Rent Reasonableness Determinations

NC ESG RENT REASONABLENESS DETERMINATIONS (if not available at nchousingsearch.com)

Before providing rent assistance to an ESG household, the grantee must determine that the rent is a reasonable rent in comparison to rent for other comparable unassisted units. To make this determination, the grantee must consider: (1) The location, quality, size, unit type, and age of the contract unit; and (2) Any amenities, housing services, maintenance and utilities to be provided by the owner in accordance with the lease.

Determination of Rent Reasonableness is required BEFORE:  Paying any portion of unpaid back rent.  Providing security deposit assistance.  Entering into a contract, or making a one time payment, to assist the household with their rent in an existing unit or if they are moving in a new unit.

Documentation of Rent Reasonableness must be retained in the ESG household file.

Rent Reasonableness Documentation Requirements If SocialServe.com is not able to provide a rent reasonableness determination in your area, you must conduct and document the subject unit on the attached form. When gathering the subject unit information, focus on the following:  Three (3) comparable units are required to support the subject unit’s rent.  Use similar unassisted (i.e. non-subsidized) units, currently vacant unassisted units, or unassisted units leased within the past twelve months. Units cannot be subsidized units, tax credit units, or units currently using federal housing assistance. Comparable units must be unassisted units and may not be located in a substantially assisted apartment complex/multifamily property.  Comparable units must be dated less than six months from the transaction effective date.  Comparable units must be in close proximity to the subject unit, in the surrounding neighborhood, whenever possible. If necessary, the geographic area can be expanded.  The comparable unit’s bedroom size and unit type must be identical to the subject unit.  Comparable units may be located in the same building, or group of buildings, as the subject unit of an apartment complex/multifamily property.  The Gross Rent of each comparable unit must equal or exceed the Gross Rent of the subject unit. Gross rent equals contract rent plus utility allowance. NOTE: Any changes to the contract rent or utilities will change the gross rent amount.  Use the local PHA utility schedule allowances based on the actual unit size for the subject unit and the comparable units when determining Gross Rent.  In rare circumstances, if comparables are not available for the same unit size and type, surveys for a smaller unit of the same type would be acceptable. For example, if no 4BR apartment rent units are available in your subject area, you would use a 3BR apartment. The smaller unit must have similar services, amenities, etc.

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Informational - NC ESG Rent Reasonableness Determination Calculating Gross Rent Amount

To calculate the gross rent of a unit that is being tested by the FMR standard:

Total contract rent amount of the unit + Any fees required for occupancy under the lease (excluding late fees and pet fees) + Monthly utility allowance * (excluding telephone) established by local PHA = Gross Rent Amount

*Note: The monthly utility allowance is added only for those utilities that the tenant pays for separately (for more information on utility allowances established by the local public housing agency (PHA), see 24 CFR § 982.517). The utility allowance does not include telephone, cable or satellite television service, and internet service. If all utilities are included in the rent, there is no utility allowance.

Refer to: https://www.onecpd.info/resource/3070/esg-rent-reasonableness-and-fmr/

References Apartment Listings/Ads in Telephone Directories; Telephone Surveys : Landlord Associations; City/Town List of Registered Landlords; Other local Public Housing Agencies (PHAs); Newspaper Rental Ads; Apartment Shopper’s Guides; Realtors; and Rental Referral Services.

of 2 Revision 1.25.17

Informational - NC ESG Rent Reasonableness Determination