HUD's NEW FAIR MARKET RENT POLICY: FREQUENTLY-ASKED QUESTIONS

• What is the Section 8 Housing Choice Voucher Program?


The Section 8 Housing Choice Voucher Program is a federal program administered by the U.S. Department of Housing and Urban Development (HUD) that helps more than 1.4 million low-income households, including families with children and elderly and disabled households, to afford decent-quality rental housing. Families with Housing Choice Vouchers locate rental units of their choice in the private market. Provided the units meet applicable cost and quality standards, the federal government provides subsidies to help the voucher-holders afford their rental costs.

Families with vouchers generally pay 30 percent of their adjusted income for rent and utilities, with the federal government subsidizing the balance up to a locally-determined "voucher payment standard." Families may choose to contribute an additional ten percent of their adjusted income to rent higher-quality apartments.

The state and local public housing agencies (PHAs) that administer the Housing Choice Voucher program have discretion to set voucher payment standards anywhere between 90 and 110 percent of the Fair Market Rent (FMR), set by HUD. In addition, PHAs may request HUD's approval to set voucher payment standards above 110 percent of the FMR.


• What are "Fair Market Rents"?


Fair Market Rents (FMRs) are estimates of rental housing costs in local housing markets that HUD prepares using rent survey data to serve as the basis for determining the maximum subsidy levels in the Housing Choice Voucher program. In general, FMRs are set at the 40th percentile rent i.e., the dollar amount which allows voucher-holders access to 40 percent of standard quality rental units. Adjustments are made to exclude public housing units, newly built units and substandard units.


• What is HUD's New FMR Policy?


HUD's new Fair Market Rent (FMR) policy provides targeted relief to areas where market conditions are preventing families from successfully using Housing Choice Vouchers. Where it is necessary to ensure the effective operation of the housing voucher program, HUD will raise Fair Market Rents from the 40th to the 50th percentile of recent movers. This will ensure that families with vouchers have access to at least half of all standard quality rental units in those areas.

The new policy is designed to achieve two fundamental program objectives:


• Ensuring that voucher-holders can find suitable housing. In many areas, the current Fair Market Rents based on the 40th percentile of recent movers are adequate to allow families with Section 8 vouchers to rent suitable housing. In some areas, however, difficult market conditions are preventing families from finding affordable units. The new policy authorizes Public Housing Agencies to use voucher payment standards based on the 50th percentile rent when fewer than three-fourths of the families issued vouchers succeed in using them to find housing.



• Ensuring that voucher-holders have access to a broad range of housing opportunities throughout the metropolitan area. One of the goals of the Section 8 program is to ensure that voucher-holders are free to move to neighborhoods of their choice throughout the metropolitan area. To advance this objective, HUD will increase FMRs to the 50th percentile in metropolitan areas where there is both concentration of voucher-holders and evidence suggesting this problem may be due to the distribution of affordable rental units in the area.



• What areas will benefit from the new FMR policy?


The new FMR policy will apply wherever families are experiencing problems using housing vouchers. Any area in the United States that meets the applicable criteria on or after the effective date of the new policy will be eligible to use the 50th percentile rent.

The new policy is expected to become effective in early December. Because circumstances may change between now and then, it is impossible to identify with certainty all of the areas that will benefit from the higher subsidy levels. HUD has, however, conducted a preliminary analysis to identify some of the areas that could receive the benefit of the higher FMRs, in the event that circumstances do not change.

For example, among the housing agencies that have reported problems using vouchers despite raising payment standards to 110 percent of the FMR are agencies in the following cities: Baltimore, MD; Birmingham, AL; Boston, MA; Burlington, VT; Charlotte, NC; Malden, MA; Marin County, CA; Milwaukee County, WI; Raleigh, NC; Santa Monica, CA. Should these agencies continue to experience problems with voucher usage, and provide data documenting these difficulties, per the requirements of the new rule, these agencies would be eligible to use the 50th percentile rent.

In addition, HUD plans to raise FMRs to the 50th percentile where necessary to ensure that voucher-holders have access to a broad range of housing opportunities throughout the metropolitan area. Although new areas could be added each year, the following metropolitan areas would qualify initially for 50th percentile FMRs under this aspect of the policy:



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Albuquerque, NM MSA		Norfolk-Virginia Beach-Newport News, VA-NC MSA
Atlanta, GA MSA		Oakland, CA PMSA
Austin-San Marcos, TX MSA		Oklahoma City, OK MSA
Baton Rouge, LA MSA		Orange County, CA PMSA
Bergen-Passaic, NJ PMSA		Philadelphia, PA-NJ PMSA
Buffalo-Niagara Falls, NY MSA		Phoenix-Mesa, AZ MSA
Chicago, IL PMSA		Richmond-Petersburg, VA MSA
Cleveland-Lorain-Elyria, OH PMSA		Sacramento, CA PMSA
Dallas, TX PMSA		Salt Lake City-Ogden, UT MSA
Denver, CO PMSA		San Antonio, TX MSA
Detroit, MI PMSA		San Diego, CA MSA
Fort Lauderdale, FL PMSA		San Jose, CA PMSA
Fort Worth-Arlington, TX PMSA		St. Louis, MO-IL MSA
Grand Rapids-Muskegon-Holland, MI MSA		Tampa-St. Petersburg-Clearwater, FL MSA
Houston, TX PMSA		Tulsa, OK MSA
Kansas City, MO-KS MSA		Ventura, CA PMSA
Las Vegas, NV-AZ MSA		Washington, DC-MD-VA-WV PMSA
Miami, FL PMSA		West Palm Beach-Boca Raton, FL MSA
Minneapolis-St. Paul, MN-WI MSA		Wichita, KS MSA
Newark, NJ PMSA

As noted above, this is not a comprehensive list of all areas that could qualify for the 50th percentile rent under the new FMR policy. Any area that satisfies the applicable criteria will be eligible for an increase.



• How will the new FMR policy impact areas that have exception payment standards?


A number of metropolitan areas around the country such as Los Angeles, San Francisco, Rochester, NY; and Portland, ME have already received approval from HUD to use voucher payment standards that exceed 110 percent of the FMR in parts of their metropolitan areas with particularly high housing costs. The new FMR policy does not limit the ability of these areas to continue to use these exception payment standards.
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