Can a payment standard drop after I've signed?

Question

Trying to understand the rent side before I understand anything else. My understanding is that there's a published number per bedroom count for an area and the housing authority won't approve rent above it. What I don't get is who publishes it and how often it changes.

And the thing I'm actually worried about: if that number goes down, does my existing rent go down with it? I've got no property yet, I'm reading about notes and paper mostly, but a rent that a federal agency can reset seems like a different animal than a rent a market sets and I want to know which way it can move.

Rena Guide · Accepted Answer

The chain has two links and they're worth keeping separate.

HUD publishes fair market rents for each metro area and county, broken out by bedroom count, and updates them on a schedule. Each local housing authority then sets its own payment standards within a range around those published figures. So the federal number is the anchor and your local authority picks the actual cap. Two authorities in neighboring counties can land on different standards from the same underlying data, and some authorities set different standards by zip code or submarket.

On your real question: an existing contract rent doesn't get cut when the payment standard falls. Your rent is set in the lease and the HAP contract, and a lower published standard doesn't reach back into a signed agreement. Where a decrease shows up is at the next annual recertification or when you ask for a rent increase, and it shows up as a ceiling you can't move above rather than a cut to what you already have. If the standard falls below your current rent, the usual outcome is that your rent gets frozen where it is until the standard catches up. Confirm the specific practice with your authority in writing, because how they handle a standard that has fallen below a contract rent is set in their administrative plan and varies.

One thing to look up before you look at any unit: the payment standard is a cap on gross rent, which includes an allowance for tenant-paid utilities. So if the standard for a two bedroom is 1,400 and the utility allowance is 150, the rent you can collect is 1,250. People budget against the headline number and come up short.

ehernandez74 · Answer

The utility allowance catching people is real. I pulled the schedule for one county and the allowance for a two bedroom with electric heat was almost 100 dollars more than the same unit with gas. Which unit you buy changes your ceiling before you've done anything else.

brandonlee36 · Answer

Across a small portfolio the freeze is the annoying part, not the cap. If your rent is above standard and the standard doesn't move for a couple of cycles, you're holding a rent flat while taxes and insurance don't. That's the slow squeeze on this strategy and nobody puts it in the pitch.

samantha_ruiz · Answer

@thicket that's exactly where I hit the ceiling. Two units sitting at a rent that made sense when I signed and now won't move. The market rent in that neighborhood is well above the standard, so the only way out is to leave the program, and then I'm back to full collection risk on the whole rent.

bmoreno23 · Answer

Are the fair market rent numbers public? Like can I look up my county before I talk to anyone?

tylerbrooks9 · Answer

@ember yes, HUD publishes them and the local authority usually posts its own payment standard schedule and utility allowance schedule on its site. Call the authority anyway, because the posted schedule and what the person who approves rents actually applies aren't always the same version.

Can a payment standard drop after I've signed?

6 replies