HUD Updates Flat Rent Requirements

HUD’s Office of Public and Indian Housing (PIH) issued Notice PIH 2017-23, clarifying HUD’s interpretation of the statutory amendment related to flat rents; it also supplements the final “Streamlining Rule” published on March 8, 2016 (see Memo, 3/7/16). The Notice provides detailed guidance to public housing agencies (PHAs) about complying with the flat-rent requirement on an annual basis, phasing in flat rents, consulting tenants each year regarding their option to choose flat rents or income-based rents, and seeking an exception flat-rent level. It is important to remember that it is up to tenants to decide each year whether they are better off paying rent based on their actual income or paying the set flat rent.

The FY14 Appropriations Act required PHAs to establish flat rents at no less than 80% of the Fair Market Rent (FMR) and established rent increase phase-in requirements to prevent family rental payments from increasing by more than 35%. HUD implemented these requirements through Notice PIH 2014-12 (see Memo, 5/23/14). Through FAQs accompanying Notice PIH 2014-12, HUD provided flexibility to PHAs to phase-in all flat-rent increases over a three-year period, including those increases that were 35% or less (see Memo, 6/20/14).

The FY15 Appropriations Act amended the FY14 Act regarding the minimum flat rent, and HUD issued an interim rule and Notice PIH 2015-13 implementing these changes (see Memo, 9/14/15). Consequently, flat rents have to be set at no less than the lower of 80% of the FMR or the Small Area Fair Market Rent (SAFMR). PHAs may apply for a flat rent lower than these two options if the PHAs demonstrate, through a market analysis, that those rent options are not reflective of market value.