Rent Reasonableness Calculator: Are You Undercharging HUD?

• Comparable unassisted units. The PHA may not approve a lease until it determines the initial rent is reasonable compared to other comparable unassisted units (24 CFR § 982.507).
• Unit characteristics. Location, quality, size, unit type, and age of your unit.
• What you provide. Amenities, housing services, maintenance, and utilities included under the lease.
• Family share limit. At initial occupancy, if gross rent exceeds the payment standard, the family share can't exceed 40% of adjusted monthly income (24 CFR § 982.508).

What is rent reasonableness?

Rent reasonableness is a HUD requirement that the rent to owner be reasonable compared to rent for other comparable unassisted units. Under 24 CFR 982.507, the PHA may not approve a lease until it determines the initial rent is reasonable, and the rent to owner can't exceed the most recently determined reasonable rent during the tenancy.

How does the Housing Authority determine rent reasonableness?

The PHA compares your unit to other comparable unassisted units, considering the unit's location, quality, size, unit type, and age, plus any amenities, housing services, maintenance, and utilities you provide under the lease (24 CFR 982.507(b)). The regulation doesn't fix how many comparables to use or how far away they can be, so PHAs use their own methods and forms. Ask yours how it does the comparison.

Can the rent be higher than the payment standard or Fair Market Rent (FMR)?

The voucher subsidy is based on the lower of the payment standard or the unit's gross rent (24 CFR 982.505), and the payment standard is set by the PHA within HUD's range around FMR. A rent above the payment standard can still be approved if it is reasonable, but the tenant then pays the difference on top of their income-based share. The rent must also pass rent reasonableness regardless of FMR.

What is the 40% limit on the family share?

When the PHA approves a tenancy for initial occupancy and the unit's gross rent exceeds the family's payment standard, the family share can't exceed 40% of the family's adjusted monthly income (24 CFR 982.508). This applies at initial occupancy; it is separate from the rent reasonableness comparison, but either one can keep a proposed rent from being approved.

What happens if the PHA finds my rent is not reasonable?

The PHA can't approve the tenancy at that rent. Owners commonly respond by asking the PHA what comparable-unit information it relied on, lowering the requested rent, or documenting amenities or services that differ from the comparables. Whether and how a PHA reconsiders is set by the PHA's own procedures, so ask it directly.

Do I have to charge Section 8 tenants the same rent as other tenants in my building?

Rent to owner can't be more than the rent you charge for comparable unassisted units in the same premises. By accepting each housing assistance payment, the owner certifies this (24 CFR 982.507(d)).

When does the PHA re-check rent reasonableness?

The PHA must redetermine reasonable rent before any increase in the rent to owner, if HUD's published FMR decreases by 10% compared with the prior year (measured 60 days before the contract anniversary), and if HUD directs it. It may also redetermine at any other time (24 CFR 982.507(a)). For how increases are requested, see our rent increase calculator.