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HUD's Section 8 Rent Figure Fell 6%. Can You Still Raise Yours?
•Martin Maxwell•Season 1•Episode 182
HUD's 2027 Fair Market Rent for a two-bedroom fell in 246 of 260 Dallas-area ZIP codes, a median 6.5%. In one Garland ZIP it went from $1,680 to $1,580. You have a Section 8 tenant who's never been late, and the lease renews March 1.
Your rent is $1,475. Your taxes and insurance are up about $90 a month, so you planned to ask for $100 more. Then a landlord friend says the housing agency will start paying less in March, so you'd better raise now.
Why HUD's number isn't your tenant's subsidy — the agency sets its payment standard at 90% to 110% of the figure, and last year's $1,680 is still 106% of the new one.
What HUD's 2024 rule does for an existing tenant — the old payment standard can stay while the family stays, and any cut waits at least two years, with a year's notice.
The two rules that limit your increase — rent reasonableness against unassisted comps, and the share above the payment standard that falls on the family, with no cap after move-in.
What a $100 ask really costs — $80 a month moved onto the family, against a move-out that costs about $4,475, or 56 months of that $80.
Do you know where your tenant's gross rent sits against your agency's payment standard? And if the agency asked for comps tomorrow, could you hand over three?
The payment standard, utility allowance, family income and turnover cost are assumptions. Rules per 24 CFR Part 982 and HUD Notice PIH 2024-19; check your agency's Administrative Plan. Framing, not legal or financial advice.
Subscribe now to price your renewal off the comps, not the headline.
Find your metro at rei.pm/markets and follow it on its market page.
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Welcome to the 5 Minute Prime Podcast. Quick actionable tips to master personal finance and real estate investing. In just five minutes a day, we'll help you build wealth and achieve financial freedom. Hey Prime Investors, Martin Maxwell here. Welcome back to the 5-Minute Prime Podcast.
1680 down to 1580. That's what HUD just did to its rent figure for a two-bedroom in one Dallas area zip code. And if you've got a Section 8 tenant renewing in March, somebody has probably already told you what that means for you. They're probably wrong about it. Say you own one rental, a two-bedroom house in Garland, just northeast of Dallas. Since March of 2024, you've rented it to a family of two with a housing choice voucher. 32 months. Never late. The lease renews March 1st. The rent is $14.75. The housing agency pays $11.50 of it, and the family pays $325. They also pay their own utilities, which the agency figures at $185 a month. So their whole share is $5.10, about 30% of their income. Your property tax and insurance went up about $90 a month this year. So the plan was simple. Ask for $100 more at renewal.
Then HUD publishes its 2027 Fair Market Rents. In the Dallas area, 246 of 260 zip codes went down. Yours went from 1680 to 1580 for a two-bedroom. About 6%. Your agency had set its payment standard right at that old $1680. Now run your plan against that. $15.75 in rent plus the $185 utility allowance is $1760. That's $180 over the new number. And the market? On a zip level rent index that blends every kind of rental, the typical asking rent in your zip code is about $14.90, up around 2% in a year. Then a landlord friend calls. The agency is going to start paying less in March, he says. Raise it now, before they do.
So, three options. Pick one before I tell you mine. Option one, ask for the full hundred to fifteen seventy five. It covers your higher bills. If the agency keeps your tenant on the old standard, it pays $20 more and the family pays $80 more. But first, the agency has to agree that $15.75 is a reasonable rent. Option two, renew flat at $14.75. No paperwork, no new rent check, the family's share doesn't move, and you eat the $90 this year. Option three, ask for $20 to $14.95 and attach three comparable rentals that don't take vouchers. $14.95 plus the utility allowance is exactly $16.80, the old standard. So the agency covers the whole increase. Three options. Hit pause, decide, then come back.
Start with your friend, because he's wrong on the timing. That $1580 is HUD's fair market rent. It is not your tenant's subsidy. Your housing agency turns that figure into a payment standard, anywhere from 90 to 110% of it. Last year's 1680 works out to about 106% of the new number. It's still inside the range. Nothing forces the agency to lower it at all. And if it does lower it? Under HUD's 2024 rule, the agency can keep an existing family on the old standard for as long as they stay in the unit. Any cut can't reach them for at least two years after it takes effect, and they get a year's written notice. Cut the schedule in January 2027, and the earliest your tenant feels it is January 2029. Which way your agency goes is written in one document. It's administrative plan. Read that before you read the headline. Why did the number fall at all? The formula caught up. HUD built it from 2020 to 2024 survey rents, with an inflation step near zero for Dallas and a forecast about half of last year's. It's not a policy cut and it's not the market. So March comes down to two other rules. Rule one is rent reasonableness. Before any increase, the agency checks your new rent against comparable units with no subsidy, and you owe it 60 days' notice. For a March 1st renewal, that's December 31st. Option one asks for $15.75, almost 7% more than today. But the check isn't about the size of the raise, it's about the rent itself. 1575 is almost 6% above the typical rent in your zip. That typical rent mixes apartments and houses, so it's a starting point, not comps. Unless houses like yours are leasing near $1575, expect less than you asked for. Maybe nothing. Rule 2 is the one people miss. Anything your gross rent runs over the payment standard is the families to pay, and there's no cap on it once they've moved in. The 40% of income limit only applies when a tenancy starts. At $1575, their share goes from $5.10 to $590. And if a cut to $1580 ever does reach them, it's $6.90. That's past 40% of their income. Now price option one as what it really is: a bet. Even approved, it beats option three by $80 a month, and every dollar of that $80 comes from the family. That's $9.60 a year. If they move, you eat a vacant month plus a turn. We've used $3,000 for that turn before. So call it $44.75. More if the next tenant also has a voucher and the unit has to wait on an inspection. $44.75 is $56 months of that extra $80. One move out wipes out almost five years of the raise. We looked once at a tenant asking for 15% off to renew in a 2% market, and the number that decided it wasn't on the lease at all. Same here. So option one only wins if that $80 raises the odds they leave by less than about one in five. Nobody can tell you that from the outside. In the book, I make the case that retention beats recruitment. A reasonable increase at renewal, not a big one, is the math that keeps a good tenant earning for you. Option two is safe. It leaves $240 a year on the table, and a year with no comps in your file for next time. Option
three is the call. $20 a month, and the agency pays all of it because your gross rent lands exactly on $1680. It lands right on the typical rent in your zip code. And three comparable units with no subsidy make your case before anyone asks. It doesn't cover your $90. Nothing on this list does without betting a turnover on a family that's never been late. Two things that are not options. No side payment above the approved rent. Ever. HUD's rules don't let you take it. And none of this is about whether to rent to voucher holders. Source of income laws vary by state and city, and Texas has no statewide one. This family has paid on time for 32 months. And if you already mailed a $100 notice, don't panic. The agency's rent check will size it. Send your comps. The headline number fell. The number that decides March is the comp. Here's your challenge.
Tonight, find three numbers. Your agency's current payment standard for your zip code and unit size. Your tenant's gross rent, which is your rent plus their utility allowance, and three rentals near you, same size, no subsidy with what they actually lease for. Then do this. If your gross rent sits below the standard, ask for what your comps support. If that, plus the utility allowance, lands at or under the standard, the family's share doesn't move. Send the notice 60 days before the renewal. If you're already over the standard, renew flat this year and put those three comps in the file for next year. The full write up, all three options side by side, is linked in the show notes. I'm Martin Maxwell. This has been the Five Minute Prime Podcast. I'll see you next episode.
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