Until changes were made to federal law, a public housing tenant’s rent was 30% of the tenant’s annual adjusted income. “Annual income” for federal housing programs is defined at 24 C.F.R. § 5.609. Most public housing tenants are still charged rent based on 30% of their income.
Although rent may be reduced if a tenant’s income decreases, a reduction is not allowed if the income loss is due to welfare work sanctions. A rent reduction may not be withheld until the welfare department notifies the PHA in writing that the loss of income was due to work sanctions and until the tenant has a chance for a grievance. If the loss of welfare arises from the exhaustion of time limits or occurs because the tenant could not find a job despite compliance with the welfare agency’s requirements, the tenant must be allowed the rent reduction.1 A tenant may also request an exemption to minimum rent if one is applicable.
When computing rent, you should closely scrutinize the deductions and exclusions at 24 C.F.R. §§ 5.603–.634 (especially sections 5.609 and 5.611). Check to see if the PHA gave the proper credits or deductions for medical expenses; childcare expenses; allowances for elderly, disabled, or minor family members; training income; and earned income exclusions. Because there are so many deductions and exclusions and HUD knows PHAs make many mistakes, there is a movement to change the way rents are calculated. This movement is called “Rent Simplification.”
Under the current rent rules, a public housing tenant’s rent is calculated in the following way:
STEP 1— Compute all non-exempt income for the entire family for the year to get annual income.
STEP 2 — Subtract all eligible deductions for the family to get adjusted income.
STEP 3 — Divide the adjusted income figure by 12 to get a monthly adjusted income.
STEP 4 — Multiply the monthly adjusted income by 30% if the family pays income-based rent.
This is how much the family pays for its share of rent if the family does not pay its own utilities. If the family pays for its own utilities, go to STEP 5:
STEP 5 — Subtract the utility allowance that the PHA uses for the family’s bedroom size and utility type from the number in STEP 4.2
It can be very costly for a low-income tenant whose rent is not calculated correctly. The most commonly missed deductions are for childcare and medical expenses.
- 142 U.S.C. § 1437j(d)(2).
- 2See Haywood v. Chi. Hous. Auth., 212 F. Supp. 3d 735 (N.D. Ill. 2016) (holding that an applicant had a private right of action to challenge a public housing authority’s determination that an applicant cannot fully deduct utility payments made to a third-party provider from the rent computation).