Ask about . . . Pricing and Fees—Subsidized Rental Housing
Government or other public funds are used to build or operate "subsidized housing," which is housing that is affordable for persons whose household income is below a specified amount. The charges for rents and utilities are set and regulated by the government agency or public entity that provided the funding (see Government Oversight).
However, there are many different government or public subsidy programs. Each program has its own set of rules, regulations, and rent-determination formulas that must be followed by the owner of the housing development regarding rental charges, tenant eligibility, waiting lists, and other factors. Thus, if a resident is eligible to live in several subsidized housing developments, the amount of rent he will pay can differ from one development to another.
In general, the formula used to calculate each tenant's monthly rent will begin with the tenant's total household income and may subtract a number of household costs, such as utilities and medical expenses, to arrive at the tenant's "countable income" upon which to base each tenant's monthly charge. Sometimes utilities will be included in the monthly rent charge, and sometimes the rent and the utilities are paid separately.
You can ask the housing manager for a detailed explanation of how your rent amount will be determined, including which of your financial resources are considered when determining your total household income, what items or household expenses will be considered in calculating your monthly rent, and whether any utilities and services are included in the monthly rent.
A very general statement about rent in subsidized housing is that "a tenant should not have to pay more than 30 per cent of his household income for rent," and very often government subsidy programs calculate their subsidies to achieve this goal.
However, there may be differences. For example, some developments may not use the 30 per cent rule for determining rent, but will charge the same "basic rent" amount to everyone whose countable income is under a specified amount; and residents with higher incomes will pay proportionately higher rents.
In general, a county's "Area Median Income" is used to calculate the level of household income that qualifies a family or individual as eligible for subsidized housing. Taking into account ALL households in a county, that county's median household income is the middle income amount; that is, half of all households in the county have a total household income below the middle amount, and half of all households have a total household income above the middle amount.
Each program that provides funding for subsidized housing developments will specify its own criteria for tenants' income-eligibility—this criteria is stated as a percentage of the "Area Median Income" of the county in which the development is located. For example, to be eligible to live in a specific development in a specific county, a tenant's total household income might have to be at or below 90 per cent of that county's Area Median Income, or 80 per cent, or 60 per cent, or 50 per cent, or 30 per cent. The stated percentage that qualifies a person as eligible varies according to the subsidy program used to build or operate the development.
Concerns about fairness: Sometimes Person "A" becomes concerned about fairness because he learns that others in the development are paying a different amount of rent, or that his friend, Person "B," is eligible for the same type of subsidized housing in Person "B's" community when Person "A" is not eligible in his own community. Two reminders:
- Since every tenant's total household's income and "qualified" household deductions are different: Do not expect to pay the same rent as other tenants in your development.
- Since each county's Area Median Income is different: Do not assume that you will be eligible for a development in your county simply because your friend is eligible for the same type of development in another county.
For each development that is of interest to you, you should ask the development's manager if you are income-eligible for living in the development; and, if you are, you should ask the manager for a detailed explanation of your rental charges.
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