LANDLORDS BEWARE! – U.S. HUD May be Lowering Section 8 Fair Market Rents
It was recently reported to the Apartment Association of Greater Los Angeles by a housing providers participating in the U.S. Housing and Urban Development’s (HUD) Section 8 housing voucher program that local housing authorities such as the City of Los Angeles (HACLA) are planning to reduce the amount of Fair Market Rents being offered to housing providers by as much as 10% to 12%. According to a former employee of the Housing Authority for the City of Los Angeles (HACLA), “They're making a preliminary, initial rent offer to get the owner ‘hooked’ [and] then after the inspection, when it's time to allow the client to move in, [they] change it to a lower amount with no explanation. There is no transparency…This is also affecting rent increases.”
While there appears to be claims of “bait and switch” tactics being deployed, to date these claims remain unsubstantiated and in fact, sources within HACLA deny this is occurring and have indicated this is “not their process” and that lowering of the rent offered could arise when a discrepancy exists between an owner’s application and the findings during the inspection process.
When questioned about the reduced rental amounts and accusations of “bait and switch” tactics being deployed by HACLA, we received an email response from a senior manager who stated that the adjustments being made to rental amounts are common as the adjustment “happens every year.” The senior manager went on to explain that HUD issues new Fair Market Rents that housing authorities then use to set voucher payment standards. We were then told that the Fair Market Rents for the upcoming year have “decreased versus last year.” The reduction being made to Fair Market Rents is the first decrease in several years, but we were told, the decrease is “in line with what we have been seeing from our comparable rent provider in the lower cost areas of the city--rents flattening or decreasing.”
The HACLA senior manager also stated that “housing Authorities’ funding formulas are being adjusted resulting in decreased revenues for all…HACLA is required to adjust our voucher payment standards (VPS).” HACLA is currently in the process of finalizing the VPS and, according to our contact, “…trying to soften the blow as much as possible within our new funding constraints.”
In addition, HACLA is planning on expanding the VPS / Small Area Fair Market Rent tiers it has deployed into 8 tiers, and as a result, some areas of the city will see rent increases while others will experience lower Fair Market Rents. Once the revised schedule of Fair Market Rents is finalized, the Apartment Association of Greater Los Angeles will notify members.
Founded in 1917, the Apartment Association of Greater Los Angeles (AAGLA) is Southern California's premier trade association for rental housing providers, delivering essential member support through aggressive legislative advocacy and critical local regulatory updates. Serving Ventura, Los Angeles, and San Bernardino counties, AAGLA empowers its 10,000+ members through expert educational resources and direct access to experienced operational advisors. With influence across nearly 200 local jurisdictions and a comprehensive library of management tools, AAGLA continues its century-long mission of fostering professionalism and excellence in the rental housing industry.