HUD PIH Notice § 2018-01
Guidance on Recent Changes in Fair Market Rent (FMR), Payment Standard, and Rent Reasonableness Requirements in the Housing Choice Voucher Program (HUD PIH Notices)
HUD guidance — not codified law
Superseded
Verified 10/14/2026 · Next check 10/21/2026
effective 10/6/2026FederalAffordable Housing ProgramsOperative Text
HUD PIH Notice § 2018-01
U.S. Department of Housing and Urban Development
Office of Public and Indian Housing
SPECIAL ATTENTION OF: NOTICE PIH 2018–01 (HA)
Public Housing Agency Directors Issued: January 17, 2018
Public Housing Hub Office Directors This notice remains in effect until amended,
Public Housing Field Office Directors superseded, or rescinded
Subject: Guidance on Recent Changes in Fair Market Rent (FMR), Payment Standard,
and Rent Reasonableness Requirements in the Housing Choice Voucher Program
(1) Purpose. This Notice provides guidance on the regulatory provisions implemented under
the Small Area FMR (SAFMR) Final rule (FR-5855-F-03, “Establishing a More
Effective Fair Market Rent System; Using Small Area Fair Market Rents in the Housing
Choice Voucher Program Instead of the Current 50th Percentile FMRs; Final Rule,”
published in the Federal Register on November 16, 2016). The effective date of the Final
rule is January 17, 2017.
In addition to affecting how FMRs are calculated in certain designated metropolitan
statistical areas (MSAs), the final rule makes changes to payment standard and rent
reasonableness requirements that apply to all public housing agencies (PHAs)
administering the Housing Choice Voucher (HCV) program, regardless of whether the
PHAs operate in an area where SAFMRs have been adopted.
(2) Background. In the administration of the HCV program, SAFMRs (i.e., FMRs
established at the ZIP code–area level) replace the 50th percentile FMRs previously
required in metropolitan areas with high concentrations of voucher families. SAFMRs are
intended to provide families residing in such areas with access to low-poverty areas by
providing rental assistance at a level that makes the higher rents in such areas affordable
to them. For HCV-assisted families who reside in metropolitan areas where the use of
SAFMRs is mandatory, PHAs are required to use SAFMRs in establishing families’
payment standards.
HUD published a final rule1 in the Federal Register on November 16, 2016, establishing
the SAFMR selection parameters and naming 24 metropolitan areas that met the selection
criteria and were designated for mandatory use of SAFMRs commencing on October 1,
2017. The final rule became effective on January 17, 2017. On August 10, 2017, HUD
1
“Establishing a More Effective Fair Market Rent System; Using Small Area Fair Market Rents in the Housing
Choice Voucher Program Instead of the Current 50th Percentile FMRs,” 81 Fed. Reg. 221 (November 16, 2016).
exercised the authority under 24 CFR 888.113(c)(4)(iii) to suspend the SAFMR
designation for 23 of the 24 designated areas that would have gone into effect on October
1, 2017, until October 1, 2019 (the start of FY 2020). On December 23, 2017, the U.S.
District Court for the District of Columbia entered a preliminary injunction, voiding that
suspension. This means that the mandatory use of SAFMRs is now in effect for all 24
designated SAFMR areas, which are listed in Appendix A to this notice. PHAs operating
in these metropolitan areas must act as quickly as is reasonably feasible to implement the
use of SAFMRs by revising any payment standard that is not within the basic range of the
SAFMR for the applicable ZIP code area. PHAs are expected to have completed the
implementation as expeditiously as possible and no later than April 1, 2018. Any PHA
that does not believe it will be able to complete the SAFMR implementation before April
1, 2018, should immediately contact the Office of Public Housing in the local HUD field
office for assistance. (MTW agencies should contact the MTW office.)
The final rule also made several regulatory changes to the HCV program with respect to
payment standards and rent reasonableness determinations that apply to all PHAs,
regardless of whether they operate within a metropolitan area designated for SAFMRs,
choose voluntarily to adopt use of the SAFMRs, or choose not to do so.
HUD is issuing this guidance now to help PHAs better understand their options under the
final rule. HUD is likely to amend and extend this guidance once it has received and
evaluated the complete results of the Small Area FMR Demonstration Evaluation.
In addition to developing this guidance, HUD has established a set of Frequently Asked
Questions (FAQ) specific to SAFMRs. To access the FAQs please click the following
link: https://www.hudexchange.info/programs/public-housing/small-area-fair-market-
rents/. Questions may be sent to SAFMRs@hud.gov.
(3) Categories of PHAs. This notice refers to four categories of PHAs:
(a) “Designated SAFMR PHAs” refers to PHAs that directly administer HCV
assistance for any family that resides in a designated SAFMR area (i.e., a
metropolitan area where the use of SAFMRs is required). Appendix A lists
designated SAFMR areas as of FY 2018.
(b) “Opt-in SAFMR PHAs” refers to PHAs that are not required to use SAFMRs in a
particular area within their jurisdiction but choose voluntarily to do so.
(c) “Non-SAFMR PHAs” refers to PHAs that are not required to use SAFMRs and
choose not to do so.
(d) “PHAs” refers to any PHA with an HCV program, regardless of SAFMR status.
In the final rule and in this Notice, the term FMR is used collectively to include ZIP
code–based SAFMRs, metropolitan area FMRs (MAFMRs), and nonmetropolitan county
FMRs.
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(4) Changes Affecting All HCV PHAs. The final rule implements a number of HCV
provisions that apply to all PHAs.
(a) Decreases in FMRs. The final rule amends 24 CFR §888.113(b), governing the
establishment of 40th percentile FMRs. Based on this amendment, the following
standards apply:
• In areas where MAFMRs are in use, any decline in the MAFMR from one
year to the next will not exceed 10 percent.
• In areas where HUD has not required the use of SAFMRs, the SAFMRs
for a ZIP Code area will be no lower than 90 percent of the higher of (1)
the previous year’s SAFMRs for that ZIP Code area or (2) the previous
year’s MAFMRs.
• For a HUD-designated SAFMR area (where use of the SAFMRs is
required within the metropolitan area by all PHAs), the SAFMRs for a ZIP
code area will be no lower than 90 percent of the previous year’s SAFMRs
for that ZIP code area. In the year that a metropolitan area first transitions
to a HUD-designated area, the SAFMRs will also be no lower than 90
percent of the previous year’s MAFMRs. However, in all subsequent years
following the transition to the HUD-designated SAFMR area, the
relationship between the SAFMRs and the MAFMRs will no longer be
relevant. The only applicable restriction from that point forward is that the
SAFMRs will be no lower than 90 percent of the previous year’s SAFMRs
for that ZIP code area.
(b) Rent reasonableness. The final rule changes the percentage decrease in FMRs that
triggers the need for a rent reasonableness determination from 5 to 10 percent (see
24 CFR §§982.507(a)(2)(ii), 983.302(a)(2), and 983.303(b)(1)). A rent
reasonableness determination will be required only when the decrease in the
FMRs from the previous year is exactly 10 percent. (An FMR will never decrease
by more than 10 percent from the previous year’s FMR, regardless of whether a
PHA is voluntarily using SAFMRs, is operating in a designated SAFMR area, or
is not using SAFMRs. This outcome results from HUD’s decision, described
above, to establish SAFMRs at a level that will not decrease by more than 10
percent from the prior year’s MAFMR levels.)
A PHA is still required to redetermine rent reasonableness before any increase in
rent to owner and/or if directed by HUD.
(c) Revisions to payment standard amounts and schedules. The final rule provides
that all PHAs must revise and implement their payment standard amount and
schedule, if a revision is necessary to stay within the basic range, no later than 3
months following the effective date of the change in the FMR (see 24 CFR
§982.503(b)(1)(ii)). For example, if a published FMR that went into effect on
October 1, 2018, pushed a PHA’s payment standards to 89 or 111 percent of the
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FMR, then the PHA would have until January 1, 2019, to revise and implement its
payment standard amounts to bring them back within the basic range.
Pursuant to this change, a new payment standard schedule may go into effect on
or after the effective date of the published FMR, but no later than 3 months
following the effective date of the published FMR. The following scenarios apply:
(i) For reexaminations of income with an effective date prior to the effective
date of the new payment standard schedule, the old payment standard
schedule will be used.
(ii) For reexaminations of income that are effective on or after the effective
date of the new payment standard schedule, the new payment standard will
be used.
(iii) The payment standard employed for a newly issued voucher will depend
on the effective date of the HAP contract. If the effective date of the HAP
contract is before the effective date of the new payment standard schedule,
then the old payment standard schedule is used. If the effective date of the
HAP contract is on or after the effective date of the new payment standard
schedule, then the new payment standard schedule is used.
In order to assure that families are informed about the effect of payment standard
changes, HUD recommends that PHAs provide both the old and the new payment
standard schedules to families who have been issued a voucher and whose search
term will extend beyond the effective date of the new payment standard schedule.
(d) Exception payment standards. The final rule establishes the following exception
payment standard provisions:
(i) Non-SAFMR PHAs. PHAs that are not using SAFMRs have two options
for establishing exception payment standards:
(I) MAFMR-based exception payment standards (24 CFR
§982.503(c)(2)). As was the case prior to the implementation of the
final rule, a non-SAFMR PHA may adopt an exception payment
standard above 110 percent up to 120 percent of the published
FMR for an area upon approval from the local HUD field office.
The final rule changes the parameters used by the local HUD field
office in evaluating the request. Prior to the rule, the field office
would determine whether the request is justified using either (1)
the median rent method or (2) the 40th or 50th percentile rent
method. The final rule now allows use of either (1) the median rent
method or (2) the 40th or SAFMR method, in accordance with
revised 24 CFR §982.503(c)(2)(ii). This change reflects the fact
that the 50th percentile rent method is no longer in effect. (Note
that 50th percentile FMRs remain in effect for the purpose of
determining success rate payment standards.)
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(II) SAFMR-based exception payment standards (24 CFR
§982.503(b)(1)(iii)). A non-SAFMR PHA may establish an
exception payment standard for a ZIP code area of up to and
including 110 percent of the SAFMR determined by HUD for that
ZIP code area. Regardless of the level of the exception payment
standard compared to the MAFMR, the PHA must simply send an
email to SAFMRs@hud.gov to notify HUD that it has adopted an
exception payment standard based on the SAFMR. In other words,
HUD no longer approves or disapproves the exception payment
standard amount under this method, nor does the limitation at 24
CFR §902.982(c)(5), governing the total population of HUD-
approved exception areas, apply to exception payment standard
areas established for a ZIP code area pursuant to this authority.
A PHA that adopts an exception payment standard pursuant to this
authority must apply it to the entire ZIP code area, for both its
HCV and, if applicable, PBV program. For the PBV program, this
means that the rent to owner may not exceed the new exception
payment standard amount, provided the rent is still reasonable (24
CFR §983.301(b)).
A PHA that adopts an exception payment standard area must revise
its briefing materials to make families aware of the exception
payment standard and the area that it covers.
(ii) Designated SAFMR PHAs and Opt-in SAFMR PHAs. HUD will issue a
separate Federal Register notice proposing conditions and procedures
under which a PHA using SAFMRs may request HUD approval to
establish an exception payment standard that exceeds 110 percent of the
SAFMR. The requirements at 24 CFR §982.503(c) do not apply to such
requests.
(iii) Reasonable accommodation requests. Per 24 CFR §982.505(d),2 any PHA
may, without HUD approval, establish an exception payment standard of
up to and including 120 percent of the FMR if required as a reasonable
accommodation for a family that includes a person with a disability. The
Small Area FMR rule further clarified that a PHA may request HUD
approval to establish a payment standard that exceeds 120 percent of the
FMR if necessary as a reasonable accommodation for such a family.
(e) Decrease in the payment standard amount during the HAP contract term. The
Housing Opportunity Through Modernization Act of 2016 (HOTMA) amended
the United States Housing Act of 1937 to provide that no PHA is required to
reduce a family’s payment standard based on a reduction in the FMR. Prior to this
2
“Streamlining Administrative Regulations for Public Housing, Housing Choice Voucher, Multifamily Housing,
and Community Planning and Development Programs; Final Rule,” 81 Federal Register 12354, March 8, 2016.
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change, if the amount on the PHA’s payment standard schedule decreased during
the term of the HAP contract, the PHA was required to use the lower payment
standard to calculate the family’s HAP beginning on the effective date of the
family’s second regular reexamination following the effective date of the decrease
in payment standard. The final rule amends the voucher program regulations at 24
CFR §982.505(c)(3) to reflect the change made by HOTMA, providing PHAs
with three options for applying a decrease in the payment standard amount to
families under HAP contract on the effective date of the decrease in the payment
standard amount. Specifically, a PHA may adopt one of the policies listed below
if there is a decrease to the payment standard schedule during the term of a
family’s HAP contract:
(i) Hold harmless — no reduction in subsidy. A PHA may continue to use the
existing higher payment standard for the family’s subsidy calculation for
as long as the family continues to receive the voucher assistance in that
unit.
(ii) Gradual reduction in subsidy. A PHA may gradually reduce the payment
standard amount used to calculate the family’s subsidy, phasing in the
reduction. The initial reduction in payment standard cannot take place
before the effective date of the family’s second regular reexamination
following the effective date of the decrease in payment standard. Phased-
in reductions may proceed annually from the second regular
reexamination until the payment standard amount for the family meets the
normally applicable payment standard amount on the PHA’s voucher
payment standard schedule.
(iii) No change in policy. A PHA may continue to use the lower payment
standard to calculate the family’s HAP beginning at the effective date of
the family’s second regular reexamination following the effective date of
the decrease in the payment standard.
A PHA’s Administrative Plan must indicate how it will handle decreases in the
payment standard amount for families under HAP contract. Whatever the policy,
the PHA must apply it uniformly to all families. A PHA may establish different
policies for designated areas within its jurisdiction (for example, for different ZIP
code areas), but within each designated area, the policy must be applied uniformly
to all families under HAP contract.
If a PHA chooses to reduce the payment standard for a family under HAP
contract, the initial reduction in payment standard cannot take place before the
effective date of the family’s second regular reexamination following the effective
date of the decrease in payment standard. Per 24 CFR §982.516(a), PHAs must
conduct a reexamination of family income and composition at least annually. The
requirement to conduct an annual reexamination is in effect even if the PHA
implements a streamlined income determination for fixed-income families, as is
currently permitted under 24 CFR §982.516(a). Even if the PHA conducts a full
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income recertification only every three years, it will review the family’s payment
standard annually as part of the streamlined annual reexamination, and the
decrease in payment standard will take effect in the second calendar year after the
effective date of the payment standard reduction.
A family that will be affected by a payment standard reduction must receive
notice. A PHA must provide such notice in writing 12 months before the effective
date of the reduced payment standard amount. This notice is required for any
reduction in payment standard, even if the PHA chooses to reduce the payment
standard gradually. Appendix B to this Notice provides PHAs with tips for
strengthening their written notices to such families.
(5) Adoption of SAFMRs: Designated SAFMR PHAs and Opt-In PHAs. The elements of
the final rule that pertain only to designated SAFMR PHAs and opt-in PHAs are
presented below, followed by a listing of factors that apply to all SAFMR adopters.
(a) Designated SAFMR PHAs Only. As discussed in section 4(c) above, section
982.503(b)(1)(i) provides that a PHA must revise the payment standard amount
no later than 3 months following the effective date of the published FMR if a
change is necessary to stay within the basic range. For a PHA that directly
administers HCV assistance to families in metropolitan areas where the adoption
of SAFMRs is mandatory, the PHA has no later than 3 months from the effective
date of the FMRs to adopt payment standards within the basic range of the
SAFMRs. In other words, the PHA must adjust the payment standard for any ZIP
code area where the current payment standard falls outside of the basic range of
the SAFMR for that ZIP code area.
HUD recommends that any agency that is required to adopt SAFMRs review the
SAFMRs for the fiscal year prior to mandatory adoption to estimate the effect of
moving from MAFMRs to SAFMRs. For example, if a large number of families
residing in the PHA’s jurisdiction will experience a decrease in subsidy at the
second regular reexamination following the effective date of the mandatory use of
the SAFMRs, PHAs will want to consider whether to adopt the hold harmless or
gradual reduction in subsidy options described in paragraph (4)(e) of this Notice.
Since designated SAFMR agencies are required to adopt SAFMRs, they need not
amend their Administrative Plans to indicate that they will be doing so. However,
all PHAs (including designated SAFMR agencies) must state in its Administrative
Plan how it will handle decreases in the payment standard amount for families
under HAP contract, even if the agency will not adopt any of the discretionary
policies, such as the hold harmless or gradual reduction in subsidy options
mentioned above.
(b) Opt-in PHAs. An agency that administers vouchers in a metropolitan area where
the adoption of SAFMRs is not required may request approval from HUD
voluntarily to adopt SAFMRs.
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In evaluating whether to opt in, an agency must compare the applicable SAFMRs
and MAFMRs to:
(i) consider whether adoption of SAFMRs is likely to have an adverse effect
on the availability of rental housing that is both affordable and available to
program participants and applicants;
(ii) estimate the effect on families of SAFMR adoption and consider whether
to adopt the hold harmless or gradual reduction in subsidy options
described in paragraph (4)(e) of this Notice;
(iii) identify any areas where the difference between the MAFMR and the
(lower) SAFMR is exactly 10 percent and opt-in will therefore trigger the
need for rent reasonableness determinations;
(iv) consider whether to apply SAFMRs to its PBV program, if applicable, in
which case PBV-assisted projects may also be subject to a rent
reasonableness determination (see paragraph (4)(b)(ii), above).
An agency that chooses to adopt SAFMRs must submit a written request to its
local HUD Office of Public Housing via SAFMRs@hud.gov, stating that it has
completed the evaluation in paragraph (5)(b), above. The request must indicate
the PHA’s proposed effective date of SAFMR implementation.
If HUD approves the request, the PHA must then amend its Administrative Plan,
stating in its plan that it will operate according to SAFMRs and also identifying
any policies it has adopted with respect to SAFMRs (e.g., applying SAFMRs to
its PBV program, adopting tenant protections as described in paragraph (4)(e)).
A PHA that opts in to SAFMRs may opt out, returning to the use of MAFMRs,
via revision of its Administrative Plan and notification to its local HUD field
office (again at SAFMRs@hud.gov), after taking into consideration any
disruptions to its program, families, and owners that may result.
(c) All SAFMR adopters. The items presented below apply to all SAFMR adopters,
whether they are designated PHAs or opt-in PHAs.
(i) Exception payment standards. Exception payment standards that were
approved prior to the adoption of SAFMRs may remain in effect, subject
to the conditions in the approval letter. In some cases, the amounts
previously approved may now fall within the SAFMR basic range and will
therefore no longer be exceptions. Any amounts that remain above the
basic range must be maintained unless, following the adoption of
SAFMRs, an agency subsequently elects to reduce its payment standards
or otherwise seeks to establish a higher payment standard (but, see
paragraph (4)(d)(ii), above), in which case another waiver must be
requested and approved before the new, higher payment standard may be
adopted.
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(ii) Establishing payment standards within the basic range and payment
standard groupings. As is the case for any FMR area, the payment
standard amount for the ZIP code area must be within the basic range (90
to 110 percent) of the SAFMR for the ZIP code area (unless an exception
payment standard is in effect for the area). As discussed in paragraph
(4)(c) above, the PHA is required to revise its payment standard amount
and schedule if the payment standard amount for the ZIP code area is
outside of the basic range (unless the payment standard is an exception
payment standard or a payment standard below the basic range that was
previously approved by HUD). If the payment standard amount for the
ZIP code area is within the basic range, the PHA may revise its payment
standard amounts at any time for the ZIP code area, provided the revised
payment standard amount remains within the basic range.
The PHA establishes the payment standard amounts for the ZIP code area
for a unit size at any level between 90 percent and 110 percent of the
published SAFMR for that unit size. The percent of the SAFMR that the
payment standard equals may vary between different unit sizes and from
ZIP code area to ZIP code area. For example, in lieu of establishing a
unique payment standard for each ZIP code area within its jurisdiction, a
PHA may use this flexibility to establish payment standards for “grouped”
ZIP code areas, provided the payment standard in effect for each grouped
ZIP code area is within the basic range of the SAFMR for each ZIP code
area in the group. So, for example, a PHA could establish a payment
standard schedule that falls within the basic range for a group of ZIP code
areas and identify that group of ZIP code areas as Group A, another as
Group B, and so on.
Exhibit 1: Example of Payment Standard Groupings of ZIP Code Areas
Payment
ZIP Code SAFMR Basic Range Group
Standard
90012 $1,490 $1,341-1,639 $1,440 A
90013 $1,630 $1,467-1,793 $1,630 B
90014 $1,810 $1,629-1,991 $1,630 B
90015 $1,180 $1,062-1,298 $1,100 C
90016 $1,340 $1,206-1,474 $1,440 A
90017 $1,090 $981-1,199 $1,100 C
Adopting groups, as illustrated above, may help to minimize the
administrative burden of managing multiple payment standard areas.
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(iii) Applicability of SAFMRs to the project-based voucher (PBV) program. No
PHA is required to use SAFMRs for its PBV program. Thus, a PHA that
operates under SAFMRs must determine whether to apply MAFMRs or
SAFMRs to its PBV program.
A PHA that chooses to apply SAFMRs to its PBV program must adopt
such a policy in its Administrative Plan and must apply SAFMRs
uniformly for all projects within its jurisdiction for which notice of owner
selection under 24 CFR §983.51(d), regarding owner proposal selection
procedures, was made after the effective dates of the agency’s adoption of
both SAFMRs and a revised Administrative Plan. For any project where
the notice of owner selection was made prior to either or both of these
effective dates, the PHA and owner may agree mutually to apply SAFMRs
to the project. If the rent to owner will increase as a result of this mutual
agreement, then the rent increase shall go into effect no earlier than the
first anniversary of the HAP contract and must comply with the
requirements of 24 CFR §983.302(b), regarding rent increases.
For any PBV project to which SAFMRs have been applied, an owner and
PHA may not subsequently choose to apply the MAFMR, even if the PHA
changes its policy so that SAFMRs will no longer apply to its PBV
program.
In considering whether to adopt SAFMRs for its PBV program, HUD
recommends that a PHA compare the HAP contract rents of current PBV-
assisted projects (if any) within their jurisdiction with what the rents
would be under a SAFMR regime. Consider the examples below:
Exhibit 2: Example of Higher PBV Maximum Rent to Owner under SAFMRs
ZIP Maximum Rent to Maximum Rent to
MAFMR SAFMR
Code Owner Owner
90010 $1,545 $1,700 $2,130 $2,343
90013 $1,545 $1,700 $1,630 $1,793
90014 $1,545 $1,700 $1,810 $1,991
90024 $1,545 $1,700 $2,290 $2,519
90025 $1,545 $1,700 $2,000 $2,200
If the adoption of SAFMRs would create a significant discrepancy in
individual ZIP code areas between existing PBV-assisted projects and
newly developed projects under an SAFMR regime, then PHAs will want
to consider the effect on neighborhoods and HCV applicants and program
participants before taking a decision about whether to adopt SAFMRs for
their PBV program. Consider the ZIP codes described above, for example.
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A family can reside in any of these ZIP codes at lower cost to the PHA
under MAFMRs than SAFMRs. If the PHA has existing properties in
these ZIP codes, then it may not make sense to adopt SAFMRs.
Exhibit 3: Example of Lower PBV Maximum Rent to Owner under SAFMRs
ZIP Maximum Rent to Maximum Rent to
MAFMR SAFMR
Code Owner Owner
90005 $1,545 $1,700 $1,190 $1,309
90006 $1,545 $1,700 $1,170 $1,287
90011 $1,545 $1,700 $1,240 $1,364
90029 $1,545 $1,700 $1,230 $1,353
90033 $1,545 $1,700 $1,170 $1,287
Alternatively, if a PHA adopts PBVs and places properties in any of the
ZIP codes described above, the PHA may be called upon to justify why it
is paying so much more for some projects than others. Despite the change
in rules that provides an explanation for the difference, a PHA may face
pressure to terminate (or at least not extend) the PBV HAP on pre-
SAFMR properties, with potential consequences for tenants, lenders, and
investors. If an owner has 30-year debt on the project and the appraised
value has declined at the point of extension due to the adoption of
SAFMRs, then the adoption of SAFMRs could create problems.
(iv) Portability and vouchers administered outside of SAFMR areas. The
vouchers of families who port will be administered according to the
policies of the receiving PHA (as the term is used for portability
purposes). If the receiving PHA is operating under SAFMRs, then the
family’s voucher will be administered using SAFMRs. If the receiving
PHA has not adopted SAFMRs, then the family’s voucher will not be
administered using SAFMRs (regardless of whether the initial PHA uses
SAFMRs). Likewise, if a PHA operates in a SAFMR area but also
administers vouchers outside of that SAFMR area, then the vouchers that
are administered outside of the SAFMR area will be administered using
MAFMRs. If such a PHA wishes to apply SAFMRs to vouchers
administered outside of a SAFMR area, then the PHA must request HUD
approval to do so following the requirements of paragraph (5)(b).
(v) Special Housing Types. If use of the SAFMR has been designated for a
metropolitan area or a PHA has voluntarily chosen to use SAFMRs, the
SAFMRs apply to all tenant-based vouchers, including special housing
vouchers.
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All special housing types are subject to the SAFMRs. For example, under
the Single Room Occupancy (SRO) special housing type, the payment
standard is 75 percent of the zero-bedroom payment standard amount on
the PHA payment standard schedule. If the PHA revised the payment
standard schedule as a result of the applicability of SAFMRs, the payment
standard for SRO units would likewise be revised to reflect 75 percent of
the applicable zero-bedroom payment standard amount.
Revisions to the payment standard as a result of the implementation of
SAFMRs would also apply to the voucher homeownership program at 24
CFR §§982.625 through 982.641. The PHA must use the same payment
standard schedule and payment standard amounts for the homeownership
option as for the rental voucher program. The same protections that the
PHA may employ for families under HAP when the payment standard
decreases would apply to families assisted under the voucher
homeownership option. Furthermore, the payment standard for a voucher
homeownership family is always the greater of the payment standard used
at the commencement of homeownership assistance for occupancy of the
home or current payment standard in effect at the most recent regular
reexamination.
(vi) Optional reporting. HUD’s Office of Policy Development and Research
(PD&R) has developed a mobile application that delivers the most current
FMR and Income Limit information to a mobile user based on the GPS
location of their mobile device (available at https://www.huduser.gov/
portal/pdr_mobile.html). In order to provide additional information to
voucher families searching for a unit, PD&R would like to include
payment standards in the application. PHAs that are willing to provide
their payment standard information to HUD may do so by contacting
PD&R at SAFMRs@hud.gov.
(6) Applicability of SAFMRs to Moving to Work (MTW) agencies. An MTW PHA that
operates in a mandatory SAFMR metropolitan area may be exempt from use of SAFMRs.
An individual MTW PHA is exempt from the requirement to use SAFMRs if that agency
has an alternative payment standards policy in its HUD-approved Annual MTW Plan. An
MTW PHA that does not have such a policy in its HUD-approved Annual MTW Plan is
required to use SAFMRs as outlined in the final rule. Any MTW PHA that does not
operate in a metropolitan area where the use of SAFMRs is mandatory may choose to
adopt SAFMRs, following the procedures outlined in this Notice.
(7) Inapplicability of SAFMRs to other HUD programs. SAFMRs do not apply to any
programs other than the HCV program. Other programs that use FMRs (e.g., HOME
Investment Partnerships Program) continue to use MAFMRs regardless of whether
SAFMRs have been designated for HCV tenant-based assistance within the same
metropolitan area. The use of SAFMRs in HUD’s Rental Assistance Demonstration
(RAD) is addressed in Notice PIH 2012–32 (HA) H–2017–03, REV–3, which was
published on January 12, 2017, and was in effect at the time of publication of this notice.
12
Generally, under RAD, an owner may use the SAFMR in place of the metropolitan area
FMR in the computation of PBV rents, with HUD approval.
(8) Impact of Final rule on current 50th percentile FMR areas. The final rule eliminates
the regulations that had governed the establishment of FMRs using 50th percentile rents
and establishes requirements for the transition of 50th percentile FMR areas. A PHA that
is operating in a metropolitan area in which 50th percentile FMRs are effective, and for
which the 3-year period has not expired prior to January 17, 2017, will, for the purposes
of the HCV program, transition out of the use of 50th percentile FMRs, as follows.
(a) A PHA that is operating in a metropolitan area that is designated for SAFMRs
shall transition to the use of SAFMRs, as of the effective date of the area’s
SAFMR designation.
(b) A PHA that is operating in an area that is not designated for SAFMRs may choose
one of the following options:
(i) Adopt SAFMRs without regard to the expiration of the 3-year period.
(ii) Remain subject to 50th percentile FMRs until the expiration of the 3-year
period, then revert to the use of 40th percentile FMRs.
(iii) Revert to the use of the 40th percentile MAFMRs at the end of the 3-year
period and then establish exception payment standards for a ZIP code area
of up to and including 110 percent of the relevant SAFMR area by
notifying HUD, as described in paragraph (4)(d)(ii)(II) of this Notice.
(iv) If a PHA scored the maximum number of points on the SEMAP
deconcentration bonus indicator in the prior year or in two of the last three
years (24 CFR §982.503(f)), then, upon the expiration of the 3-year
period, it may request HUD approval of payment standard amounts based
on the 50th percentile rent in accordance with 24 CFR §982.503(f),
governing payment standard protections for PHAs that meet
deconcentration objectives. The request must be made to the local HUD
field office during the period between the release of revised FMRs and the
effective date of those FMRs.
PHAs interested in more information on 50th percentile areas should review HUD’s FY
2018 FMR Federal Register notice. This notice is available at:
https://www.huduser.gov/portal/datasets/fmr/fmr2018/FY2018-FMR-Preamble.pdf
(9) Suspension of SAFMRs or Temporary Exemption for an Individual PHA. The
regulations at 24 CFR §888.113(c)(4) provide that HUD may suspend a SAFMR
designation from a metropolitan area, or may temporarily exempt a PHA in a designated
SAFMR area from use of the SAFMRs, when HUD by notice makes a documented
determination that such action is warranted. The process for reviewing whether a
suspension or temporary exemption is warranted may be initiated by HUD or at the
request of a PHA.
13
(a) Suspension by HUD. In the event HUD determines that it is necessary to suspend
an area’s SAFMR designation or temporarily exempt an individual PHA from use
of the SAFMRs within a designated SAFMR area, HUD will issue a Notice of
Suspension or Exemption with information on the adverse rental market condition
that is the reason for the suspension, the duration and timing of the suspension,
and other details as HUD determines necessary. HUD may take either action by
itself or upon request by a PHA or PHAs as described below.
(b) Suspension of an SAFMR designation for the metro area or exemption from use
of the SAFMRs for a PHA at the request of a PHA. PHAs may request either (1) a
suspension of the Small Area FMR designation for a metropolitan area or (2) a
temporary exemption from use of the SAFMRs within the designated SAFMR
area for an individual PHA. In both cases, the request must be based on a
documented finding of an adverse rental housing market condition specific to the
area or PHA requesting a suspension or temporary exemption. If the request is for
a suspension of the SAFMR designation for the metropolitan area, the requesting
PHA or PHAs must administer more than 50 percent of the vouchers leased in the
metropolitan area. PHA requests for suspension or exemption must be emailed to
SAFMRs@hud.gov.
(c) Adverse rental housing market condition. Adverse rental housing market
conditions may include, but are not limited to, current vacancy rates falling below
four percent (insufficient supply); a sudden influx of families into the
metropolitan area (demand shock); a sudden loss of rental units (supply shock); a
rapid increase in the PHAs per unit costs (PUC) causing the PHA to experience a
funding shortfall (supply or demand shocks). Adverse rental housing market
conditions may apply to the broad rental housing market, or may apply to the part
of the rental market that is affordable and available to HCV families. For
example, declining success rates and increasing rent burdens despite PHA owner
outreach efforts may be evidence of adverse rental market conditions for HCV
families due to lack of units that are both affordable and owned by owners willing
to participate in the HCV program. There are likely to be other circumstances that
cause adverse rental market conditions and HUD will review the documentation
of these conditions on a case by case basis.
(10) Paperwork Reduction Act. The information collection requirements contained in this
Notice have been approved by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3520) and assigned OMB control number
2577–0169.
/s/
Dominique Blom
General Deputy Assistant Secretary
Office of Public and Indian Housing
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APPENDIX A — METROPOLITAN AREAS WHERE THE USE OF
SAFMRS IS MANDATORY AS OF FY 2018
Atlanta-Sandy Springs-Roswell, GA HUD Metro FMR Area
Bergen-Passaic, NJ HUD Metro FMR Area
Charlotte-Concord-Gastonia, NC-SC HUD Metro FMR Area
Chicago-Joliet-Naperville, IL HUD Metro FMR Area
Colorado Springs, CO HUD Metro FMR Area
Dallas, TX HUD Metro FMR Area (Dallas-Plano-Irving, Texas Metro Division)
Fort Lauderdale, FL HUD Metro FMR Area
Fort Worth-Arlington, TX HUD Metro FMR Area
Gary, IN HUD Metro FMR Area
Hartford-West Hartford-East Hartford, CT HUD Metro FMR Area
Honolulu, HI MSA
Jackson, MS HUD Metro FMR Area
Jacksonville, FL HUD Metro FMR Area
Monmouth-Ocean, NJ HUD Metro FMR Area
North Port-Sarasota-Bradenton, FL MSA
Palm Bay-Melbourne-Titusville, FL MSA
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA
Pittsburgh, PA HUD Metro FMR Area
Sacramento--Roseville--Arden-Arcade, CA HUD Metro FMR Area
San Antonio-New Braunfels, TX HUD Metro FMR Area
San Diego-Carlsbad, CA MSA
Tampa-St. Petersburg-Clearwater, FL MSA
Washington-Arlington-Alexandria, DC-VA-MD HUD Metro FMR Area
West Palm Beach-Boca Raton, FL HUD Metro FMR Area
15
APPENDIX B
Tips for PHAs on language to include in any written notice to families who will experience a
reduction in subsidy due to a decrease in the payment standard.
• Provide a simple, clear letter, mailed directly to the family. This approach is preferable to
a general meeting or training, even if all families are invited.
• Provide the notice at least one year in advance of the effective date of the lower payment
standard and change in the HAP calculation for the family. Even a second notice sent less
than a year before the date of implementation of the lower payment standard can not
make up for proper notice (i.e., notice sent at least one year in advance of the
implementation date of the lower payment standard).
• In the letter, clearly define and explain the term “payment standard,” and explain how a
change in the payment standard is likely to affect the family’s subsidy. Do not assume
that the family understands what is meant by “payment standard” or the connection
between a change in the payment standard and a change in their subsidy. Include a
sample calculation to illustrate the likely effect of the change.
• Identify a point of contact for families who have questions or wish to seek new housing,
given the change. Make clear whom families may contact if they have questions, as well
as how to contact that person.
All materials provided to residents communicating a change in their subsidy must be presented in
a manner that is accessible for those with hearing and/or vision impairment, in addition to those
with limited English proficiency, as described below.
• Effective Communication Requirements. All notices and communications must be
provided in a manner that is effective for persons with hearing, visual, and other
communication-related disabilities consistent with Section 504 of the Rehabilitation Act,
Title II of the ADA, and implementing regulations. Recipients must provide appropriate
auxiliary aids and services necessary to ensure effective communication, which includes
ensuring that information is provided in appropriate accessible formats as needed (e.g.,
Braille, audio, large type, assistive listening devices, sign language interpreters,
accessible websites, and other electronic communications). See 24 CFR §8.6; 28 CFR
§35.160.
• Limited English Proficiency (LEP) Requirements. Recipients of HUD funds must take
reasonable steps to ensure meaningful access to their programs and activities to LEP
individuals. See HUD’s published Final Guidance to Federal Financial Assistance
Recipients: Title VI Prohibition Against National Origin Discrimination Affecting
Limited English Proficient Persons (LEP Guidance), 72 Fed. Reg. 2732, for more
information.
16
Source: Legislative text reproduced verbatim
Plain English
PIH Notice § 2018-01 implements the Small Area Fair Market Rent (SAFMR) Final Rule for the Housing Choice Voucher program, changing how Fair Market Rents are calculated in certain metropolitan areas and how payment standards are set and adjusted. The rule caps annual FMR decreases at 10 percent, shifts the rent-reasonableness-determination trigger to that same threshold, and requires PHAs to revise payment standards within three months of an FMR change. It also gives PHAs new options for handling payment standard reductions for families already under HAP contracts, including hold-harmless and gradual phase-in approaches.
Written by anthropic/claude-sonnet-4.6 · Reviewed on October 7, 2026
Plain English — not legal advice.
For Property Managers
Under PIH Notice § 2018-01, owners participating in the HCV program should be aware that rent reasonableness determinations are now triggered only when FMRs drop by exactly 10 percent, rather than the previous 5 percent threshold. Compliant operators stay informed about whether their properties fall within a designated SAFMR area, since ZIP code-level payment standards may differ significantly from metropolitan-area FMRs. Owners in PBV projects should review whether their PHA has adopted SAFMRs for its PBV program, as that choice directly affects the maximum allowable rent to owner under 24 CFR § 983.301(b).
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
For Tenants
PIH Notice § 2018-01 affects the subsidy amount voucher holders receive, particularly for families living in one of the 24 designated SAFMR metropolitan areas listed in Appendix A of the notice. If a PHA reduces its payment standard, families under HAP contract must receive written notice at least 12 months before the reduction takes effect, and the reduction cannot begin before the second regular reexamination after the decrease. Tenants who believe their PHA has not followed these procedures may contact their local HUD Office of Public Housing or reach out to a tenant-rights organization for guidance on available options.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 7, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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