Rent Determination

Requested Rent

As a landlord with the Housing Choice Voucher program, the amount of rent that you will receive for your unit is dependent on many different factors. Landlords may request any amount of rent for their unit they would like, however, as an HCV participant, it is the agency’s responsibility to ensure that the amount requested is reasonable for the unit and affordable for the participants applying to live in your unit.

The housing authority may not approve the requested rental amount due to any one of several different criteria. In the event the requested rent is not approved by the agency, they will present the landlord with a rent offer that represents the maximum amount that can be approved. The landlord will have the chance to accept or refuse the rent offer, however, the agency will not negotiate.

The affordability criteria for rental pricing is regulated by HUD and the agency itself is not in a position to make any changes to these guidelines. Therefore, the offer that is made by the housing authority is final. If the offer is refused, the case is closed and the tenant is required to find another unit to apply for.

If you accept the offer, the case moves forward.

Rent Reasonableness

As mentioned, the PHA must ensure that the rent charged by the landlord is reasonable for the unit. This is called Rent Reasonableness.

Ensuring that rental pricing is reasonable for the participant is very paramount. If a PHA approves rents that are too high, the program funds are misdirected. If approved rents are too low, the landlord does not have an incentive to participate in the program, or they participate only with their lowest-cost and lowest-quality units. In addition, participants may be inappropriately restricted to certain jurisdictions where they can reside.

Your housing authority will use many different factors to determine what amount of rent is reasonable for the unit the tenant has chosen, including:

  • Location: Is this a neighborhood where rental pricing may be higher or lower than usual? Are public transportation to schools, stores, medical facilities, etc., readily available and easily accessible?
  • Overall Unit Quality: The extent to which the unit meets or exceeds the housing quality standards.
  • Size of the Unit: Including number of bedrooms, bathrooms, and square feet of living space.
  • Unit Type: Is this a garden apartment, elevator building, townhouse, single-family detached property?
  • Property Age: How old or new is the property or has the property undergone significant rehabilitation?
  • Amenities: What amenities are included such as central air conditioning, carpeting, dishwasher, washer/dryer connections, garbage disposal, playgrounds, storage, parking, etc.
  • Utilities: Are any utilities included in the rental amount?
  • Comparable Units: What do similar units within a certain radius cost?

Rent reasonableness, combined with the tenant’s income, and a few other factors, will determine the amount of the housing assistance payment landlords will receive.

Payment Standard

The payment standard is just one of the factors that are taken into consideration when determining the amount of monthly assistance landlords will receive on behalf of the tenant. The payment standard is defined as athe maximum subsidy amount a Public Housing Authority can pay on behalf of a tenant. These calculations are based on HUD-established Fair Market Rents (FMR) for the area. Think of this as a cap in assistance.

The tenant’s payment standard is determined by the lower of either the voucher size or the unit size. The level of assistance a participating household qualifies for based on their household composition determines voucher size, which is communicated by the number of bedrooms a household will need. The voucher size also determines the payment standard the housing authority will use when calculating the rent offer. The unit size refers to how many bedrooms an existing unit has.

Participants are able to select a unit that is a different size than their voucher size, however, this is where the lower of the 2 payment standards will be used. For example, if the tenant receives a 2-bedroom voucher, it has been determined by the housing authority that the household requires a 2-bedroom unit to meet their needs. The participants are able to select a unit that is a different size than their voucher size, however, this is where the lower of the 2 payment standards will be used. So if the tenants choose a 1 bedroom unit, the housing authority will use the unit size of 1-bedroom to determine the payment standard for their rent offer because it is the lower of the two. If they were to choose a 3-bedroom unit, the housing authority would use the voucher size of 2-bedroom to determine the payment standard.

Affordability

While a tenant may select a unit with a rent amount exceeding the agency payment standard, the agency will not approve a unit for which the tenant’s rental price paid to the landlord, plus the utility allowance, would exceed 40 percent of their monthly adjusted income.

This “maximum initial rent burden” is applied each time a tenant moves to a new unit or signs the first assisted lease for a unit. This rule does not apply to changes in the tenant required payment portion after moving in. For example if the landlord requests a rent increase, this does not apply.

Housing Assistance Payment (HAP)

The housing assistance payment, or HAP, is the final amount landlords are paid by the agency minus the portion required to be paid by the tenant.