Payment standards are used to calculate the housing assistance payment (HAP) that the PHA pays to the owner on behalf of the family leasing the unit. Each PHA has latitude in establishing its schedule of payment standard amounts by bedroom size. The range of possible payment standard amounts is based on HUD’s published fair market rent (FMR) schedule for the FMR area in which the PHA has jurisdiction. FMRs are based on either the 40th or 50th percentile of rents charged for standard rental housing in the FMR area. A PHA may set its payment standard amounts from 90 percent to 110 percent of the published FMRs, and may set them higher or lower with HUD approval.
The level at which the payment standard amount is set directly affects the amount of subsidy a family will receive, and the amount of rent paid by program participants.
If the family leases a unit with a gross rent at or below the payment standard for the family, the family’s share of the rent will be its TTP. If the rent for the unit is higher than the payment standard, the family’s share will be higher than the TTP.
If the payment standard amount is too low:
- Families may need to pay more than they can afford; or
- Families may have a hard time finding acceptable units or units in more desirable areas;
- Housing choices will be narrowed and the PHA’s efforts to affirmatively further fair housing will be undermined.If the payment standard amount is too high, owners may be encouraged to ask for higher than reasonable rents.Payment standard amounts should be high enough to allow families a reasonable selection of modest, decent, safe, and sanitary housing in a range of neighborhoods in the PHA’s jurisdiction. To meet that objective and to support families wishing to move to areas with lower concentrations of poor and minority households, a PHA may establish higher payment standard schedules for certain areas within its jurisdiction so that program families can rent units in more desirable areas.The PHA’s procedures for establishing and revising its payment standard schedule must be set in its administrative plan.