HUD HCV Guidebook § 2.1.3
Ten Percent or More Reduction in FMR (HUD HCV Guidebook)
Operative Text
A rent reasonableness determination is required when there is a ten percent decrease in the published FMR (for the unit size rented by the family) in effect 60 days before the contract anniversary date as compared with the FMR in effect one year before the contract anniversary date. An FMR will never decrease by more than 10 percent from the previous year’s FMR. This provision is designed to ensure that when the market goes down by a significant amount, the PHA must5 reexamine rent reasonableness at the contract anniversary date, even if the owner does not propose a rent increase. When determining if this provision applies, the PHA must compare the FMR in effect 60 days prior to the upcoming HAP contract anniversary date with the FMR in effect one year before the upcoming anniversary date.6
Under HUD Housing Choice Voucher Guidebook § 2.1.3, when the published Fair Market Rent (FMR) for a given unit size drops by ten percent or more compared to the FMR from one year prior—measured 60 days before the HAP contract anniversary date—a formal rent reasonableness determination must be conducted. This rule is triggered regardless of whether the property owner has proposed any rent increase. Because FMRs are capped at a maximum ten percent annual decrease, this provision effectively activates whenever the FMR reaches its allowable floor for that year.
Plain English — not legal advice.
Property owners participating in the Housing Choice Voucher program should be aware that under § 2.1.3, the Public Housing Authority (PHA) is required to conduct a rent reasonableness review at the contract anniversary date whenever the applicable FMR has fallen by ten percent. Compliant operators generally maintain records of current and prior-year FMRs for their unit sizes and remain prepared for a rent reasonableness evaluation even in years when they have not submitted a rent increase request. Staying informed about FMR publications well in advance of the HAP contract anniversary date helps operators anticipate when this review process may be initiated.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
For tenants in the Housing Choice Voucher program, § 2.1.3 provides a structural protection: when market rents drop significantly, the PHA is obligated to reassess whether the rent being paid remains reasonable, even without any action by the landlord. This means the housing assistance payment contract is subject to review at the anniversary date in years of notable FMR decline, which can affect the terms of continued assistance. Tenants who have questions about whether a rent reasonableness review has been conducted may contact their local PHA or reach out to a tenant-rights organization for general guidance.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 26, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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