How to Respond to Changes in Household Composition
Suppose a household member at your site has a baby or a relative who previously had not lived in the household moves in. Whatever the reason for the change in the household composition, you need to know about it. That's because HUD rules require that you know and take certain steps when you learn of such a change. For example, you may need to recalculate the household's income and rent, or possibly require the family to transfer to a larger unit at your site.
HUD Handbook 4350.3 says residents must report when:
A family member moves out;
The family proposes to move a new member in;
A formerly unemployed adult obtains employment; and
The family's income increases by $200 or more per month [pars. 7-10 A/7-22 and 7-12 B/7-26 and 27].
Handbook 4350.3 further says that residents may report when:
The family has a decrease in income;
There is an increase in allowances, such as increased childcare or medical costs; and
There are changes that will affect household rent, such as a member becoming elderly or disabled [pars. 7-10 B/7-22 and 23].
If residents fail to report the changes that the Handbook says they must report, and the site owner or manager becomes aware of the change, HUD says that the resident should be notified in writing of the lease clause violation and given 10 days to respond and get the interim recertification started, according to Scott Michael Dunn, a compliance and housing management expert with Compliance Solutions. If the resident does not respond in 10 days, his rent must be raised to the market rent the next month, Dunn adds.
Some household change situations are more likely to be brought to your attention than others, Dunn says. “In our experience, for obvious reasons, people come in and report events that may decrease their rent without much prodding,” he explains. “They must understand that they need to report increases in income and changes in household composition as well.”
Take Five Steps When Households Add Members
Here are five key steps you'll need to take when you learn that a household has added a new member:
1. Recertify the household and recalculate the rent. HUD requires you to process an interim recertification when there is a change in household composition. That's because you must recalculate the household's share of the rent to take into account any change in the household income caused by the new member.
In many cases, the household's rent will increase if the new member has a job or other income sources. In other cases, the household rent would decrease. That's the case if the new member causes the household to qualify for new allowances for which it was not previously qualified. These include deductions from household income based on a member's age, disability, or medical expenses.
Example: If a household member has a baby, the household is entitled to a dependant allowance as well as an allowance for childcare expenses. The household rent would go down, in this case, because of the additional deductions.
2. Evaluate unit occupancy. If the size of a household increases, HUD says you need to evaluate whether the unit it presently occupies might be “overoccupied.” You would make this assessment based on your site's occupancy standards [HUD Handbook 4350.3, par. 7-15]. Added household members could make for overcrowded conditions that cause greater wear and tear, increased utility costs, and extra maintenance problems. An overcrowded unit also could violate local housing codes.
3. Require transfer, if necessary. If you determine that the household no longer meets your site's occupancy standards, you must require the household to transfer to a larger unit if the following conditions are met: an appropriate-sized unit is or becomes available at your site; you have an applicant household for whom the current unit would be appropriate; and the household in question doesn't plan on moving within the next few months.
4. Send transfer notice. If you determine that a transfer is necessary, you must notify the household about the need to transfer units. In your written notice to the household, you must indicate the following:
The lease requires unit transfer. You aren't just arbitrarily making the household move; the household's lease and HUD rules make the move necessary.
Why the current unit is no longer appropriate. Refer to your occupancy standards and limitations. Indicate to which specific unit the household will be moving.
A moving deadline. The HUD lease requires a household to move to a new unit “within 30 days” after receiving the notice.
Consequences for not moving. The household will lose its housing assistance if it does not comply with the transfer request by the deadline. HUD's lease makes it clear that if the household wishes to remain in the same unit, they must pay the HUD-approved market rent. Specify this amount for the household and the date the increased rent would take effect.
5. Consider helping the household move. Ordinarily, the household is responsible for paying the moving costs associated with transferring to an appropriate-sized unit. But some households may not be able to afford such costs. HUD has said it is not opposed to site owners or managers using site maintenance staff to assist with a household move under these circumstances.
HUD Handbook 4350.3 states that owners must have further policies regarding transfers, which address the following:
Transfer waiting lists;
Acceptable reasons for transfers;
Procedures for filling vacancies; and
Priorities for filling a vacant unit from an outside applicant or tenant waiting lists [pars. 7-15 C/7-28].
“These topics must be covered in the resident selection criteria for the property,” Dunn explains. “It is good to periodically review the resident selection criteria to be sure that all required topics are adequately covered.”
Since changes in numbers of household members are closely tied with household income and assets, it is important for managers to keep abreast of current rules relating to these, Dunn adds. For instance, consider the following situations: a change in household composition relates to adding a foster child or adult, or a household is now caring for a minor dependent while the child's parent is on active military duty.
“In each of these situations, whether and how we count the income for the new household member has changed in the last year with the release of Change 3 of Handbook 4350.3,” Dunn says. “Without a current, accurate understanding of HUD rules, a manager may not count the new household income correctly.”
Education Can Improve Compliance
One of the biggest challenges in getting residents to comply with the requirement to inform you of household changes is that they say they did not know they needed to do so. Dunn says educating residents at several opportunities can help.
“Like so many of the requirements that we need our residents to follow, encouraging their cooperation starts with education,” he says. “We need to let them know right from the beginning that they must report certain events, and that they may choose to report others. In our experience, a good ‘welcome to your new community’ session goes a long way.”
In these sessions, Dunn says, the manager explains the basics of the program, the resident's rights and responsibilities, and why these benefit the resident. One key topic on the agenda is what to do when household composition changes.
“We find that this cuts down on those who don't report changes because they genuinely didn't know they had to report them,” Dunn points out. “It also makes those who may be tempted not to report these changes think twice. For these sessions to be most productive, management must have a clearly defined agenda, or checklist of items they'll cover.”
Some management companies Dunn has worked with have had success with incorporating a “reminder” about reporting household changes into the form they use for residents to request repairs. Most households have occasion to use these repair forms several times a year.
“With just a little tweaking, this form can also have a section to be used to report changes in income or household composition,” he says. “This serves as a written reminder of the need to report these changes every time the form is seen. Since residents are not likely to remember all of the HUD rules, if it is done well, this form can be additionally helpful.
“Of course,” he adds, “there must be a good procedure in place to make sure that requests for repairs and reported changes get to the correct respective personnel in the management company.”
Scott Michael Dunn: VP/Chief Compliance Officer, Compliance Solutions, an affiliate of Zeffert and Associates, 2321 Weldon Pkwy., St. Louis, MO 63146; (800) 820-4079; email@example.com.
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