Rent Information

Introduction

All Section 8 participant families have been transitioned to the Housing Choice Voucher Program on or before October 1, 2001. Rent calculation methods for the Housing Choice Voucher Program are described at 24 CFR 982.505. The rent calculation formula is specific and is not subject to interpretation.

The PHA will determine rent reasonableness in accordance with 24 CFR 982.507(a). It is the PHA’s responsibility to ensure that the rents charged by owners are reasonable based upon unassisted comparables in the rental market, using the criteria specified in 24 CFR 982.507(a).

This chapter explains the PHA procedures for determination of rent-reasonableness, payments to owners, adjustments to the payment standards, and rent adjustments.

Rent to Owner in Housing Choice Voucher Program

The rent to owner is limited only by rent reasonableness. The PHA must demonstrate that the rent to owner is reasonable in comparison to rent for other comparable unassisted units

The only other limitation on rent to owner is the maximum rent standard at initial occupancy (24 CFR 982.508). At the time a family initially receives tenant-based assistance for occupancy of a dwelling unit, whether it is a new admission or a move to a different unit, if the gross rent for the unit exceeds the applicable payment standard for the family, the family share may not exceed 40 percent of the family’s monthly adjusted income.

During the initial term of the lease, the owner may not raise the rent to owner.

Making Payments to Owners

Excess Payments

The total of rent paid by the tenant plus the PHA housing assistance payment to the owner may not be more than the rent to owner. The owner must immediately return any excess payment to the PHA.

Owners who do not return excess payments will be subject to penalties as outlined in the “Program Integrity” chapter 14 of the Administrative Plan. The Fraud Specialist establishes policies and procedures to deter and detect fraud and abuse by Tenants, Landlords, and Employees.

Late Payments to Owners

It is local business practice in the City of Omaha for property managers and owners to charge tenants a reasonable late fee for rents not received by the owner or property manager by the due date, not withstanding any grace period which is typically 5 days past the first of the month.

Therefore, in keeping with generally accepted practices in the local housing market, the PHA must make housing payments to the owner promptly and in accordance with the HAP contract.

Rent Reasonableness Standards

The PHA will not approve a lease until the PHA determines that the initial rent to owner is a reasonable rent. The PHA must redetermine the reasonable rent before any increase in the rent to owner, and if there is a five percent decrease in the published FMR in effect 60 days before the contract anniversary (for the unit size rented by the family) as compared with the FMR in effect one year before the contract anniversary.

The PHA also will redetermine rent reasonableness when an owner requests an increase in the rent to owner for a Voucher.

The PHA must redetermine rent reasonableness if directed by HUD and based on a need identified by the PHA auditing system, the PHA may elect to redetermine rent reasonableness at any other time. At all times during the assisted tenancy, the rent to owner may not exceed the reasonable rent as most recently determined or re-determined by the PHA

For the Voucher Programs, the PHA will determine and document on a case-by-case basis that the approved rent is reasonable in comparison to rent for other comparable unassisted units in the market.

The owner will be advised that by accepting each monthly housing assistance payment s/he will be certifying that the rent to owner is not more than rent charged by the owner for comparable unassisted units in the premises.

If requested, the owner must give the PHA information on rents charged by the owner for other units in the premises or elsewhere. The PHA will only request information on the owner units elsewhere if the PHA has cause to demonstrate that the owner has a tendency to charge higher rents to Program participants or if needed for rent reasonableness comparables.

The data for other unassisted units will be gathered from newspapers, Realtors, professional associations, inquiries of owners, market surveys, and other available sources.

The market areas for rent reasonableness are census tracts within the PHA jurisdiction. Subject units within a defined housing market area will be compared to similar units within the same area.

The following items will be used for rent reasonableness documentation:

• Size (number of Bedrooms/square footage)
• Location
• Quality
• Amenities (bathrooms, dishwasher, air conditioning, etc.
• Housing Services
• Age of unit
• Unit Type
• Utilities
• Maintenance

The PHA maintains a computer, which includes data on unassisted units for use by staff in making rent reasonableness determinations. The data is updated on an ongoing basis and purged when it is more than 18 months old.

At least 3 comparable units will be used for each rent determination, one of which must be from the first category above if possible. All comparables must be based on the rent that the unit would command if leased in the current market. Leased in the current market means that the unit has been leased within the last 365 days.

When there is a discrepancy in bedroom size, comparing the Request for Tenancy Approval to the County Assessor’s Database, management may choose to inspect the property to assess unit size and determine rent reasonableness.

Payment Standards for the Voucher Program

Adjustments to Payment Standards

The PHA will review the Payment Standard annually to determine whether an adjustment should be made for some or all unit sizes. The Payment Standard will be reviewed according to HUD requirements and this policy and if an increase is warranted, the payment standard will be adjusted within 90% to 110% of the current Fair Market Rent.

In a volatile market, it will be at the PHA’s discretion whether to make the change immediately or wait until the time of the annual review of the PHA’s Payment Standard.

The PHA may use some or all of the measures below in making its determination whether an adjustment should be made to the Payment Standards.

Assisted Families Rent Burdens

The PHA will review reports showing the percent of income used for rent by Voucher families to determine the extent to which the rent burden is more than 45% of income.

The PHA will separate cases where the Rent to Owner is comparable to the average Contract Rent in the certificate program from those where Rent to Owner exceeds that average.

Availability of Suitable Vacant Units Below the Payment Standard

The PHA will review its rent reasonableness database and vacancy rate data to determine whether there is an ample supply of vacant units below the Payment Standard in areas without minority concentration and/or poverty-impacted areas.

Quality of Units Selected

The PHA will review the quality of units selected by participant families before d­etermining any change to the Payment Standard to ensure that Payment Standard increases are only made when needed to reach the mid-range of the market.

PHA Decision Point

The PHA may review the quality and size of units where the Rents to Owner are above the Payment Standard by more than 25%. If more than 50% of families have selected above-average units or have selected larger units than the Voucher size, the PHA may elect not to increase the Payment Standard nor continue the analysis.

If the analysis continues, the PHA will divide those rents between contracts within the first year and after the first year. If the Rents to Owner are more than 25% above the average, in any bedroom size, the PHA may continue the analysis. If not, the PHA may elect not to increase the Payment Standard for certain bedroom sizes.

Rent to Owner Increases

The PHA may review a sample of the units to determine how often owners are increasing rents after the first year of the lease and the average percent of increase by bedroom size. The sample will be divided into units with and without the highest cost utility included.

A comparison will then be made to the applicable annual adjustment factor to determine whether owner increases are excessive in relation to the published annual adjustment factor.

Rent Reasonableness Data Base/Average Contract Rents

The PHA will compare the Payment Standards to average rents in its Rent Reasonableness Database and to the average Contract Rents by unit size. The Payment Standards should be on a par (equivalent) with these amounts.

Lowering of the Payment Standard

Lowering of the FMR may require an adjustment of the Payment Standard. Additionally, statistical analysis may reveal that the Payment Standard should be lowered. In any case, the Payment Standard will not be set below 90 percent of the FMR without authorization from HUD.

Financial Feasibility

Before increasing the Payment Standard, the PHA may review the budget and the project reserve, to determine the impact projected subsidy increases would have on funding available for the program and number of families served.

For this purpose, the PHA will compare the number of families who could be served under a higher Payment Standard with the number assisted under current Payment Standards.

File Documentation

A file will be retained by the PHA for at least three years to document the analysis and findings to justify whether or not the Payment Standard was changed.

Exception Payment Standards

HUD has authorized the PHA to establish a payment standard [between 110% and 120%] for [all unit sizes] in [designated area/PHA jurisdiction]. This is referred to by HUD as the upper range.