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TMS 2000 Section 8 Help Centre...

New 40 Percent Limitation and Related Issues (New information effective 12/3/1999)


Last Revised: November 5, 1999
Created: October 13, 1999
Copyright 1999 by Custom Computer Systems, Inc. All rights reserved

Important Note(s):

  • The original 40 percent limitation (applied before 12/3/1999) was applied any time a tenant "first moved to a unit".
  • The new 40 percent limitation (applied on or after 12/3/1999) is to be applied:
    • any time a tenant "first moves to a unit" AND
    • the Gross Rent is more that the family's payment standard
  • The test is still the same - simply applied in fewer cases. Before - it was applied to every new admission or change of unit. Beginning 12/3/1999 - you apply it to a new admission or change of unit if and only if the gross rent of the unit is greater than the family's respective payment standard!
  • Please be aware there is much indication that more changes are coming!

What the Original Law Said (applies before 12/3/1999)

Subtitle C titled “Section 8 Rental and Homeownership Assistance” of Section 545 of Public Law 105-276 passed by the 105th Congress (More commonly known as the QHWRA Act) contains a provision at Section 545(a)(o)(3) as follows:

“(3) 40 PERCENT LIMIT. – At the time a family initially receives tenant-based assistance under this section with respect to any dwelling unit, the total amount that a family may be required to pay for rent may not exceed 40 percent of the monthly adjusted income of the family.”

That’s nice – but what does it really mean?

Families that have to pay more than 40 percent of their monthly income for their portion of rent and utilities cannot be housed without breaking a federal law passed by the 105th Congress.

Update taken from Federal Register to be effective 12/3/1999

“ At the time a family initially receives tenant-based assistance for occupancy of a dwelling unit, and where the gross rent of the unit exceeds the applicable payment standard for the family, the family share does not exceed 40 percent of the family's monthly adjusted income."

The test is the same - however - when to apply the test is more restrictive. That is - if a family is moving to a unit AND the gross rent of the unit exceeds the applicable payment standard - then you apply the test. Like wise - if the gross rent is less than or equal to the payment standard - you do not apply the test

Adjusted Monthly Income - equates to line 9d of form HUD 50058.

Family Share equates to line 12t. of HUD-50058 form as revised 10/1999. Information at HUD forums, etc., up to this point has indicated family's share includes both their portion of the rent plus utility allowance if any!

How does TMS 2000 help?

At the completion of a given rent calculation – if the result is in violation of the 40 Percent Limitation – You are notified via a big red screen and the calculation cannot be completed. As a result – a MTCS record will not be created and thus – will not be submitted to MTCS.

Remember – to do so – is in violation of federal law. As such, TMS 2000 will not let you complete or submit such a calculation.

What can I do?

If a family in found to be in violation of this provision the following may help:

  1. See if owner will reduce rent or have family look for less expensive unit.
  2. Consider raising payment standards.

Other Issues to Consider

  1. The payment standard to apply is based on the number of bedrooms the family qualifies for. That is - if the family qualifies for a 2 bedroom unit - but is moving into a 3 bedroom unit - you apply the standard for a "2" bedroom unit!
  2. This limitation will likely make it more difficult to move certain families into larger units. That is, anytime the family is trying to move into a unit that is larger than they qualify for - you may want to alert them to the potential difficulties!
  3. The relationship between gross rents and the payment standard can make a huge difference. In one instance – we observed – an elderly couple with approximately $15,000 of income did not pass the test. The problem was two-fold. First – the payment standards were low, and second – the couple qualified for a 1-bedroom unit but were moving to a two-bedroom unit.

That’s it! Hope this helps you. Thank you for your indulgence.

© Copyright 1999 by CCS Inc.