The unit rent a landlord can request is based on a few factors:
1. Is the rent reasonable compared to other privately rented units that do not have any subsidy? This is called rent reasonableness. Think of this as a rent appraisal. We check to see if the owner is requesting a competitive rent in the rental market and is not charging our participants more because they receive subsidy. Federal law does prohibit them from charging more rent to Housing Choice Voucher participants than they would unsubsidized renters.
2. Can the family afford the initial rent?
The Agency determines the maximum subsidy they will pay based on the payment standard amount. This does not mean that the family cannot pay more than this amount it implies that whatever exceeds the maximum amount of subsidy the family might be responsible for. For this to be approved, the Agency must determine that the family can afford the additional amount in the first year of lease-up. This step is called affordability. Typically, families with limited to no income do not qualify for amounts more than the payment standard.
If the rent for the unit exceeds the reasonable rent amounts or affordability amounts the housing specialist will contact the landlord to negotiate rent.
There is no room to negotiate in the cases where the rent is considered to exceed rent reasonableness. This means that the rent the landlord is asking for is too high for the private rental market. For the participant to be approved to rent the unit, the landlord will be required to reduce their rent. The landlord does have the opportunity to provide rental market data that will support the rent requested for reconsideration.
If the rent is considered unaffordable to the family, which is the more common scenario, the landlord could choose to reduce its rent for the first year and then complete a rental increase request 60 days before completing the initial lease term.
The landlord could also choose to separate any fees included in the rent such as lawn maintenance, pool maintenance, homeowner’s association fees, or any utilities that may be included. If this occurs, rent reasonableness and affordability would need to be completed again before approval.
After the family has occupied the unit and completed an initial term (typically 12 months), rental increases are approved based on rent reasonableness. The family’s affordability is not a factor.
Keep in mind, the program is designed to promote a higher level of independence from governmental subsidy while also improving life quality.