Take Three Steps to Prevent Subsidy Abuse When Household Member Moves Out

The departure of a household member can bring about changes that affect a household’s subsidy as well as other aspects of its placement at your site. HUD expects you to stay on top of such changes so that your households are paying the correct amount of rent and your assisted units are fully and appropriately occupied.

For example, after a member moves out, the household could still be getting allowances that reduce its rent, but those allowances are attributable to the member who departed. Or after a household member moves out, the unit the family occupies may now be too big for the number of individuals who make up the “new” household. You need to be sure you are adhering to your site’s occupancy standards.

What HUD Requires

Changes in family composition such as when a member leaves must be reported immediately, and an interim certification should be completed. Chapter 7 of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, says households must report when any member moves out of the unit [HUD Handbook 4350.3, par. 7-10 (A)(1)], and management must conduct an interim recertification [Handbook 4350.3, par. 7-11(A)(1)].

Handbook 4350.3 also says that the site owner may require the family to move to a unit of appropriate size when—and if—such a unit is available [Handbook 4350.3, par. 7-16(A)(1), 3-23(H)(1)(a)(1)]. When a household reports that a member leaves, the owner may want to verify that the member has left. Some ways to do this include having the departed member provide a lease that shows the new address, or a new driver’s license or utility bill showing the departed member’s name and a new address. An affidavit from the household could be used if other forms of verification are unavailable [Handbook 4350.3, par. 3-27(C)].

HUD expects you to reassess allowances in these situations. For instance, if the person leaving the household is over 62 or disabled at a Section 8 site, will the household still qualify as an elderly household and be eligible to receive the $400 elderly household deduction and medical expense deductions? Unless a remaining member meets the program definition of elderly, the household may not.

The $480 per-dependent allowance will be affected if the member who is leaving is a minor, and childcare expenses will need to be adjusted if a child under age 13—for whom such expenses had been claimed—leaves the unit. Disability assistance expenses also will be adjusted if they applied to the person who moves out of the unit.

These changes and others triggered by a change in family members could have a major impact on the rents charged and the subsidy paid. If a family’s assistance is being prorated because they have a mix of eligible and non-eligible members due to citizenship status, the prorated assistance must be reevaluated when members leave.

Three Steps to Manage Move-Out

Here’s how you can be sure you get the information you need and comply with HUD requirements when a household member moves out:

1. Get written verification of the move-out. The HUD lease requires households to request an interim recertification whenever a member moves out. When you are advised by a household that a member is moving out, obtain the information you need such as the name, birth date, and Social Security number of the person moving out and an effective date of the change, as well as the household’s acknowledgement that their rent amount may change and that they could be required to move to a different unit at your site.

2. Recalculate the rent. Chances are that the move-out of a household member will affect the household’s rent. Many times, rent will decrease because you no longer are including the former member’s income in your rent calculation. In some cases, household rent will increase if the departed member qualified for allowances that no longer can be applied for the household. Any allowances the former member may have had due to age, disability, or medical expenses, for instance, can’t be applied to the household’s total rent calculation after the move-out.

3. Reconsider the household’s unit size. Once the household’s size and composition has changed with a move-out, the household could be too small or not have the appropriate make-up to live in the unit it currently occupies.

Here’s an example: A household consisting of a grandmother, mother, father, and two daughters occupies a three-bedroom unit. The grandmother moves out. The site’s occupancy policy says that a married couple with two children of the same gender must live in a two-bedroom unit. That means the household’s current unit is no longer an appropriate size for the household.

Also keep in mind that if the household’s current unit is designed to accommodate a disability of the member who moved out, you will need to determine whether the household still needs such an accommodation. Some sites use a lease clause in which households agree to transfer to another unit in this type of a situation. If your lease doesn’t include such a clause, you might consider asking the household to transfer voluntarily if another household requires the specially designed unit.