GOOD TO KNOW: NOTES FROM THE FIELD
A feature of the TDA blog where we address topics and questions we’re hearing in the field…
Can owners of HOME-assisted rental units begin using new Fair Market Rents as of October 1st?
No, HOME Rents are only updated following HUD’s publication of annual HOME Rent Limits, which follow a different schedule than the Fair Market Rents.
Rental units assisted with HOME funds are subject to HOME Rent Limits. The HOME Final Rule, at 24 CFR 92.252(a) and (b) defines High-HOME Rents and Low-HOME Rents. HUD publishes HOME Rent Limits annually, and in recent years the HOME Rent Limits have been published in March or April.
In the case of both the High- and Low-HOME Rent, the HOME rent is defined as the lesser of:
A calculated figure based on assumptions about household size and income targeting; or
The Fair Market Rent.
In many parts of the country, the Fair Market Rent (FMR) is the driving figure within the determination of the HOME Rent. By law, HUD must annually publish FMRs that take effect on October 1st, the beginning of the federal fiscal year. (Proposed FY2016 FMRs were published in the Federal Register on September 8, 2015.)
So in areas where the FMR is lower than the calculation of the applicable Low- or High-HOME rent, property owners and PJs often ask if a HOME-assisted property can increase its rents following the publication of new FMRs.
They cannot. Owners must always use the most recent HOME Rent Limits as published by HUD.
Even where the FMR was the limiting factor, FMRs are just one input to the calculation of HOME rents. The other input is a calculation that begins with the area median income limits, which are updated on a different schedule and drawn from different federal data sources.
In addition to its work directly for HUD, TDA regularly provides training and technical assistance to state and local recipients of HUD funding. Contact Henry Alvarez, email@example.com to learn more about our services, including training on HOME compliance in rental housing.