Meryl Finkel
Ken Lam
This article reflects the views of the authors and does not necessarily reflect the views of the U.S. Department of Housing and Urban Development.
The 1998 Quality Housing Work Responsibility Act (QHWRA) requires public housing agencies (PHAs) to offer the option of a flat rent (as opposed to an income-based rent) to residents of public housing. Flat rents are based on market rents and, therefore, the tenant rent does not vary with income. The U.S. Department of Housing and Urban Development (HUD) expected that by having the option of paying a flat rent, public housing residents would not be discouraged from working and increasing their income because their rent would not increase if their income increased. Similarly, QHWRA’s flat-rent option was also expected to avoid creating disincentives for continued residency by families that are attempting to become economically self-sufficient.
HUD implemented the provision on flat rents in 1999. As of the end of 2005, about 105,000 families (of the more than 1.2 million public housing households) were identified on HUD’s data system as paying either flat rents or ceiling rents.
This article uses extracts from HUD’s Office of Public and Indian Housing Information Center data system to provide some basic information on the use of flat rents in public housing, including the types of PHAs, places, and families that have selected a flat rent, and changes that have taken place in these properties and for these families coincident with the use of flat rents.
The article shows that, although nearly all PHAs have at least some flat-rent units, the proportion of flat-rent units in each PHA is generally small. Households paying flat rents have much higher incomes compared with other public housing residents. Similarly, a much higher percentage of households paying flat rents reported that most of their income was from wages compared with other public housing households. Thus, flat rents appear to be succeeding in allowing residents in these units to increase their income through employment and to remain in their units even as their income increases. Rents in units where residents are paying flat rents are substantially higher than in other public housing units. At the same time, households paying flat rents are virtually always paying less than 30 percent of their income for rent. In other words, flat rents offer benefits to both the residents and the housing agencies. Residents pay less than they would under an income-based rent scenario and the PHAs receive a higher rent than they would from regular public housing tenants. Properties with flat-rent units have a higher degree of income mixing than other properties do. This finding is as expected because households in units with flat rents have higher incomes than most other public housing households do.
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