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U.S. Department of Housing and Urban Development

Office of Public and Indian Housing

Special Attention of:

Public Housing Office Directors; Public Housing Agencies Administering
Section 8 Programs

**Notice PIH 2003-12 (HA)**

Issued: May 16, 2003

Expires: May 31, 2004

Cross References:

Subject: **Determination of Rent Reasonableness -- Revision of Request
for Tenancy**

**Approval, Form HUD-52517**

1.  **[Purpose]{.underline}**. This Notice applies to the Housing Choice
    Voucher Program. The Notice transmits a revised Request for Tenancy
    Approval (RFTA), Form HUD-52517 (03/2003) and provides guidance to
    public housing agencies (PHAs) and HUD field office staff on the use
    of the form to obtain information on rents charged by the owner for
    comparable unassisted units in the same apartment complex. This
    notice also clarifies requirements for determining comparable rents
    relative to determining rent reasonableness.

2.  **[Effective Date]{.underline}**. This Notice is effective upon
    publication.

3.  **[Rent Reasonableness Determination for Units Assisted in the Same
    Complex]{.underline}**. The voucher program regulation at 24 CFR
    982.507 requires the PHA to certify that the rent charged to the
    housing choice voucher tenant is not more than the rent charged for
    other unassisted comparable units. Section 982.507(c) states that
    the owner must give the PHA information requested by the PHA on
    rents charged by the owner for other units in the premises or
    elsewhere.

The RFTA, Form HUD-52517 (03/2003) was revised to add information from
owners of multifamily properties on the rents charged for three (3)
recent rentals of comparable unassisted units in the same complex. The
owner supplies this information in Section 12a of the revised RFTA. PHAs
can use the information provided in Section 12a of the form to determine
and document rent reasonableness for comparable unassisted units in the
same apartment complex.

In determining the reasonableness of rents for units located in a
multifamily project that is not substantially assisted, the PHA may base
its determination on the rents charged for the three comparable
unassisted units identified by the owner on the RFTA. In such cases, the
PHA does not have to obtain additional rent comparables in other
multifamily housing in the area.

4\. **[Clarification of 24 CFR 982.507(b)]{.underline}**. There has been
some confusion regarding the interpretation of 24 CFR 982.507(b) of the
voucher program regulation. According to Section 982.507(b):

> "*Comparability.* The PHA must determine whether the rent to owner is
> a reasonable rent in comparison to rent for other comparable
> unassisted units. To make this determination, the PHA must consider:
> (1) The [location]{.underline}, [quality]{.underline},
> [size]{.underline}, [unit type]{.underline}, and [age of the contract
> unit;]{.underline} and (2) Any [amenities]{.underline}, [housing
> services]{.underline}, [maintenance]{.underline} and
> [utilities]{.underline} to be provided by the owner in accordance with
> the lease."

Specifically, that PHAs are under the impression that they have to
routinely consider and justify rent reasonableness individually for each
of the nine criteria listed in Section 982.507(b) to "fully comply" with
the regulation. HUD realizes that, in the wake of the Section Eight
Management Assessment Program (SEMAP) implementation, commercial
trainers have stressed the need for PHAs to consider all nine factors
stated in the regulation, causing PHAs to expend excessive
administrative resources for rent reasonableness determinations. **This
notice serves to clarify the misconception. HUD never intended that PHAs
must consider each of the nine criteria to determine rent reasonableness
of each assisted unit in order to "fully comply" with the regulation.**
The preamble to Subpart K, Rent and Housing Assistance Payment, in the
April 30, 1998, [Federal Register]{.underline} provides that
"determination of rent reasonableness for Section 8 tenant-based
assistance does not call for a special or unusual valuation in
accordance with detailed procedures prescribed by HUD." The Rule
"contains \[only\] a brief and simple statement of the basic standards
to be applied by a PHA in determining rent reasonableness for the
Section 8 tenant-based programs." The Rule acknowledges, "PHAs have
extensive experience in determining rent reasonableness" and instructed,
"each PHA should use appropriate and practical procedures for
determining rental values in the local market."

In any determination about the reasonableness of rent for a particular
unit, a prospective tenant should consider factors such as location,
quality, size, type, age, amenities, housing services, maintenance and
utilities to be supplied by the owner. Since program inception, the
criteria were meant to assist PHAs in developing a common sense approach
to valuing a unit. It remains important to note that the Department
places a high priority on accurate rent reasonableness determinations
and requires that such determinations be performed in a documented,
reasonable, and consistent manner. In any determination about the
reasonableness of the rent for a particular unit, a renter (and whoever
is conducting the comparability determination) implicitly or explicitly
considers the nine comparability criteria specified in HUD's
regulations. It is not, however, necessary or cost-effective to try to
quantifiably document or separately evaluate each of these criteria. To
the extent possible, rent comparability should be based on rents paid
for similar units in the same general location that are also generally
similar in terms of the overall quality of housing services provided.
Any procedures or documentation used should reflect this approach.

5\. **[Future Guidance]{.underline}**. The Department will, in the
future, provide additional guidance to simplify and clarify rent
reasonableness requirements for PHAs.

The information collection requirements contained in this notice have
been approved by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB
control number 2577-0169. In accordance with the Paperwork Reduction
Act, HUD may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless the collection displays a
currently valid OMB control number.

\_\_/s/\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Michael Liu, Assistant Secretary for

Public and Indian Housing

Attachment (Form HUD-52517, available at www.hudclips.org)