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HPP Study: HUD Tenants Across the Country Being Shortchanged on Utility Allowances
05.27.2011 - HPP

A bedrock principle in HUD Section 8 apartment buildings across the country is that tenants will pay no more than 30% of their income for rent.  In buildings where tenants pay their own utilities, that means rent is calculated based on a reasonable utility allowance.  Because utility rates change over time, utility allowances (UAs) necessarily have to be regularly updated.  If UAs are not updated and rates go up, tenants end up paying more than 30% of their income for rent.   Unfortunately, a new study reveals that thousands of tenants across the country appear to be in this situation.

In 2009, tenants in a Texas HUD building sought HPP’s help when they realized their UAs had not been adjusted in nearly a decade.  In the course of representing those tenants to both get their UAs updated, and to get compensated for the resulting rent overcharges from previous years, HPP discovered that HUD guidance on updating UAs appeared to be lacking for many properties around the country.  In partnership with the Sargent Shriver National Center on Poverty Law, HPP began investigating the issue.  The HPP/Shriver Center report, just issued, reveals an alarming pattern.  For nearly all HUD programs, HUD provides clear direction to landlords that they must regularly apply to HUD to update UAs.  However, there is a large segment of the project-based Section 8 apartment buildings where HUD directions are silent on the issue.  The report includes a survey of the private entities responsible for administering these UAs and many of them believe that as a result of HUD silence, they have no obligation to update UAs.  The report concludes that it appears there are over 4000 HUD multifamily properties where UAs are not regularly updated, which means there may be hundreds of thousands of tenants who have been charged too much rent as a result.  The report concludes that this failure on HUD’s part is not only causing financial harm to very low income households, but that it is also illegal.  HPP and its allies are currently attempting to get HUD Secretary Shawn Donovan to address this important issue.

View Utility Allowance Report Here.