Beyond the Standard: Unlocking Higher Rents Through Reasonable Accommodations
As an investor, you may encounter a situation where your ideal rental unit is priced just above what a standard voucher can cover, making it seem out of reach for a prospective tenant. However, the HCV program has a crucial, built-in flexibility to ensure that individuals with disabilities are not priced out of suitable housing.
This flexibility comes in the form of a Reasonable Accommodation, which can adjust the program’s financial rules—specifically the Utility Allowance and the Payment Standard—to make a seemingly unaffordable unit viable.
Tip
Don’t automatically dismiss a prospective tenant if their standard voucher doesn’t cover your rent. If they mention needing the unit for a disability-related reason, it’s a signal that an Exception Payment Standard might be possible. This can turn a “no” into a “yes” and provide you with a long-term, reliable tenant.
The Principle of Reasonable Accommodation
A reasonable accommodation is a change or exception to a rule, policy, or practice that is necessary to afford a person with a disability an equal opportunity to use and enjoy a dwelling.
— U.S. Department of Housing and Urban Development (HUD)
In the context of HCV program payments, this means the PHA can adjust its standard calculations if a family’s disability-related needs require it.
There are two primary financial tools the PHA can use:
1. A Higher Utility Allowance
In some cases, a family may need to use more utilities than is typical due to a disability. For example, a person with a severe respiratory condition may require constant air conditioning, even in a climate where A/C is not standard.
If the family requests this as a reasonable accommodation and provides the necessary documentation, the PHA can approve a higher, individualized Utility Allowance for that family.
- Impact for the Investor: This does not increase the contract rent you receive. However, by increasing the family’s utility credit, it lowers their out-of-pocket expenses and makes your unit more affordable for them, helping you secure the tenancy.
2. An Exception Payment Standard
This is the more powerful tool for an investor, as it can directly support a higher contract rent. A PHA may approve an Exception Payment Standard for a family if they need a specific, more expensive unit because of a disability. The Payment Standards handbook provides clear examples of when this might apply:
- Need for a Larger Unit: A family may need an extra bedroom to store essential medical equipment or to house a necessary live-in aide.
- Need for Special Features: The family may require a unit with specific accessible features, such as a zero-step entry or an ADA-compliant bathroom.
- Proximity to Services: A person may need to live in a specific, higher-cost neighborhood to be close to essential medical facilities or support services.
Warning
An Exception Payment Standard is not a blank check. The rent you request must still pass the Rent Reasonableness test. This means your proposed rent must be comparable to what unassisted tenants are paying for similar units in the same area. The accommodation allows the PHA to subsidize a higher rent, but it does not allow you to charge more than the fair market rate for that specific unit.
The Two Tiers of Approval
The process for approving an Exception Payment Standard depends on how high the proposed rent is.
Important
The request for a reasonable accommodation is always initiated by the family, not the landlord. However, you play a key role by providing the necessary information about the unit and the proposed rent.
Tier 1: Up to 120% of the Fair Market Rent (FMR) This is the most common scenario. The PHA has the authority to approve an Exception Payment Standard of up to and including 120% of the published FMR without needing to consult HUD.
| Approval Tier | Rent Threshold | Approval Authority |
|---|---|---|
| Tier 1 | Up to 120% of FMR | Local PHA |
| Tier 2 | Above 120% of FMR | HUD Headquarters |
Tier 2: Above 120% of the Fair Market Rent (FMR) If a unit that meets the family’s needs costs more than 120% of the FMR, the process is more rigorous. The PHA must submit a request to HUD Headquarters for approval. According to the guidebook, the PHA must provide specific documentation to HUD, including:
- The family’s household composition, including any live-in aides.
- The voucher bedroom size issued to the family.
- Your proposed contract rent and the unit’s required utility allowance.
- A statement from a health care provider detailing the need for the accommodation.
- A statement from the PHA confirming that your proposed rent is “reasonable.”
- The family’s income and the proposed lease start date.
Note
For an investor, this process highlights the opportunity to secure a stable, government-backed tenancy in a higher-rent unit that might otherwise have been impossible to fill with an HCV participant. It’s a win-win scenario when a family’s needs align with your property’s value.