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FAQ Friday: Flat rent annual review

Posted by Annie Stevenson on Sep 7, 2018 11:22:45 AM

Question

I’m confused about all of the flat rent changes over the past few years. Fair market rents for 2019 were just posted and I’m not sure what I’m supposed to do with them. Help, please!

Answer

You’re correct that HUD published the fair market rents (FMRs) for federal fiscal year (FFY) 2019 on August 31. The FMR data set includes tables of unadjusted rents and small area fair market rents (SAFMRs). Your agency will need one or more of these data sets in order to comply with HUD’s current requirements for reviewing flat rents on an annual basis. The review must be completed within 90 days after the issuance of new FMRs.

The current requirements for determining public housing flat rents were published in the streamlining final rule (published March 8, 2016 in the Federal Register) and in Notice PIH 2017-23 (published November 30, 2017). The corresponding regulations are at 24 Code of Federal Regulations 960.253. PHAs are now required to set flat rents at no less than the lower of:

  • 80 percent of the applicable fair market rent (FMR)
  • 80 percent of the small area fair market rent (SAFMR) for metropolitan areas
  • 80 percent of unadjusted rents (published for nonmetropolitan areas)

Alternatively, PHAs may apply for an exception waiver through HUD to allow a lower flat rent. HUD has recently published a flat rent exception request training and a flat rent market analysis tool to assist PHAs with the exception process.

Since FMRs are published annually, PHAs must now review flat rents each year to ensure compliance with the current rule. The following is an excerpt from Notice PIH 2017-23 which describes the requirements for the annual review:

In order to comply with the flat rent requirements annually, no later than 90 days after the effective date of new FMRs or SAFMRs published by HUD, the PHA must:
1. Compare the current flat rent amount to the applicable FMR and SAFMR/unadjusted rent. If the PHA is in compliance with the law, no further steps are necessary:
a) If the flat rent is at least equal to the lower of:
a. 80 percent of the FMR, or
b. 80 percent of the SAFMR (or if no SAFMR is available, 80 percent of unadjusted rent).
b) If the current flat rent is less than the lower of option a or option b above, the PHA must set flat rents at no less than the lower of the 80 percent FMR or 80 percent SAFMR/80 percent unadjusted rent, subject to the utilities adjustment in Section 6 of this Notice, or the PHA may request an exception flat rent pursuant to the requirements of Section 5 of this Notice;
2. Update the flat rent policies in the Admissions and Continued Occupancy Policies (ACOP) as necessary;
3. Permit the family to choose between the flat rent amount and the income-based rent for all new admissions; and
4. Offer the updated flat rent amount at the next annual rent option for families that are current public housing residents, and permit the family to choose between the flat rent amount and the income-based rent, subject to the phase-in requirements in Section 8 of this Notice.

Flat rent increases must be capped at 35 percent per year. PHAs are no longer permitted to phase in increases of 35 percent or less.

Learn more about how to  correctly calculate rent

Topics: Flat Rent, FMR

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