Article | When More Rent Is the Right Rent | Part 1

What PHAs and Owners Need to Know About Rents for LIHTC and HOME Units

What do You Think?

A Public Housing Authority (PHA) is setting Housing Choice Voucher rents for a property that has both LIHTC and HOME units. The owner requests $1,050 per month—because that’s the area’s payment standard—even though LIHTC families without vouchers in the same building only pay $925. Is the higher rent allowed?

A heated discussion among PHA staff ensues that splits into two camps. They each argue the following.
Camp One “No way. How can we approve more than the rents paid by others in the same building? That wouldn’t be reasonable.”
Camp Two “HUD has rules that point the other direction. The $1,050 isn't just reasonable — it is exactly what’s required.”

So who’s right?

This scenario plays out across the country, and confusion still lingers years after Congress and HUD clarified the rules. Notably, the HOME 2025 regulation revision has put the spotlight back on this issue and resolved a final detail.

HERA 2028 and the Safe Harbor Rule
Congress addressed this dilemma in the Housing and Economic Recovery Act of 2008 (HERA). HUD later codified it in its regulations at 24 CFR §982.507(c).

The first part of the HERA rent rule for LIHTC or HOME units is simple. If the requested voucher rent is the same as or less than the rent for LIHTC or HOME units in the same project that are not occupied by voucher-assisted families, HUD automatically deems it reasonable. There is no need for a market study or to second-guess the numbers. Matching the restricted rent is enough, as long as these rents are at or below the PHA payment standard.

Quick Quiz
True or False

A PHA can never approve a voucher rent higher than the LIHTC or HOME rents at the same property.

Answer: False. The HERA rule guarantees reasonableness when the requested rent matches or is below the non-voucher LIHTC/HOME rents. However, higher rents are not prohibited. They simply require a standard market reasonableness test.
 

But Wait...There's More...
This is where many misconceptions start. PHAs and owners/agents sometimes treat the safe harbor as a ceiling, the most that can be paid. It isn’t. It’s just a shortcut allowed in determining reasonableness when requested rents for LIHTC or HOME units are at or below the rent paid by other LIHTC or HOME families at a property who do not have a voucher.  

In Part 2, we’ll look at what happens when the owner requests more than they charge other LIHTC or HOME families — how payment standards and market comparisons come into play, and what owners and agents should do to make sure they don’t leave money on the table for often cash-strapped LIHTC and HOME properties.