Can you bank increase Section 8 rents from multiple years?

Question

I understand that Section 8 tenants can have the rent raised a certain % each year. I am wondering if I don't raise the rent for a few years, can I bank the increases into one year? For example, Let's say I am allowed to raise the rent by 2% a year for Section 8. If I don't raise the rent for 3 years, can I then bank that increase and raise rent by 6%?

Melissa Hartvigsen · Answer

@Matt Wells

You should do regular rental increases each year.  When you send the new rental rate to the housing authority, they will run their calculations to make sure the rent you are charging is still within their approval amount. Small increases are easily approved.

If you "bank" the increases and do a 6% all at once, you may price your tenants out of your housing if the local housing authority does not approve the new amount. Sometimes the housing authority may be able to approve a large increase. I would not risk doing a 6% increase without first checking to see what the local housing authority considers  "Fair Market Rent" for your unit size. My local housing authority publishes the fair market rent amounts online. I am sure a quick google search for "Section 8 Fair Market Rent {YOUR CITY}" will help guide you with your decision.You could also try the national HUD fair market rent lookup tool at:https://www.huduser.gov/portal/datasets/fmr/fmrs/FY2023_code/select_Geography.odn

Phillip Austin · Answer

@Matt Wells Each housing provider is a little different but, generally speaking, yes you can do this.

Most housing authorities will assess/approve rent increases based off their determination of market rent for the property. If your property is well under market value, simply send in a rent increase request and they will look at comps to determine if the increase is justified.