Have you ever wondered how subsidized housing works? I’m sure you’ve known at least one person who has looked into subsidized housing or has lived in subsidized housing and you’ve wondered about how rental amounts are determined. Everyone’s rent is unique, is calculated on an individual basis, and is reviewed annually.
Subsidy, which is financial help to pay the rent, can come from several sources. The two largest governmental agencies which offer subsidies are U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture – Rural Development (RD).
Let’s focus on HUD. HUD offers a variety of subsidies. Three of the more popular subsidies are the Section 8 voucher program, public housing, and project based housing. The Section 8 voucher program affords an individual the opportunity to apply for and to receive help paying their rent in a HUD approved house or apartment. Public housing and project based housing have subsidies for all of the apartments in their buildings.
Income limits and other restrictions apply to all forms of subsidized housing and applicants are thoroughly screened to determine their eligibility. Rent is calculated by examining the gross income, total assets, and medical expenses for the household and is re-evaluated annually. If a tenant has an increase or a decrease in their income or if they have a change in their medical expenses, their rent may be recalculated. If a resident’s income decreases they have the option of reporting it to their landlord. A decrease in their income will result in a lower rent amount. If a household’s cumulative income increases $200 or more per month they are required to report the increase to their landlord. Failure to report this increase is a lease violation and the household is required to reimburse HUD for the amount of subsidy that HUD overpaid on their behalf.
To assist residents with utility costs there is a utility allowance. A utility allowance is the amount that HUD has determined a person will spend on utilities. This amount is based on the average utility bill for each apartment in the building. The amount of the utility allowance is subtracted from what was calculated to be the monthly rent. An example of how the utility allowance is used to calculate rent is this: The adjusted monthly income is $1000. Rent is calculated at 30% of your adjusted gross income. Thirty percent of $1000 equals $300. This would be your normal rent. The utility allowance is $20. What you would pay for rent is $280. In subsidized housing you may be paying a different rent than your neighbor.
So if you hear rumors that rent is going up in a subsidized apartment building, just remember that the tenant’s rent doesn’t change; the increase is in the subsidy portion of the rent that HUD pays directly to the landlord. Each tenant’s rent is based on their income, assets, and medical expenses.
More information on HUD programs can be found on the internet at www.hud.gov, by writing to U.S. Department of Housing and Urban Development, 451 7th Street S.W., Washington D.C. 20410, by telephone at (202) 708-1112 or TTY (202) 708-1455.
Amie Libby is a Service Coordinator and works for Lutheran in the Senior Housing Division. Contact Amie Libby, at Lutheran Senior Housing 737 Falconer St., Jamestown, NY 14701 or by e-mail at email@example.com.