What Is Exception Payment Standard
An exception payment standard is a payment standard that exceeds 110% of the Fair Market Rent (FMR) for a given area. PHAs can request this higher standard from HUD when local market conditions make it difficult to lease units at the standard 110% FMR ceiling. Once approved, the exception standard becomes the maximum voucher amount that landlords can receive for tenant-based assistance in that jurisdiction.
When PHAs Pursue Exceptions
PHAs typically request exception payment standards in high-cost metropolitan areas where rental inventory remains tight despite offering vouchers at 110% FMR. Common examples include San Francisco, New York City, Los Angeles, and Boston, where median rents consistently outpace regional FMR determinations. HUD evaluates requests based on recent lease-up data showing that the PHA cannot achieve adequate leasing success at the current ceiling.
The approval process requires the PHA to submit documentation to HUD demonstrating that the exception is necessary to meet program goals. HUD does not automatically approve requests, and must determine that the proposed percentage increase is reasonable relative to actual market conditions and other program performance metrics.
Practical Implications for Landlords and Tenants
- Landlord benefits: If your area has an approved exception standard, you receive higher monthly subsidies. A unit that qualifies for $2,200 at the 110% standard might receive $2,400 at a 120% exception standard, depending on HUD approval.
- Tenant flexibility: Tenants can search for units up to the exception amount, gaining access to better-maintained or better-located properties than would be available at lower payment standards.
- Program sustainability: Higher standards help PHAs maintain lease-up rates and prevent voucher underutilization, which affects federal appropriations and program funding.
- NSPIRE inspections: Units rented under exception standards must still meet all Housing Quality Standards (HQS) requirements. The higher payment amount does not change inspection criteria.
Current Regulations and Caps
HUD establishes maximum limits on exception payment standards, which have varied over time. As of recent guidance, exception standards typically cannot exceed 120% of FMR without extraordinary justification. Each year, HUD updates FMR values, which may trigger automatic adjustments to existing exception standards if they are tied to percentages rather than fixed dollar amounts.
PHAs must recertify the need for exception standards periodically and may be required to phase them down if lease-up rates improve or if HUD policy changes. The specific approval terms appear in HUD's exception authorization letter to the PHA.
Common Questions
- Does my area have an exception standard? Contact your local PHA directly. They will provide the current payment standard ceiling for your zip code and unit type (studio, 1-bedroom, etc.). This information is also often posted on the PHA's website.
- If I'm a tenant, does the exception standard mean I pay less rent? No. Your actual rent is negotiated between you and the landlord. The exception standard sets the maximum subsidy HUD will pay. If you negotiate rent below that amount, your tenant contribution may decrease, but the exception standard itself does not change your out-of-pocket costs.
- Can exception standards change mid-year? Typically no. HUD approvals are usually annual. However, if the PHA's authorization expires or HUD denies renewal, the standard reverts to 110% of FMR, which could affect lease-up activity going forward.