As we reported earlier this week, HUD has issued two notices concerning changes to the flat rent rule included in the fiscal year (FY) 2015 appropriations act: an interim rule published Tuesday, and Notice PIH 2015-13, published Wednesday. The notices offer PHAs two methods for setting flat rents at a lower level than 80 percent of the applicable fair market rent (FMR): by utilizing an FMR for a smaller geographic area, or by requesting an exception flat rent from HUD.
Notice PIH 2015-13 also places some restrictions on PHAs’ ability to phase in flat rent increases. Under the previous HUD guidance (Notice PIH 2014-12), PHAs were required to phase in increases exceeding 35 percent, and had discretion to phase in increases of 35 percent or less over a three-year period. For example, a 30 percent increase could be phased in at 10 percent per year over three years.
Notice PIH 2015-13, which replaces Notice PIH 2014-12, restricts PHA flexibility to phase in flat rent increases. Since PHAs are now permitted to establish flat rents at a lower level, only increases exceeding 35 percent will be phased in. Flat rents will be phased in at the full 35 percent per year. The notice contains the following instructions for implementing the new requirement:
On a case-by-case basis, at the family’s next annual rent option, compare the updated flat rent amount applicable to the unit to the rent that was being paid by the family immediately prior to the annual rent option;
a. If the new flat rent amount would not increase a family’s rental payment by more than 35 percent, the family may choose to pay either the updated flat rent amount or the previously calculated income-based rent;
b. If the PHA determines that the updated flat rent amount would increase a household’s rental payment by more than 35 percent, the family may choose to pay the phased-in flat rent amount resulting from the flat rent impact analysis or the previously calculated income-based rent.
Is your PHA in search of a proven methodology for ensuring that program participants are paying reasonable rents? GoSection8.com can help. Specializing in rent reasonableness, Go8 has served tenants, landlords, and housing authorities across the United States since 2004. Go8 can also assist public housing agencies with the new flat rent requirements. To learn more about how you can bring Go8 to your agency, email firstname.lastname@example.org.