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May 13

All about Voucher Program Rent, Part 1: Affordability and Rent Reasonableness

Posted on May 13, 2015 at 12:25 pm by Dawn Corrigan

Note: This is the first in a four-part series on voucher program rents.

Landlords who are considering renting their units on the voucher program often have questions about how much rent they can ask for their unit. The simple answer is that you should request the same rent for a voucher-holder as you would for a non-voucher holder, based on your knowledge of what comparable units in the neighborhood are currently renting for.

When the tenant submits a Request for Tenancy Approval (RTA) for your unit to our office, Pensacola Housing staff will perform two evaluations of the rent you requested before a contract can be written.

The first rent evaluation is “Affordability.” This measure looks at your proposed rent plus the tenant family’s estimated cost for essential utilities, which together are known as the “gross rent,” and compares this amount to the payment standard and to the family’s adjusted monthly household income.

Housing Tip 2Housing Tip: To calculate a unit’s gross rent, you can use Pensacola Housing’s Utility Allowance Schedule to calculate the estimated cost for essential utilities. On the schedule, you’ll use the bedroom size for either the unit or the family’s voucher, whichever is smaller. Circle the dollar amounts in the appropriate column and rows for Heating, Air Conditioning, Cooking, Other Electric, Water Heater, Water, Sewer, and Trash Collection. Of those dollar amounts, take all the ones that are not supplied by the landlord, and total those together. Then add that total to your proposed rent. This is the gross rent.

If the gross rent is equal to or lower than the payment standard for which the family and unit are eligible, then the rent is considered affordable. However, if the gross rent is greater than the applicable payment standard, HUD mandates that the tenant’s share of the gross rent cannot be more than 40% of the family’s adjusted monthly household income. Anything more than that is considered unaffordable.

If the unit is found to be unaffordable for the family, a Housing Office staff member, or the tenant, might make outreach to find out if the landlord is willing to lower the rent to the affordable amount. Please keep in mind that the affordability determination is not based on the perceived value of your unit, but on what this specific tenant family can afford. Some landlords are willing to make small affordability rent reductions in order to work with a tenant who passed the landlord’s screenings and seems like a good match. However, the landlord is under no obligation to do so. If the landlord chooses not to reduce the rent, Pensacola Housing will let the family know a different unit must be selected.

Assuming the affordability test is met, the unit is scheduled for an inspection. During the visit, the HQS Inspector confirms that the unit meets minimum Housing Quality Standards. He also makes notes of some details about the unit that will be used to make a “rent reasonableness” determination.

“Rent Reasonableness” is the second rent evaluation. A proposed rent is considered reasonable if it is not more than what is charged for comparable units (comps) that are rented to unassisted tenants. To confirm reasonableness, Pensacola Housing looks at 3 comps in the local market rented by tenants who don’t have vouchers. The most important criteria we consider when selecting a comp are the age of the unit, the location, the unit type, and the size. Other considerations are the quality; what essential utilities, if any, are provided by the landlord; and what amenities, services, and maintenance, if any, are provided.

Once the inspector has selected 3 comps, we evaluate the landlord’s proposed rent for reasonableness. If the proposed rent is supported by the comps, we are happy to approve it. If not, we will contact you to let you know what rent we can approve. It is up to the landlord to make the best business decision about whether or not to accept the rent Pensacola Housing has determined is “reasonable.” If the landlord declines, then once again we will let the family know a different unit must be selected.

Thanks to the Pensacola Association of Realtors, the Housing Office has a very robust and current database of unassisted rental comps from within Escambia County. We are also happy to receive comps from our landlords to add to our database. In order to create a comp record, we must have the following information:

  • Address and Unit Number

  • Bedroom Size

  • Lease Start Date

  • Contract Rent Amount

  • Utilities/appliances/amenities included with the lease, if any

  • Move-in specials or discounts offered to the tenant at lease-up, if any

Note that whenever possible, we will use comps from within the same census tract as the assisted unit to make a rent reasonableness determination.

Part Two in this series covers Side Payments. Part Three reviews Utility Assignments.
Part Four explains The Importance of the Utility Chart.