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September 4, 2015: Advocate Alert: Rural Development Rental Housing Residents Facing Illegal Rent Increases!

Large numbers of very low-income residents of Rural Development (RD) rental (Section 515) and farm labor (Section 514) housing who receive Rental Assistance (RA) subsidies have gotten, or are about to get, 30-day notices of rent increases from their landlords.These notices substantially increase their rents effective September 1, October 1, 2015 or shortly thereafter. Nationally, it is estimated that as many as 20,000 households will receive these notices, with 60 percent them likely to be elderly households or households that include a person with a disability. They likely cannot pay the increased rents and are at risk of displacement or eviction. In fact, these rent increases are caused by the arbitrary manner in which RD has calculated the amount of RA that is awarded to each development. The rent increases are also illegal.

Owners are sending out these rent increase notices because RD has advised them that they have exhausted the funding under their individual RA contracts and that the agency cannot renew the contracts during their 12-month term. This is not true. RD knowingly, if not intentionally, underfunded RA contracts starting late last year by adopting an arbitrary methodology for determining the amount of assistance granted to each owner based on a state-wide three year average of the cost of subsidizing a RA unit. In some instances, this amount was adequate, but in many others, contracts that have legitimate and RD-approved higher operating costs, were underfunded. It is these contracts that have now exhausted funding under their RA contracts and are resorting to the illegal rent increases.

RD claims that it cannot do anything to deal with this issue because Congress, at RD’s request, adopted legislation in 2014 that precludes the agency from renewing any RA contract during the term of that contract. While this is true, Congress did not direct RD to underfund contracts, which is the real cause of the problem. Moreover, RD never advised owners or residents that they could appeal the amount of RA awarded to each development under these contracts. By failing to do this, RD violated the owners’ and residents’ due process rights.

These rent increases are also illegal. Section 1490a(a)(3)(C) of the Housing Act of 1949 precludes owners of Section 515 or 514 housing from increasing the rent of any resident by more than 10 percent during any 12 month period. Yet the rent increases that are being implemented exceed this amount and RD has been unwilling to advise owners that their rent increases are illegal. They are telling owners in writing that they can lessen the impact of the loss of RA by stopping to make mortgage and reserve payments and by dipping into reserve accounts. They are, however, also advising them orally that they can raise residents’ rents, something that is precluded by law.

These rent increases may also be illegal under the residents’ leases and should be challenged if they are.

Residents who are affected by these rent increases and who cannot afford attorneys should be urged to contact their local legal services programs for help. The National Housing Law Project is prepared to assist those programs in representing their clients. For assistance contact Gideon Anders at

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