HUD Housing Programs: Tenants’ Rights (The Green Book): 4.4.2.1 Overview
Public housing and Section 8 tenants460 whose rents are income-based generally pay, as their “total tenant payment,” the highest of:
Public housing and Section 8 tenants460 whose rents are income-based generally pay, as their “total tenant payment,” the highest of:
Most public housing and Section 8 tenants, and a few Section 236 and Rent Supplement tenants, pay rent based on a percentage of their income. Of these, most pay 30% of their adjusted income as their rent. However, since the statute requires that the tenant pay the higher of 10% of annual income or 30% of adjusted income, the PHA or owner must do both sets of calculations to determine which figure is higher.
The vast majority of assisted tenants pay rent based on this formula.
The 10% of gross income formula465 is used only if it would produce a higher rent than any of the other methods, which is rarely the case. Its most common application is where the household has very high child care expenses, medical expenses, or disability assistance expenses, such that 10% of income exceeds 30% of adjusted income. All of the income-counting and exclusion steps described above are used, except that there are no deductions, which makes the 10% calculation somewhat simpler.
PHAs (for public housing, Section 8 Vouchers, and the Section 8 Moderate Rehabilitation program) and Project-Based Section 8 owners must establish minimum rents ranging from $0 to $50 per month, subject to certain statutory hardship suspensions and exemptions.466 These minimum rents do not apply to any other HUD or federal housing program.
The law requires HUD and PHAs immediately to grant exemptions to their minimum rent policies to families unable to pay the minimum rent because of financial hardship.474 This includes situations in which: families have lost or are waiting for benefits;475 families would be evicted as a result of the imposition of a minimum rent;476 families’ circumstances change, for reasons such as the loss of employment;
For PHAs establishing a minimum rent for the public housing and Voucher programs, all tenants should receive notice and an opportunity to comment.492 Minimum rent policies must be included in the PHA’s annual plan,493 which triggers the public notice and tenant participation procedures.494 For public housing tenants, any changes to the minimum rent policy may require an amendment to the tenant’s lease, or to policies incorporated by reference
The policy of setting rent based on income started in the public housing program. In 1969, Congress amended the public housing statute to define the maximum rent as a percentage of family income.
Tenants’ litigation to enforce their rights to specific rent limitations can take many forms. For PHAs and other landlords who are “state actors,” 42 U.S.C.A. § 1983 clearly provides a claim to enforce the Brooke Amendment and regulations regarding rent-setting, including utility allowances.
An important threshold issue when applying rent limitations is determining what is covered by the rent. For most HUD programs, “rent” covers the unit itself, as well as reasonable utilities and all essential housing services.
The public housing program has the widest variety of rent and recertification requirements and options, including:
For the project-based rental assistance programs, the assistance paid by HUD or the PHA fully covers the difference between the tenant’s portion of the rent and the contract rent for the unit. Most of the project-based rental assistance programs (with the exception of Section 8 Moderate Rehabilitation42) are governed by HUD Handbook 4350.3.43 These properties adhere to the following rent requirements and options:
A voucher tenant receives a housing subsidy that is based on the tenant’s income and the PHA’s maximum subsidy (the “payment standard”), which may not fully cover the actual rent charged (including tenant-paid utilities as determined by utility allowances).48 The ordinary tenant contribution is determined in the same manner as for the other income-based programs.49 However, a voucher tenant may pay more than that amount.
As noted above, each PHA must have a rent reasonableness policy under which it evaluates contract rents.66 In determining whether the rent is “reasonable,” in comparison to rents charged for comparable dwelling units in the unassisted local market,67 a PHA must consider the location, quality, size, unit type, and age of the contract unit, as well as any amenities, housing services, maintenance and utilities provided by the owner under the lease.68
If the PHA determines that the contract rent is “reasonable,” it must then determine the subsidy payable. This is based on the “payment standard” used by the PHA for different sized apartments, as well as the “subsidy standard” used by the PHA to determine the unit size for which the household qualifies (regardless of the unit size occupied). From this amount, the PHA subtracts the tenant’s statutory TTP contribution to determine the actual assistance payment to the owner.
PHAs often revise their payment standards as of October 1 of each year when HUD publishes new FMRs. In addition, PHAs may revise their payment standards as part of the PHA plan process, or in conjunction with HUD approval of exception or success payment standards. Such changes are effective immediately for voucher holders who are leasing up. However, some special rules apply regarding the implementation of such changes for voucher participants under pre-existing HAP Contracts.
Fair Market Rents. For the Section 8 program, FMRs are used for a variety of purposes. Most importantly, FMRs provide a benchmark for determining payment standards under the Section 8 Voucher program.
Because the Brooke Amendment requires tenants’ income-based rent contributions to cover both rent and a reasonable amount of utilities, tenants paying their own utilities must receive a utility allowance credited toward the minimum rent.496 The regulations for public housing, Section 8 Moderate Rehabilitation, and Project-Based Section 8 maintain the policy that minimum rent tenants are credited with amounts that they should pay for tenant-paid utilities (i.e., the utility allowance, not the actual bills).
Tenants who received Enhanced Vouchers, because their owners prepaid HUD-subsidized mortgages or opted out of Project-Based Section 8 program,500 are not subject to the usual Voucher minimum rent rules. Their minimum rent is instead initially equal to the dollar amount of rent required at the time of the owner’s prepayment or opt-out,501 not an amount between $0 and $50 set by the PHA.
Congress has adopted a welfare rent provision that permits the PHA or owner to charge as rent the shelter portion of the welfare grant, but only where that component is specifically designated and adjusted in accordance with actual housing costs.508 HUD’s implementing regulations and guidance parrot the statute.509 Thus, not all shelter components of a welfare grant may be used to determine rent under the Brooke Amendment.510 The pur
Tenants who pay rent based on income and are also responsible for paying any utilities must usually receive a utility allowance526 credited against their statutory rent obligation. This includes almost all public housing, Project-Based Section 8, Voucher, Rent Supplement and Section 236 RAP tenants, and those Section 236 tenants paying more than basic rent.
The United States Housing Act allows public housing tenants (but not Section 8 tenants) the option of paying a “flat rent,” based not on tenant income, but on the “rental value” of the unit.
Under a policy known as “rent choice,”548 all public housing tenants have the right, once each year, to choose between having their rent set at the flat rent or based on their income. Ordinarily tenants will only choose a flat rent if they have relatively high income, which would result in a higher income-based rent. If a family chooses a flat rent, the PHA does not pay any utility allowance for any tenant-paid utilities,549 which an income-based rent tenant would receive.
Rents for families with some household members who are immigrants ineligible for HUD assistance have their own special rules. Although Congress has made certain categories of immigrants ineligible for HUD assistance, other members of their families (e.g., citizens or legal permanent residents) remain eligible. To reconcile these conflicts, HUD requires pro-ration of the housing assistance for “mixed families,” i.e., ones with both eligible and ineligible members.556