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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

HUD publishes 2019 FMRs

Posted by Annie Stevenson on Sep 5, 2018 3:35:33 PM

In a notice published Friday in the Federal Register, HUD announced that it has published fair market rents (FMRs) for federal fiscal year (FFY) 2019 (October 1, 2018 through September 30, 2019). As explained in the notice:

Section 8(c)(1) of the United States Housing Act of 1937 (USHA), as amended by the Housing Opportunity Through Modernization Act of 2016 (HOTMA), requires the Secretary to publish FMRs not less than annually, adjusted to be effective on October 1 of each year. This notice describes the methods used to calculate the FY 2019 FMRs and enumerates the procedures for public housing agencies (PHAs) and other interested parties to request reevaluations of their FMRs, as required by HOTMA.

The deadline date for comments on the 2019 FMRs is October 1, 2018. The revised FMRs will be effective on October 1, 2018 (unless HUD receives a request for reevaluation of specific area FMRs).

Materials posted today on PD&R’s FMR page include the FFY 2019 FMRs for all areas (see Schedule B) and the FFY 2019 small area FMRs (SAFMRs) for metropolitan FMR areas (see Schedule B addendum).

HUD has also posted a schedule of unadjusted rents, which are used for setting public housing flat rents in non-metropolitan areas. The accompanying county-level data set was also posted to the FMR page. HUD no longer publishes exception FMRs for manufactured home spaces in the HCV program since PHAs now use their regular FMRs/SAFMRs for subsidy determinations.

Learn more about how to  correctly calculate rent

Topics: flat rent, FMR, HOTMA, SAFMR

HUD suspends mandatory SAFMRs

Posted by NMA on Aug 15, 2017 9:00:12 AM

govt-columns.jpgIn a letter to PHAs dated August 11, HUD announced that it has suspended the mandatory use of small area fair market rents (SAFMRs) for a period of two years. The suspension applies to 23 of the 24 metropolitan areas which had been selected to use SAFMRs beginning on October 1, 2017. The requirement has been suspended for two years, until October 1, 2019.

According to the letter, HUD decided to suspend the requirement for three reasons:

  • Interim findings of the SAFMR demonstration, in operation since 2012, indicate the need for further analysis of benefits and costs
  • Responses to HUD’s request for comments on regulatory reform recommended a suspension of the requirement
  • HUD has not yet provided guidance and technical assistance

The letter further states that PHAs may request permission from HUD to implement SAFMRs on a voluntary basis. Some PHAs may have already prepared for implementation and may wish to proceed. HUD will expedite the approval process for PHAs impacted by the suspension of mandatory SAFMRs.

PHAs designated to use 50th-percentile FMRs, for which the three-year authorization period did not expire before January 17, 2017, will continue to use them until October 1, 2019. These PHAs will then transition to the use of SAFMRs.

HUD plans to provide implementation guidance and training on all aspects of the rule, including voluntary use of SAFMRs and options for PHAs operating in 50th-percentile FMR jurisdictions. Questions may be directed to HUD field offices or to SAFMR_Rule@hud.gov.

To receive more updates and analysis like this on the latest HUD news, subscribe to NMA’s PIH Alert and receive a daily email with breaking stories and other important information for PHAs and housing professionals.

Topics: flat rent, FMR, PIH Alert, Program News and Notices

Q&A: Flat rent annual review

Posted by NMA on Sep 6, 2016 12:32:53 PM

Flat rent annual reviewQUESTION    I’m confused about all of the flat rent changes over the past couple of years. I see that HUD has published FMRs for 2017 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) 2017 on August 26. The FMR data set includes a table of unadjusted rents. Small area fair market rents (SAFMRs) were posted on August 30. 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 flat rent annual 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 in the Federal Register) and in Notice PIH 2015-13 (published September 8, 2015). 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 FMR
  • 80 percent of the SAFMR (published 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. For areas in which HUD has not published a SAFMR or unadjusted rent, flat rents must be set at no less than 80 percent of the applicable FMR.

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 2015-13 which describes the requirements for the flat rent annual review:

In order to comply with the flat rent requirements annually, no later than 90 days after issuance of new FMRs or SAFMRs by HUD, the PHA must:

1. Compare the current flat rent amount to the applicable FMR and SAFMR/unadjusted rent:

a) If the flat rent is at least 80 percent of the lower of the FMR or SAFMR/unadjusted rent, the PHA is in compliance with the law, and no further steps are necessary;

b) If the flat rent is less than 80 percent of the lower of the FMR and SAFMR, the PHA must set flat rents at no less than 80 percent of the lower of the FMR or SAFMR/unadjusted rent, subject to the utilities adjustment in this notice, or the PHA may request an exception flat rent pursuant to the requirements of Section 4 of this notice;

2. Update the flat rent policies in the admissions and continued occupancy policies (ACOP) as necessary;

3. At all new admissions, permit the family to choose between the flat rent amount and the income-based rent; and

4. For families that are current public housing residents, offer the updated flat rent amount at the next annual rent option, and permit the family to choose between the flat rent amount and the income-based rent

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.

Are you a PIH Alert subscriber? Every Friday, the PIH Alert includes one frequently asked question (FAQ) submitted by our readers. To submit your question, email Annie Stevenson at annie@nanmckay.com with the subject line "FAQ Friday."

If you're attending The Housing Conference this month in San Antonio, you can also ask Annie your question in person! Don't miss her sessions on the fair housing final rule and new and upcoming affordable housing legislationRegister online or email sales@nanmckay.com for more information.

Topics: final rule, flat rent, FMR, PIH Alert, PIH notices, Program News and Notices, Q&A, streamlining

2017 SAFMRs now available on HUD's website

Posted by NMA on Aug 30, 2016 11:11:07 AM

HUD’s Office of Policy Development and Research (PD&R) has posted “hypothetical” small area fair market rents (SAFMRs) for federal fiscal year (FY) 2017. The data set of 2017 SAFMRs was posted this morning to PD&R’s SAFMR web page.

2017 FMRs were published in a Federal Register notice on August 26. That notice explained that while HUD will no longer publish proposed and final versions of FMRs, PHAs may comment on the FMRs and request reevaluation until September 26.

As further explained in the August 26 notice, PHAs may provide data-supported comments or requests for reevaluation of SAFMRs by using HUD’s special tabulations of the distribution of gross rents by bedroom unit size for ZIP code tabulation areas. HUD will post revised SAFMRs after confirming the calculations.

HUD published a proposed rule on the use of SAFMRs in the HCV program on June 16. The rule, which is intended to help reduce the number of assisted families that reside in areas of high poverty concentration, would require the use of SAFMRs in certain metropolitan areas if the area meets a specific set of criteria. SAFMRs may also be used in determining public housing flat rents in metropolitan areas.

Interested in learning more about SAFMRs? Make an appointment to talk with one of our rent calculation experts at The Housing ConferenceAnnie Stevenson and other industry experts are available for limited free one-hour Q&A sessions with registered conference attendees. Don’t delay, signups close this Friday! Register online or email sales@nanmckay.com for more information.

Topics: flat rent, FMR, Program News and Notices, proposed rule

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