How to: Apply the 12-month rule to tenants going to market rent
Regulations for calculating rent-geared-to-income are full of notices and deadlines which can get quite confusing. This is especially true when we’re looking at what happens with loss of eligibility.
When a tenant has been paying the equivalent of market rent for 12 consecutive months, they become ineligible for RGI assistance (12-month rule). If their income decreases after that 12-month period has passed, they can no longer get a subsidy unless they re-apply, either to the central waiting list or to an internal waiting list (when the housing provider has such a system).
In practice, the ineligibility process starts when the housing provider first sends out the notice of decision, which informs the household that their payable rent is equal to market rent.
In addition to what is normally included on any notice of decision of rent change, this notice should explain the 12-month rule. The household should be informed that:
- although the household is not currently receiving any subsidy, they must still report any change of income and their rent will be recalculated accordingly,
- they will become ineligible for RGI assistance after the 12-month period if their income doesn’t decrease during that time, and
- they will not have to move out if they lose eligibility for RGI assistance.
That first notice of rent change is only that, a notice of rent change due to the new calculation. It does not serve as the notice of loss of eligibility. Providers need to deliver separate notices for loss of eligibility at the time that the decision is made.
At the end of the 12-month period, if the household has not received RGI subsidy for the entire period, they must receive a notice that they are no longer eligible for RGI assistance. Because the rent is not changing, you do not need to give 90 days’ notice of the loss of eligibility. You can deliver the notice at the end of the month prior to the loss of eligibility.
E.g.: The tenant’s rent increased to the market amount on April 1st, 2014. You can send them a notice on March 23rd, 2015 that they are no longer eligible as of April 1st, 2015.
The notice of decision of loss of eligibility must indicate:
- the date the rent change first became effective,
- how to apply for RGI assistance if it’s needed in the future, and
- how to request a review of decision.
If the market rent increases during that 12-month period, the tenant will still need to get a 90-day notice of an increase in the market rent. The housing provider should make sure the tenant is still paying the lesser of the calculated rent and the new market rent.