HUD annually publishes the fair market rents (FMR) for each market area in the United States.1  The PHA must adopt a schedule that establishes voucher “payment standard” amounts for each unit size in each market area within the PHA’s jurisdiction.2  The payment standard must be set between 90% and 110% of FMR.3  However, with HUD approval, PHAs may use exception payment standards or small-area FMRs to increase the payment standard in certain cases or areas. A tenant may also request a payment standard above 110% as a reasonable accommodation for a disability.

The payment standard is the maximum monthly subsidy (including any utility allowance) that is available by household size and is used to calculate the monthly housing assistance payment (HAP) for a family. A family’s HAP varies with the family’s income, i.e., a family with a greater income receives a lower HAP than an equivalent family with a lower income.

The PHA pays the HAP directly to the landlord, and the tenant is responsible for the portion of the gross rent (approved contract rent to owner plus any utility allowance) exceeding the HAP. The family pays this portion (the “family share” or “tenant share”) to the landlord. As a result, the tenant should negotiate for lowest possible gross rent. At the family’s request, the PHA must help the family negotiate the rent with the landlord.4  If you are checking whether the HAP is calculated correctly, the basic rule is that the HAP equals the payment standard for the family minus the total tenant payment or the gross rent minus the total tenant payment, whichever is lower.5

A PHA cannot approve use of a voucher unless the gross rent is a reasonable rent for comparable units in the area.6  For the initial lease on the unit, the family share cannot exceed 40% of the family’s income.7  Following the initial term of the lease, the family share is no longer capped at 40%. At this time, if a landlord wishes to raise the rent to an amount that would result in the family share exceeding 40% of family’s income, the tenant can elect to remain in the unit only if the PHA agrees that the new gross rent is still reasonable in the housing market. Unfortunately, in areas where market rents are higher, an approved rent change after the first year may result in the Section 8 tenant being severely cost burdened. In such a case, the tenant’s remedy is to move.

Once the rent has been established by the PHA, the owner may not demand or accept any rent payment from the tenant in excess of this amount set by the PHA and must immediately return any excess rent payment to the tenant.8  Such payments are considered illegal side payments and are totally disallowed under the program. In some cases, a tenant may offer to pay an amount above the maximum rent set by the PHA out of pocket in order meet the demands of a landlord/owner for a particular unit. You must advise your client against such action as it will seriously jeopardize future participation in the HCVP. Demanding and collecting illegal side payments may give rise not only to a breach of contract claim but also to a qui tam claim under the False Claims Act.9  Extra fees that were not approved by the PHA may also be considered illegal side payments under this theory.10

Tenants under the HCVP program are entitled to a decrease in their share of rent when they timely report a decrease in income. They must request an “Interim Recertification.”11  Typically, the decrease should take effect the first day of the month following the reporting of the income change, but PHAs are allowed to make their own rules about the effective date of recertifications.12  By contrast, the PHA can choose whether to process rent increases on an interim basis and should give at least 30 days’ notice of any rent increase.13  Check the PHA Administrative Plan for rules specific to a particular housing authority. Note that on January 1, 2024, certain changes go into effect pursuant to the Housing Opportunity Through Modernization Act (HOTMA). Under the new rules, PHAs are only required to conduct interim reexaminations if income change will cause the family’s adjusted annual income to increase or decrease by 10%. PHAs may not consider any increase in the earned income of a family between annual reexaminations unless the family has previously received an interim reduction.14

The HCVP has a minimum rent requirement of $50.00. Your client may be paying minimum rent without realizing it. For example, tenants who have $0 rent get a utility reimbursement check rather than a utility allowance subtracted from their rent portion. If your client is getting a utility reimbursement that seems too low, or no utility reimbursement, it may be because of the $50 minimum rent. Your client must request a “financial hardship exemption” in order to be exempted from the minimum rent requirement.15

Tenants are also entitled to an informal hearing of the determination of the family’s annual or adjusted income and the use of such income to compute the HAP.16  At the hearing, the tenant may have the assistance of a lawyer or other representative.17  Before the hearing, the family or its representative must be given the opportunity to examine any PHA documents directly relevant to the hearing. If the PHA does not make a document available for examination on request of the family, the PHA may not rely on that document at the hearing.18

• 1The can be found at the huduser.gov website.
• 224 C.F.R. § 982.503.
• 324 C.F.R. § 982.503(b).
• 424 C.F.R. § 982.506.
• 524 C.F.R. § 982.505.
• 624 C.F.R. § 982.507.
• 724 C.F.R. § 982.508.
• 824 C.F.R. § 982.451(b)(4)(ii).
• 9See United States ex rel. Richards v. R&T Invs. LLC, 29 F. Supp. 3d 553 (W.D. Pa. 2014); United States ex rel. Wade v. DBS Invs., LLC, 2012 U.S. Dist. LEXIS 122734 (S.D. Fla. Aug. 29, 2012); United States ex rel. Mathis v. Mr. Prop., Inc., 2015 U.S. Dist. LEXIS 30738 (D. Nev. Mar. 10, 2015); United States ex rel. Sutton v. Reynolds, 564 F. Supp. 2d 1183 (D. Or. 2007); Coleman v. Hernandez, 490 F. Supp. 2d 278, 280 (D. Conn. 2007); United States ex rel. Price v. Peters, 66 F. Supp. 3d 1141 (C.D. Ill. 2013); United States ex rel. Carmichael v. Gregory, 270 F. Supp. 3d 67 (D.D.C. 2017).
• 10United States ex rel. Sutton v. Reynolds, 564 F. Supp. 2d 1183, 1188 (D. Or. 2007) (denying summary judgment in favor of tenant on FCA cause of action where landlord charged an extra $30 per month for lawn maintenance); United States ex rel. Mathis v. Mr. Prop., Inc., 2:14-cv-00245, 2015 WL 1034332, at *4 (D. Nev. Mar. 10, 2015) (pool maintenance fee not reflected in HAP contract gave rise to FCA cause of action, citing prohibition on “additional rent” in Part C of the HAP contract); Coleman v. Hernandez, 490 F. Supp. 2d 278, 280 (D. Conn. 2007) (charging of an additional $60 per month for water usage was considered a side-payment when not included in the HAP Contract and therefore a FCA violation).
• 1124 C.F.R. § 982.516.
• 1224 C.F.R. §982.516(e).
• 13The Housing Choice Voucher Program Guidebook - Reexaminations, U.S. Dep’t of Hous. & Urb. Dev.
• 1424 C.F.R. § 982.516(c).
• 1524 C.F.R. § 5.630.
• 1624 C.F.R. § 982.555(a).
• 1724 C.F.R. § 982.555(e)(3).
• 1824 C.F.R. § 982.555(e)(2)(i).

If a family includes a member with a disability, that family member’s income may be excluded from the rent calculation under three circumstances: (1) the disabled family member was previously unemployed for at least one year; (2) the disabled family member’s earnings increased as a result of an economic self-sufficiency or other job training program; or (3) the disabled family member’s earnings increased during or within six months after receiving assistance or services from any state program for temporary assistance for needy families funded under Part A of Title IV of the Social Security Act.1  This is typically called the “earned income disallowance.”

Under this provision, for the first 12-month period, the increase of income is wholly disallowed in the rent calculation.2  If the family began receiving the benefits of the disability disallowance prior to May 9, 2016, 50% of the earnings of the disabled family member are excluded following the initial 12-month period.3  Otherwise, the 50% disallowance is only available for an additional 12 months; in this case, there is a lifetime maximum disallowance of 24 months.4

Note that on January 1, 2024, certain changes go into effect pursuant to the Housing Opportunity Through Modernization Act (HOTMA). Under the new rules, the earned income disallowance (also known as earned income disregard) is being phased out from 2024-2026.

• 124 C.F.R. § 5.617.
• 224 C.F.R. § 5.617(c)(1).
• 324 C.F.R. § 5.617(c)(4).
• 424 C.F.R. § 5.617(c)(2).