HUD Occupancy Standards

Created under the leadership of President Lyndon B. Johnson, HUD was established as part of the Department of Housing and Urban Development Act (42 U.S.C. 3532-3537), effective November 9, 1965. Working to establish fair housing free from discrimination as well as increase access to adequate housing across different socio-economic groups, one of HUD's most well-known programs is Section 8 housing. Section 8 provides vouchers for rent to those with low incomes. The vouchers are designed to make up the difference between what the tenant can pay and fair market price for landlords. Most recent estimates by HUD officials show that the program currently supports over 3 million individuals.

So what does that mean for property owners and renting?

Participating in the Housing and Urban Development Programs

The Housing Choice Vouchers (HCV) provided by Section 8 is dependent upon landlord participation. In some cases, landlords may shy away from this program based on the state and federal requirements involved in accepting HUD vouchers or be wary due to a misunderstanding of the type of tenant associated with these programs. For this reason, laws have been enacted to prevent discrimination against those who rely upon HCV. Additionally, in order to combat this perceived difficulty, many different locations have added incentives to entice property owners into this program. A number of states and counties have also been working to streamline the bureaucratic process with faster and simpler inspections and less paperwork.

One thing that can be assured — with the high-demand for HUD housing, property owners are sure to get added interest in any eligible property, and with the added interest, there is the need to review HUD occupancy standards.

Fair Housing and the Keating Memo

The Fair Housing Act (FHA) states that families may not be discriminated against because they have children under the age of 18 when applying for a rental. And while the presence of children (those under 18) was listed in this law, what was missing was any HUD occupancy standards. For example, a landlord would not be discriminating if denying occupancy in a small two-bedroom apartment to a family of eight. Without knowing where the line between fair housing and discriminatory renting lay, the Keating Memo was shared as guidance on fair housing occupancy, later becoming the standard for guidance. The memo provides a standard rule of two people per bedroom and adds clarity that the same occupancy laws being asked of all adult households must apply to households with both children and families.

Understanding How to Apply Occupancy Standards

The two persons per bedroom standard is a guideline, and there may be some exceptions to this rule. An example is a newborn adding a third person to the parents' bedroom. It's generally agreed on that the size of the space should affect the number of people living in a bedroom. As a landlord, some things you might want to consider include:

• Is your occupancy policy one size fits all? As mentioned above, the HUD occupancy standards are guidelines are based on a standard size bedroom layout and architecture. Consider if any of your rental properties warrant individualized policies.
• Are there specific state and local laws that will affect your occupancy policy? You'll want to review fire codes, building codes, property maintenance codes, zoning codes and more. Be aware that your policies may change if you have rental properties in more than one state or in different municipalities.
• When setting limits, place one on the number of total people living at a property, not on the number of children that may be allowed per rental. This again goes back to the anti-discrimination laws.
• When placing limits, age does matter. Consider the physical space that a person may require in your rental. As described, an infant may easily be able to share a certain space with parents where a teenager may not. The addition of a new baby may require a grace period before requesting tenants to move into a larger occupancy area.
• Consider building infrastructure. Additional people in a Victorian-era house may cause a strain on plumbing or electrical systems that would not be felt by a modern energy-efficient dwelling.
• When using the above information to create your occupancy policy, document the reasoning behind it. An evidenced-based explanation will help prevent you from claims of discrimination and help others to understand the logic of your decision.

HUD housing provides a home for many low-income individuals and creates demand for rental property owners. Understanding the guidance around HUD occupancy standards and rental limits for these properties can help landlords take advantage of incentives to accept HCV in their community. Ask questions and do the research to understand the best occupancy limits for your local property, and create a detailed policy before renting it out.

The information contained in this article does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional financial or legal advice as they may deem it necessary.