Article | When More Rent Is the Right Rent | Part 2

How PHAs and Owners Should Apply Payment Standards, Market Tests, and Requests

In Part 1, we examined the first part of the Housing Choice Voucher rent rule: LIHTC and HOME rents charged at a property are automatically considered “reasonable” if voucher rents match them or are lower. But what if the owner requests more?
 

Payment Standards Rule the Day
When a rent request is higher than the comparable LIHTC/HOME rents at a property, the safe harbor from the first part of the rule doesn’t apply. That doesn’t mean the higher rent can’t be approved. Instead, the regulation requires the PHA to use the standard rent reasonableness test under §982.507(a). This involves undertaking the following steps. 

1. Compare the requested rent to similar unassisted market units, not including any LIHTC- or HOME-controlled rents.
2. If the requested rent is within range and under the PHA’s payment standard, it’s appropriate.

The real limiter here is the payment standard (§982.503), not LIHTC or HOME rents. Even if a rent is “reasonable” as determined above, the PHA cannot approve more than its own payment standard.

So in our scenario from Article 1

• $975 is the LIHTC/HOME rent for a property.
   
• $1,050 is the PHA payment standard for the area.

$1,050 is more than the LIHTC rent, but the rent can still be approved if the market supports it based on the PHA's reasonableness determination.

HCV/LIHTC/HOME Rent Regulatory Timeline

• HERA (2008): Congress created the LIHTC and HOME safe harbor and reasonableness policy.
• Voucher Regulation (2016): HUD implemented the HERA rule for the LIHTC at §982.507(c). 
  • PHAs treat LIHTC rents as automatically reasonable when they match comparable LIHTC rents at a property — but higher rents could still be approved up to the payment standard.
• HOME Regulation (2025): HUD extended the safe harbor to HOME rents in the HOME 2025 final rule.
  • It now allows owners of HOME properties to charge rent to HOME families and collect subsidy up to the level the HCV program allows. HOME rent limits no longer apply to HOME units housing families with rent subsidy.  

Why This Matters
When HOME, LIHTC, and voucher rules overlap, the details can be tricky. Rent standards, reasonableness tests, and payment standards don’t always line up neatly, and it’s natural for questions to come up.

The bottom line is that if rents are capped at the restricted HOME/LIHTC levels at a property when the law actually allows more, the result is underpayment. That can destabilize properties and limit housing opportunities for the very households these programs are meant to serve.

By understanding how HERA, the 2016 LIHTC voucher rules, and HOME 2025 fit together, PHAs and owners can work from the same playbook — ensuring rents are both compliant and sustainable.
What Owners and Agents Should Do

• Know your rights. The LIHTC and HOME safe harbor establishes that charging LIHTC or HOME rents is reasonable, but it is not a ceiling. Higher rents can be approved if the market and PHA payment standard support them.
• Check payment standards. Most PHAs publish them, and they set the real limit on subsidy, not the LIHTC or HOME rent you otherwise charge.
• Make the request. Rent reasonableness only gets tested if the owner asks. If you never request above the restricted LIHTC/HOME rents at your property, you’ll never get more.
• In practice. Owners/agents should request the rent they believe is supported, up to the payment standard. If it’s at or below comparable LIHTC/HOME rents, it’s automatically reasonable. If it’s higher, the PHA must apply the market test.

Takeaway
The LIHTC/HOME safe harbor prevents PHAs from undervaluing LIHTC and HOME units per law by holding them to LIHTC/HOME rents otherwise charged. Payment standards stop them from overpaying. Owners and PHAs both have a role: ask for what’s supportable, apply the right test, and approve what the law allows.

That’s how Congress designed it in the law in HERA — and how HUD has written it into the regulations.