Is Your Unit Rent Reasonable?
Will You Be Approved for a Section 8 Tenant?
If you are a landlord who is considering renting your unit to a tenant with a housing choice voucher, your unit must be approved by Section 8. Part of this approval involves passing a Section 8 Housing inspection. The other part involves having your unit certified as rent reasonable by the local Public Housing Authority. The PHA will use certain qualifications to determine if your unit is rent reasonable.
When Does a PHA Have to Determine Rent Reasonableness?
There are certain times when a Public Housing Authority must determine if a unit is rent reasonable. These instances include:
- When a landlord is trying to have his or her unit approved to be occupied by a Section 8 tenant.
- When the landlord of a Section 8 tenant is appealing to the Public Housing Authority for an increase in rent.
- When a housing contract is up for renewal, the PHA must compare the Fair Market Rent from one year ago to the Fair Market Rent that is in effect 60 days before the contract expires. If the Fair Market Rent decreases by at least five percent compared to the previous year’s Fair Market Rent, the unit must be reexamined to determine if the amount that will be paid to the landlord is rent reasonable.
- When HUD instructs the PHA to do so.– This often occurs when HUD wants to review the way in which the PHA is allocating funds and conducting operations.
- When the Public Housing Authority feels it is necessary to do so.
How Does a PHA Determine Rent Reasonableness?
In order to determine if a unit is rent reasonable, the Public Housing Authority will compare that unit to similar units in the area. This is done to determine if the rent that the landlord is charging is reasonable compared to a similar unit.
For a comparable unit, the PHA will look for a unit that is similar in:
- Location- The unit must be in an area within the PHA’s jurisdiction. If the unit is in a nearby area, the PHA has to make appropriate adjustments.
- Is Comparable in Size- Even if the units have the same number of bedrooms, a one bedroom that is 600 square feet is not comparable to a one bedroom that is 1200 square feet. The units must therefore be similar in number of bedrooms and in square footage.
- Similar in Type- To be comparable, the units must be located in the same type of property, such as in a single family home, a multifamily home, an apartment building or a high-rise.
- Date of Construction- The PHA will not compare a newly constructed home to a home that was built in 1900.
- Condition of Property- A rundown property will not be compared to a well-maintained property.
- Quality of Renovations- The PHA will not compare an upgraded unit to one that has not been renovated. For example, a unit with brand new kitchen appliances and hardwood floors will not be compared to a unit with 50-year old carpet and only a working stove.
- Property Amenities and Services- The Public Housing Authority will compare units with similar amenities and services, such as a washer and dryer, central air conditioning, designated parking spot, outdoor space, elevator or doorman.
- Number of Included Utilities- The PHA must take into account any utilities that are included in the price of the rental. They must make the necessary adjustments in order to accurately compare the units.
When the Public Housing Authority is determining rent reasonableness, they are comparing the unit to similar units in the area. Comparable are pulled for two types of properties:
- Properties in the Area that Are Similar-The PHA will compare the unit that is trying to be approved for Section 8 to units in the area that are not part of public housing assistance programs.
- Similar Units on the Premises- If the unit that is vying to be approved by Section 8 is located in a property that has one or more similar units which are not part of a public housing assistance program, the PHA will compare the units. The landlord has to certify that the Section 8 housing choice voucher amount will not be more than the amount of rent the landlord collects for the other comparable units on the premises.
What If Your Unit Is Not Considered Rent Reasonable?
If, after conducting their comparable search, the Public Housing Authority determines that your unit is not rent reasonable, your unit will not be eligible to house the Section 8 tenant. You will not be able to collect the housing choice voucher, even if the tenant is willing to pay more out of their own pocket to live in your unit. The Section 8 tenant will be entitled to search for a unit that is considered rent reasonable.