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August 2003 Owners Update

Owner Update “Question Of The Month”

Why is the rent on a particular unit OK'd for one family but disallowed for another?

This situation does sometimes happen, and it is confusing for owners who think the problem is with the amount of rent. The problem is not the actual rent amount, but the amount of income the assisted family can contribute to the unit. HUD says the housing authority must track the tenant amount - called the Tenant Rent Burden - and that the Tenant Rent Burden should not exceed 40% of the family income.

The basic idea of the rental assistance program is that each family should pay at least 30% of their income toward rent and utilities not included in the rent. TMHA will pay the rest.

So how would a family pay more than 30%? It's very possible, if the Gross Rent of the unit (Rent to Owner + Estimate of Tenant-pd utilities) exceeds the Payment Standard. The Payment Standard is the ceiling rent amount that we use to compute the amount of Maximum Subsidy for the family. If the Gross Rent of the unit is higher than the Payment Standard, the family will pay their 30% plus the difference between the Payment Standard and the actual Gross Rent, which we call "overage".

This situation causes a good news, bad news scenario. The good news for owners is that we can work with a Gross Rent higher than our Payment standard. The bad news is that, for some of our families, a unit can be too expensive, even with our assistance. It‚s not that the rent is too high; it is that the family has too little income to carry their share of rent/utilities.

This can be confusing. Hopefully, the two scenarios below will help sort it out. Note that the rent/utility information is the same in both examples. There is $35 of overage (amount that the Gross Rent exceeds the Payment Standard).

In the case of Family #2, TMHA will attempt to negotiate a lower rent on behalf of the family (by $5 in the example). The owner can either lower the rent, or choose not to.