing, rent, or fuel expenses. According to the interpretation of the Director of the National Fiscal Information on May 24, 2021 (reference: 0114-KDIP4-2.4012.204.2021.1.MC), in light of Article 90b(1) of the law, expenses related to the use of the vehicle under a lease, operational lease, or a similar agreement are not subject to correction. Deductions for these expenses occur continuously (unlike ownership acquisition – a one-time, upfront deduction). Therefore, there is the possibility of verifying this deduction continuously. In the month of changing the vehicle’s designated use, the taxpayer should adjust the deduction amount.

Importantly, in the case of selling the vehicle during the correction period, there is a statutory presumption of a change in the vehicle’s use to exclusively for business purposes until the end of the correction period. For the purchase of a car valued up to 15,000.00 PLN, the VAT correction period is 12 months. In the case of leasing assignments, this situation does not apply; therefore, there is no incurred input tax that, based on VAT regulations, could be subject to correction. These regulations apply exclusively to purchased cars, and the assignment does not affect the change in the vehicle’s use.

4. Tax Situation of the Assignor (Acquiring Receivables)

The tax situation is different for the entity acquiring receivables. In this case, the input VAT from the acquisition of receivables from the leasing agreement will be subject to deduction, based on general rules applicable to passenger cars. Accordingly, in the case of using the car exclusively for business purposes, 100% of the VAT is eligible for deduction, while in other cases, 50% of the incurred VAT can be deducted.

The net consideration value may be recognized as a deductible expense, taking into account the limits related to the car’s value. For a non-electric passenger car, the expenditure can be considered a deductible expense only in proportion to the car’s value relative to the limit, which is 150,000.00 PLN (for electric cars, 225,000.00 PLN).

Further settlements related to the acquired lease will proceed for the acquirer in a standard manner, without any specific deviations.

The act of leasing assignment is becoming increasingly common on the market, especially in the area of personal car transactions, where leasing is a very attractive form of financing. Leasing assignment allows a business owner to dispose of obligations before the end of the lease agreement.

However, it is essential to remember that leasing assignment will be subject to VAT according to general principles, i.e., the entire consideration value should constitute taxable sales value subject to VAT. On the other hand, for the entity acquiring receivables from the lease, the input VAT from the consideration is subject to deduction in its VAT settlement, depending on how the car is used: either 100% or 50%, for usage in both business and private purposes.

It is also important to note that, from the assignor’s perspective, there will be no possibility to correct input VAT from previous years in the case of leasing assignment. This is because, in the case of assignment, it cannot be considered a car sale, and thus, Article 90b of the VAT Act will not apply. Consequently, past settlements will remain unchanged.

Related posts:

New HMRC guidance: VAT and SDLT on lease renegotiations

The financial difficulties arising out of the COVID-19 pandemic have created a need for landlords to secure on-going letting of their properties and a need for tenants to improve their cash flow.

The vast number of lease renegotiations in recent months have tended to involve either a rent reduction or rent free period in exchange for either the removal of a tenant’s break right or some form of extension to the term of the lease.

On 29 July HMRC published Revenue and Customs Brief 11 (2020) (RCB11) setting out the VAT and SDLT consequences of these types of deals. The brief notes that it has been issued in response to the current rise in lease renegotiations and that it does not reflect any change in HMRC’s policy or interpretation of the law, although many considered HMRC’s previous VAT position to be unclear.

Prior to RCB11, some tax advisers had expressed concerns that common lease renegotiation scenarios (particularly rent reductions/holidays in exchange for the removal of a tenant break right or an extended lease term) could have been treated by HMRC as a ‘barter’ transaction for VAT purposes. If so, both the landlord and the tenant would have been treated as making supplies to each other, meaning that both parties may have needed to invoice, charge and account for VAT. Such an outcome can create numerous complexities, including attributing an appropriate value to the supplies and dealing with situations where one party can recover VAT and the other cannot.

RCB11 is helpful in clarifying the following key points:

• If the tenant pays no more than a peppercorn fee (and does not provide any other form of consideration to the landlord – see below) in order to obtain the benefit of a reduced rent, rent-free period or rent holiday, then there are no changes to the supplies the landlord is making to the tenant under the lease: the landlord makes no ‘new’ supply in agreeing to the lease amendment and, assuming the landlord has opted to tax the property, the landlord should simply account for the VAT on the rent it charges to the tenant in line with the revised rent payment schedule (i.e. VAT should be charged on the reduced rent, rather than the rent that would have fallen due prior to the renegotiation).
• Where a tenant agrees to the removal of a break right or agrees to extend the term of a lease, the tenant should not be regarded as making a supply to the landlord. By implication, the tenant’s agreement to these changes should not be regarded as consideration for the landlord’s rent reduction. The tenant does not need to issue a VAT invoice in this situation and the landlord, if they have opted to tax, will simply issue VAT invoices in respect of the actual (revised) rent payable by the tenant.
• Where a tenant does ‘something more’ than agree to the removal of a break right or extend a lease term (RCB11 includes an example of a tenant agreeing to undertake works on the landlord’s behalf) the tenant could be making a supply to the landlord. If so, the amount of the rent reduction will be treated as the consideration for the tenant’s supply. This could result in a requirement for the tenant to issue a VAT invoice to the landlord for an amount equal to the rent reduction and a corresponding requirement on the landlord to account for VAT on the original (higher) rent.

The rationale behind HMRC’s position aligns with their longstanding view in relation to payments made by landlords to induce tenants to enter into a new lease. In most situations, an inducement payment to a tenant is not subject to VAT on the basis that the tenant does not make a taxable supply to the landlord when all they are doing is agreeing to pay rent under a lease. RCB11 extends this logic to lease renegotiation scenarios: by agreeing to remove a break right or extend a lease term, all the tenant is doing is ‘agreeing to pay rent’ for a longer (or more definite) period, so the benefit of a reduced rent does not constitute consideration for any supply by the tenant. However, as with landlord inducement payments, where the tenant is doing more than ‘agreeing to pay rent’, HMRC are likely to treat the tenant’s actions as a taxable supply. A common scenario would be a commitment by the tenant to carry out works on the landlord’s behalf (as per HMRC’s example in RCB11). However, this could cover a multitude of other possible tenant supplies, potentially including a ‘pre-wired’ tenant consent for the landlord’s benefit or other variations to the lease which do not relate to rent payment terms, the duration of the lease or break rights.

RCB11 also includes a helpful reminder of the SDLT position for lease variations. Broadly, a reduction in rent will not normally create an SDLT liability. However, further consideration should be given to situations involving extension of lease terms, grants of reversionary leases or agreements for the tenant to do more than just pay rent (eg. carrying out landlord’s works) as such arrangements may give rise to an SDLT liability and a requirement to file a return with HMRC.

The tax consequences of lease variations are rarely straight forward – each arrangement should be considered on its own facts. The VAT guidance will be a welcome clarification for landlords, tenants and advisors, alleviating concerns about notoriously complex barter transactions in many common scenarios. However, many were hoping that HMRC’s guidance would be more comprehensive – further guidance covering situations where tenants are providing ‘something extra’ would have been helpful.

Landlords and tenants who have previously applied barter transaction VAT treatment to lease renegotiations should consider whether VAT was incorrectly accounted for in light of RCB11, and whether an error correction may be necessary.

If you would like to discuss the VAT or SDLT position of any of your lease arrangements, then please reach out to your usual Bristows contact or a member of our tax team.

Julia Cockroft

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Tá an chuid seo den suíomh idirlín ar fáil i mBéarla amháin i láthair na huaire.

• Transitional measures applying to legacy leases

This section deals with the transitional measures applying to legacy leases. Together with freehold interests or freehold equivalents held prior to 1 July 2008 , these leases are referred to as transitional properties.

Legacy leases are interests in property:

• that were treated as a supply of goods under the old Value-Added Tax (VAT) on property rules
• which is a lease of ten years or longer created prior to 1 July 2008.

The term does not include interests that constitute freehold equivalent interests.

The lease must:

• have been held by a taxable person on 1 July 2008
• form part of the assets of a business at that date.

The following come within the transitional measures:

• the VAT treatment of the assignment and surrender of legacy leases
• the VAT treatment of deeds of variation
• how to account for VAT on legacy leases
• Capital Goods Scheme (CGS) and legacy leases
• legacy leases post-letting expenses
• sale of a property following the surrender of a legacy lease
• the VAT treatment of a legacy lease reversion.

Further guidance contains more detailed information on the VAT treatment of transitional measures applying to legacy leases.

Published: 12 September 2023 Please rate how useful this page was to you Print this page

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• Practical Law

VAT on reverse premium paid by an assignor of a lease

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• Taxation: Land and Buildings
• United Kingdom

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VAT Land and Property

Vatlp02400 - supply: surrenders and reverse surrenders.

A surrender occurs when a landlord pays a tenant to give up his lease or licence before the term of the agreement has expired. The supply by the tenant to the landlord is exempt unless the tenant has opted to tax the building, in which case it is standard rated.

From 1 April 1989 all surrenders were treated as a standard-rated supplies in the UK. But, the matter was taken to the European Court of Justice by Lubbock Fine (CJEC C63/92), a firm of accountants, and the Court ruled that surrenders are in fact exempt under what is now Article 135 (1)(l) of the Principal VAT Directive (subject to exclusions and the option to tax).

The term “reverse surrender” is used where a tenant pays a landlord to take back a lease. HM Customs and Excise had historically maintained that a “reverse surrender” was a taxable supply by the landlord of releasing the tenant from its obligations under the lease. However, to regularise the position, the Value Added Tax (Land) Order 1995 formally restored surrenders to Schedule 9 and added reverse surrenders to it, so that both were formally recognised as being capable of falling within the exemption.

However, in the case of Central Capital Corporation Ltd (VTD 13319), the Appellant challenged HM Customs and Excise’s position that reverse surrenders were standard rated until the change of law in 1995. The Tribunal upheld the appeal, finding that:

• a landlord made a supply when he agreed to accept the surrender of his tenant’s lease in return for payment,
• the supply was exempt by virtue of Article 135(1)(l) of the Principal VAT Directive.

We accepted the analysis of the Tribunal. It was accepted that reverse surrenders were, like surrenders, exempt, since the introduction of the tax, with the option to tax available from 1 August 1989.

Many people find surrenders and reverse surrenders confusing. The following table will help you to determine the liability of the supply:

* - STANDARD RATED if option to tax is exercised by the person making

the supply (unless the option is disapplied). See VATLP22000 for information about the option to tax.

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The Business Bankruptcy Blog

Assignments For The Benefit Of Creditors: Simple As ABC?

Companies in financial trouble are often forced to liquidate their assets to pay creditors. While a Chapter 11 bankruptcy sometimes makes the most sense, other times a Chapter 7 bankruptcy is required, and in still other situations a corporate dissolution may be best. This post examines another of the options, the assignment for the benefit of creditors, commonly known as an "ABC."

A Few Caveats . It’s important to remember that determining which path an insolvent company should take depends on the specific facts and circumstances involved. As in many areas of the law, one size most definitely does not fit all for financially troubled companies. With those caveats in mind, let’s consider one scenario sometimes seen when a venture-backed or other investor-funded company runs out of money.

One Scenario . After a number of rounds of investment, the investors of a privately held corporation have decided not to put in more money to fund the company’s operations. The company will be out of cash within a few months and borrowing from the company’s lender is no longer an option. The accounts payable list is growing (and aging) and some creditors have started to demand payment. A sale of the business may be possible, however, and a term sheet from a potential buyer is anticipated soon. The company’s real property lease will expire in nine months, but it’s possible that a buyer might want to take over the lease.

• A Chapter 11 bankruptcy filing is problematic because there is insufficient cash to fund operations going forward, no significant revenues are being generated, and debtor in possession financing seems highly unlikely unless the buyer itself would make a loan. 
• The board prefers to avoid a Chapter 7 bankruptcy because it’s concerned that a bankruptcy trustee, unfamiliar with the company’s technology, would not be able to generate the best recovery for creditors.

The ABC Option . In many states, another option that may be available to companies in financial trouble is an assignment for the benefit of creditors (or "general assignment for the benefit of creditors" as it is sometimes called). The ABC is an insolvency proceeding governed by state law rather than federal bankruptcy law.

California ABCs . In California, where ABCs have been done for years, the primary governing law is found in California Code of Civil Procedure sections 493.010 to 493.060 and sections 1800 to 1802 , among other provisions of California law. California Code of Civil Procedure section 1802 sets forth, in remarkably brief terms, the main procedural requirements for a company (or individual) making, and an assignee accepting, a general assignment for the benefit of creditors:

1802.  (a) In any general assignment for the benefit of creditors, as defined in Section 493.010, the assignee shall, within 30 days after the assignment has been accepted in writing, give written notice of the assignment to the assignor’s creditors, equityholders, and other parties in interest as set forth on the list provided by the assignor pursuant to subdivision (c).    (b) In the notice given pursuant to subdivision (a), the assignee shall establish a date by which creditors must file their claims to be able to share in the distribution of proceeds of the liquidation of the assignor’s assets.  That date shall be not less than 150 days and not greater than 180 days after the date of the first giving of the written notice to creditors and parties in interest.    (c) The assignor shall provide to the assignee at the time of the making of the assignment a list of creditors, equityholders, and other parties in interest, signed under penalty of  perjury, which shall include the names, addresses, cities, states, and ZIP Codes for each person together with the amount of that person’s anticipated claim in the assignment proceedings.

In California, the company and the assignee enter into a formal "Assignment Agreement." The company must also provide the assignee with a list of creditors, equityholders, and other interested parties (names, addresses, and claim amounts). The assignee is required to give notice to creditors of the assignment, setting a bar date for filing claims with the assignee that is between five to six months later.

ABCs In Other States . Many other states have ABC statutes although in practice they have been used to varying degrees. For example, ABCs have been more common in California than in states on the East Coast, but important exceptions exist. Delaware corporations can generally avail themselves of Delaware’s voluntary assignment statutes , and its procedures have both similarities and important differences from the approach taken in California. Scott Riddle of the Georgia Bankruptcy Law Blog has an interesting post discussing ABC’s under Georgia law . Florida is another state in which ABCs are done under specific statutory procedures . For an excellent book that has information on how ABCs are conducted in various states, see Geoffrey Berman’s General Assignments for the Benefit of Creditors: The ABCs of ABCs , published by the American Bankruptcy Institute .

Important Features Of ABCs . A full analysis of how ABCs function in a particular state and how one might affect a specific company requires legal advice from insolvency counsel. The following highlights some (but by no means all) of the key features of ABCs:

• Court Filing Issue . In California, making an ABC does not require a public court filing. Some other states, however, do require a court filing to initiate or complete an ABC.
• Select The Assignee . Unlike a Chapter 7 bankruptcy trustee, who is randomly appointed from those on an approved panel, a corporation making an assignment is generally able to choose the assignee.
• Shareholder Approval . Most corporations require both board and shareholder approval for an ABC because it involves the transfer to the assignee of substantially all of the corporation’s assets. This makes ABCs impractical for most publicly held corporations.
• Liquidator As Fiduciary . The assignee is a fiduciary to the creditors and is typically a professional liquidator.
• Assignee Fees . The fees charged by assignees often involve an upfront payment and a percentage based on the assets liquidated.
• No Automatic Stay . In many states, including California, an ABC does not give rise to an automatic stay  like bankruptcy, although an assignee can often block judgment creditors from attaching assets.
• Event Of Default . The making of a general assignment for the benefit of creditors is typically a default under most contracts. As a result, contracts may be terminated upon the assignment under an ipso facto clause .
• Proof Of Claim . For creditors, an ABC process generally involves the submission to the assignee of a proof of claim by a stated deadline or bar date, similar to bankruptcy. (Click on the link for an example of an ABC proof of claim form .)
• Employee Priority . Employee and other claim priorities are governed by state law and may involve different amounts than apply under the Bankruptcy Code. In California, for example, the employee wage and salary priority is $4,300, not the $10,950 amount currently in force under the Bankruptcy Code.
• 20 Day Goods . Generally, ABC statutes do not have a provision similar to that under Bankruptcy Code Section 503(b)(9) , which gives an administrative claim priority to vendors who sold goods in the ordinary course of business to a debtor during the 20 days before a bankruptcy filing . As a result, these vendors may recover less in an ABC than in a bankruptcy case, subject to assertion of their reclamation rights .
• Landlord Claim . Unlike bankruptcy, there generally is no cap imposed on a landlord’s claim for breach of a real property lease in an ABC.
• Sale Of Assets . In many states, including California, sales by the assignee of the company’s assets are completed as a private transaction without approval of a court. However, unlike a bankruptcy Section 363 sale , there is usually no ability to sell assets "free and clear" of liens and security interests without the consent or full payoff of lienholders. Likewise, leases or executory contracts cannot be assigned without required consents from the other contracting party.
• Avoidance Actions . Most states allow assignees to pursue preferences and fraudulent transfers. However, the U.S. Court of Appeals for the Ninth Circuit has held that the Bankruptcy Code pre-empts California’s preference statute , California Code of Civil Procedure section 1800. Nevertheless, to date the California state courts have refused to follow the Ninth Circuit’s decision and still permit assignees to sue for preferences in California state court . In February 2008, a Delaware state court followed the California state court decisions , refusing either to follow the Ninth Circuit position or to hold that the California preference statute was pre-empted by the Bankruptcy Code. The Delaware court was required to apply California’s ABC preference statute because the avoidance action arose out of an earlier California ABC.

The Scenario Revisited. With this overview in mind, let’s return to our company in distress.

• The prospect of a term sheet from a potential buyer may influence whether our hypothetical company should choose an ABC or another approach. Some buyers will refuse to purchase assets outside of a Chapter 11 bankruptcy or a Chapter 7 case. Others are comfortable with the ABC process and believe it provides an added level of protection from fraudulent transfer claims  compared to purchasing the assets directly from the insolvent company. Depending on the value to be generated by a sale, these considerations may lead the company to select one approach over the other available options.
• In states like California where no court approval is required for a sale, the ABC can also mean a much faster closing — often within a day or two of the ABC itself provided that the assignee has had time to perform due diligence on the sale and any alternatives — instead of the more typical 30-60 days required for bankruptcy court approval of a Section 363 sale. Given the speed at which they can be done, in the right situation an ABC can permit a "going concern" sale to be achieved.
• Secured creditors with liens against the assets to be sold will either need to be paid off through the sale or will have to consent to release their liens; forced "free and clear" sales generally are not possible in an ABC.
• If the buyer decides to take the real property lease, the landlord will need to consent to the lease assignment. Unlike bankruptcy, the ABC process generally cannot force a landlord or other third party to accept assignment of a lease or executory contract.
• If the buyer decides not to take the lease, or no sale occurs, the fact that only nine months remains on the lease means that this company would not benefit from bankruptcy’s cap on landlord claims. If the company’s lease had years remaining, and if the landlord were unwilling to agree to a lease termination approximating the result under bankruptcy’s landlord claim cap, the company would need to consider whether a bankruptcy filing was necessary to avoid substantial dilution to other unsecured creditor claims that a large, uncapped landlord claim would produce in an ABC.
• If the potential buyer walks away, the assignee would be responsible for determining whether a sale of all or a part of the assets was still possible. In any event, assets would be liquidated by the assignee to the extent feasible and any proceeds would be distributed to creditors in order of their priority through the ABC’s claims process.
• While other options are available and should be explored, an ABC may make sense for this company depending upon the buyer’s views, the value to creditors and other constituencies that a sale would produce, and a clear-eyed assessment of alternative insolvency methods. 

Conclusion . When weighing all of the relevant issues, an insolvent company’s management and board would be well-served to seek the advice of counsel and other insolvency professionals as early as possible in the process. The old song may say that ABC is as "easy as 1-2-3," but assessing whether an assignment for the benefit of creditors is best for an insolvent company involves the analysis of a myriad of complex factors.

Housing Choice Voucher (Section 8) » For Participants » For Existing Tenants

For Existing Tenants with Housing Choice Vouchers (Section 8)

What you can do on this page:

• Learn about the Tenant Portal, so you can quickly send documents to your Housing Specialist, report household changes, report income changes, and more
• Learn about Housing Choice Voucher processes for existing tenants
• Find rental units that accept Housing Choice Vouchers
• Sign up for a free Housing Search Workshop

Tenant Portal

Now, tenants have an easier way to connect with their Housing Specialists. Need to tell SCCHA about changes to your household or see your rent amount? Need to request a reasonable accommodation? Easy. No more printing paperwork or waiting in line at the SCCHA - simply log-in to the Tenant Portal and easily manage your housing needs online.

Processes for Housing Choice Voucher Participants

• Re-examination Process
• Reporting Changes in Income
• Adding or Removing Someone to Your Household
• Starting the Move Process
• Portability (Moving to or from Santa Clara County with your voucher)

Re-examination Process for Housing Choice Voucher (Section 8) Program in Santa Clara County, CA

Participants in SCCHA’s housing assistance programs must report changes in income within 15 business days of the change. This must be done in writing.

Increases in Income

• Use the Tenant Portal or submit your change of income (in writing) to your Housing Specialist, advising of the type of income that has increased.
• Provide verification of the income that has increased. This can include paystubs, offer of employment, revised child support documentation, or Social Security award letters.
• You will be notified (in writing) if more information is needed.
• You will be notified (in writing) if there are any changes to your rent portion including the effective date of the change.

Decreases in Income

• Submit your change of income (in writing) to your Housing Specialist, advising of the income that has decreased.
• Provide verification of the income that has decreased. This can include paystubs, notification of termination of employment, revised child support documentation, or Social Security award letters.
• You will be notified (in writing) if additional information is needed.

When you add or remove someone from your household, you must notify SCCHA within 15 business days of the change.

Adding Someone to Your Household

• Submit your request (in writing) or through the Tenant Portal to your Housing Specialist, letting them know who you would like to add.
• Provide documents for the person(s) you are requesting to add. These can include birth certificates, custody documents (for minors), Social Security cards and photo identification.
• You may be required to attend an office appointment.
• You will be notified (in writing) of the decision, as well as any changes to your voucher size or rent portion.

Allowing someone to move in without SCCHA permission may be grounds for termination from the program.

Removing Someone from Your Household

• Submit your request (in writing) or through the Tenant Portal to your Housing Specialist, advising who you would like to remove.
• Provide verification of a lease agreement, utility bill or death certificate for the person you are wishing to remove.
• You will be notified in writing as to any changes to your voucher size or rent portion.

Moving Process With A Housing Choice Voucher (Section 8)

We make it easy to move to or from santa clara county, ca with a housing choice voucher (section 8). this is called portability., other information and resources for existing tenants.

• Payment Standards
• Subsidy Standards and Rental Unit Size
• Forms for Housing Choice Voucher Participants
• Housing Choice Voucher Administrative Plan + Participant Policies
• Participant Rights
• Participant Responsibilities

The chart below details the Payment Standards, or how much the Santa Clara County Housing Authority can pay towards the contract rent of households receiving rental assistance:

Housing size subsidy standards determine the number of bedrooms needed for families of different sizes. SCCHA is legally required to give the family the smallest subsidy that they qualify for based on family size. The family unit size number is entered on the voucher issued to the family. The household is responsible for paying for any bedroom(s) above the allocated unit size.

SCCHA does not determine where family members may sleep, or who shares a bedroom or other room in the home.

• One (1) room for every two people
• Approved live-in aides qualify for one (1) additional room
• An additional room may also be provided as a reasonable accommodation of a disability

Sometimes households choose to live in units which have a different number of bedrooms from the number on the voucher. In those instances, there are also limits on how many people may live in a unit:

Most processes can be started online using the Tenant Portal. If you need printable forms, please find them linked below:

Change of Household Composition

Reasonable accommodation forms, move forms and flyers, family self sufficiency forms, other forms and documents, housing choice voucher administrative plan and participant policies.

Participants in all of SCCHA’s housing assistance programs have certain rights. If you believe your rights have been violated, please contact your Housing Specialist. These rights include:

• Living in a unit that is safe, decent and sanitary
• Protection from unlawful discrimination
• Holding the property owner liable for damage to the unit caused by landlord negligence
• Paying only the amount of rent approved by SCCHA
• Receiving proper move-out notice
• Protections under the Violence Against Women Act (VAWA). You must not be denied assistance, terminated from participation, or be evicted from your rental housing because you are or have been a victim of domestic violence, dating violence, sexual assault, or stalking*

*If you feel you qualify for VAWA protections, click here to learn more about how SCCHA may be able to assist you.

As a participant in any SCCHA housing assistance program, you must follow certain rules. Failure to follow these rules may lead to termination of rental assistance. Some of your responsibilities include:

• Providing required information for your regularly scheduled reexaminations, and any other relevant housing information
• Reporting changes to income or household composition within 15 business days
• Allowing SCCHA representatives to conduct regularly scheduled inspections
• Allowing only authorized people to reside in the unit – you cannot lease or sub-lease the unit
• Complying with the owner’s lease, including paying your portion of the rent
• Complying with the terms of your voucher and Tenancy Addendum
• Copying SCCHA on any notices from or to the property owner, including 3-day pay or quit, eviction, rent adjustments and notice to move/vacate

For a complete list of your participant obligations, please click here

Search for Housing

Looking for affordable housing in Santa Clara County? Whether you have a Housing Choice Voucher or not, you may search local rental vacancies at AffordableHousing.com or with any of the property managers who specialize in affordable rentals. If you currently have a voucher, you can also approach a landlord to see if they’d be willing to participate in the Housing Choice Voucher program.

Search for Properties Accepting Housing Choice Vouchers

Request a Landlord to Accept Housing Choice Vouchers

If you already know where you want to live, you can approach the landlord and request that they rent to you with your Housing Choice Voucher (Section 8).

Upcoming Housing Search Workshops

Even with a Housing Choice Voucher, it’s not always easy finding an affordable place to rent. SCCHA offers free workshops to help you succeed in your search. Learn everything from how the process works to how to fill out a rental application.

See the answers to questions we are commonly asked by existing tenants. Still have more questions?

I submitted a request to my specialist, when can I expect them to contact me/call me back?

Please see the general response timelines below:

Response to call or email: Housing Specialists are working through their messages as quickly as possible and it may take up to 3 business days to respond to your inquiry. If your Housing Specialist is out of the office, another staff member will cover the answering of their calls and/or emails.

Response to income change request: processing times for income change requests is roughly 4-6 weeks. When your request is processed, SCCHA will send a letter to you and your landlord notifying all parties of the change. In many cases, the effective date of your new rent amount is the first day of the month after your Housing Specialist has received all supporting documentation.

Response to request for reasonable accommodation: The processing time for reasonable accommodation requests is roughly 4-6 weeks. Reasonable accommodations requests may be submitted to your Housing Specialist either verbally or in writing. After you share the request with SCCHA, the medical or other knowledgeable professional you listed in the request must respond to SCCHA's confirmation inquiry. SCCHA will mail you a letter with the decision.

What is my rent portion?

As a Housing Choice Voucher participant, you'll generally pay 30% of your income in rent. The easiest way to find your rent portion is by using the Tenant Portal, where you can always find your updated rent amount without having to contact your Housing Specialist.

I submitted a rent change request but am still waiting for SCCHA's decision on the adjusted rent. What do I pay in the meantime?

SCCHA recommends you advise your landlord of the anticipated change and pay as much as you can, if not all, of your last known rent portion. Please note that SCCHA will process the change to reflect around 30% of your household's updated income. Once SCCHA has notified you and the landlord of the change in your rent portion, you and your landlord can collaborate to figure out any reimbursements or credits to the following months' rent.

Do you offer utility assistance resources?

SCCHA is offering utility arrears assistance to qualifying tenants while funds last! Click below to learn more and see if you qualify. Program Flyer and Application Form: English , Spanish , Vietnamese .

Other Utility Assistance Resources: This flyer lists available utility assistance programs serving Santa Clara County residents who may need help with their utility bills. Please contact program providers directly or visit their website for more details.

Apply by May 31, 2024 here!

We are upgrading our software. Please stay tuned for updates — we will guide you through to make this transition as easy as possible for everyone involved.

for qualifying Housing Authority tenants!

Apply Now: English Spanish Vietnamese