The Department of Housing and Urban Development (HUD) has issued a final rule officially implementing Small Area Fair Market Rents (SAFMR) in place of 50 percentile fair market rents for high-cost metro areas. Importantly, it makes key changes suggested by NMHC/NAA.
While NMHC/NAA continue to oppose the use of zip codes as a substitute for real estate markets in setting rents, HUD’s final rule addresses our previous comments and provides public housing authorities considerable leeway to make exceptions and adjustments to the stated SAFMR.
Importantly, the rule says rents cannot be lowered by more than 10 percent where zip code-based rents are less than the FMR or previous SAFMR for areas in the demonstration program. Zip codes where the vacancy rate is less than four percent are exempt from the SAFMR rule and will remain under the FMR standard. The metro areas that will switch to SAFMRs as of January 17, 2017, can be found here.
Separately, HUD continues to review the effect of the SAFMR demonstration program and released a request for comments on a questionnaire they will be distributing to select residents and property owners/managers in the demonstration areas. NMHC/NAA, along with several other real estate groups provided feedback and suggested revisions to the questionnaire.
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