Frequently Asked Questions
Rent Increase
Q: When can I submit my rent increase? New 10-15-2008
A: The window for submitting a rent increase is October 1st December 31st. All rent increases submitted outside this window will not be processed.
Q: Are we still allowed to request up to a 7% rent increase? New 10-15-2008
A: 7% rent increases will be allowed only for properties that are not elderly designated. Rent increase requests for all elderly designated properties will be capped at the Social Security COLA adjustment instead of the allowed 7% maximum. MHDC will use the 2008 COLA for all 2009 Rent Increases. The 2008 COLA is 2%. Please visit www.ssa.gov/cola/automatic-cola.htm for previous COLA adjustments.
Note: While 7% is the maximum amount that can be requested, MHDC encourages rent increase requests to reflect what the management company thinks the market can support.
Q: The 2008 COLA is 2.3%. Does my property’s rent increase get increased the full 2.3%, or is my property’s rent increase rounded to the nearest %? New 10-15-2008
A: The COLA amount is rounded up or down depending on the decimal position. A 2.3% COLA equals a 2% rent increase. A 2.5% COLA would equal a 3% rent increase.
Q: How do I submit my rent increase?
A: All rent increase requests are required to be submitted on-line thru MHDC’s on-line system. Please log on to https://amrs.mhdc.com to submit your rent increase. The user name and password are the same as the user name and password used to access the budget and financial statement systems. MHDC will not accept mailed rent increase requests unless your property has 12 units or less.
Q: When is the earliest I can request a rent increase? (10/17/07)
A: The effective date needs to be at least one year from the effective date of your last rent increase submission or one year from when the property’s last building was place in service.
Q: Do I have to request a rent increase every year?
A: No – However, it is strongly encouraged. Failure to request a rent increase may cause the property to experience financial hardship. MHDC will not allow a property to request an increase that is more than 7% or the Social Security COLA adjustment % to help make-up for not requesting rent increases in previous years.
Q: Do I have to implement the full MHDC approved rent increase in any given year?
A: No – However, keep in mind MHDC’s approval process is based on what the property requests. The property’s request should be based on what the market can support. Failure to implement a MHDC approved rent increase may lead to future rent increase being denied until the property can provide proof that the market can now support a rent increase.
Q: Instead of waiting for my tenants lease to expire, is there a way I can implement my rent increase earlier so it can match the rent increase effective date?
A: Yes - MHDC does not oppose lease language that allows for a rent increase with a 30 day notice – maximum of 1 increase per year.
Q: How can I ensure that I can implement my rent increase on time?
A: MHDC recommends the property to notify their tenants of a possible rent increase at the time the increase is submitted to MHDC for approval. Therefore, once the property receives MHDC’s approval, the request can be implemented once the new effective date is set to begin. MHDC may reduce or deny a property’s rent increase, but MHDC will not increase rents higher than the requested amount.
Q: Can I request a rent increase at the same time I submit my budget?
A: Yes - the rent increase request window is October 1st – December 31st. To submit during the budget process, the system will recognize that the requested amount exceeds your current MHDC approved gross potential rent amount, and will ask you if you want to submit a rent increase – yes or no. Answering yes will pull up a rent increase packet with all the fields that are needed to submit a rent increase. If you answer no, the system will warn you that no rent increase is approved and you will need to submit your rent increase on-line by December 31, 2008.
Q: Is my approved rent increase tied to my approved budget?
A: Only properties that have more than a tax credit only relationship with MHDC (i.e. MHDC or HOME loan) will have their rent increases tied to an MHDC approved budget. Tax Credit Only properties are exempt. Since the rents are tied to the budget, it is imperative that the property submits a realistic, itemized operating income and expense budget.
Q: What are the performance indicators that MHDC looks at when approving, reducing, or denying a rent increase?
A: The two main performance indicators MHDC looks at when approving rent increases are cash flow and DCR. MHDC considers a health property to maintain a 1.20 DCR. Any budget that projects a property to exceed a 1.20 DCR may have their rent increase reduced or denied. Higher DCRs may be allowed for properties to achieve their agreed upon owner distribution and re-pay surplus cash notes and remaining deferred developer fees. In any event, MHDC will not approve an increase that is more than 7% or the Social Security COLA adjustment %.
Q: How many rent comparables do I need to submit?
A: Properties must submit Three (3) comparable rents in the area for each bedroom type. Explanations are required if three comparable rents cannot be provided. Rents from newspapers are acceptable. MHDC’s AMRS system also includes the names of other MHDC properties that are located near the submitting property.
Q: Why do I need to submit a rent roll?
A: MHDC reviews the property’s rent roll to verify current rents and occupancy levels. This information is used to help MHDC determine if a rent increase is needed. Rent increase may be denied if MHDC determines a significant number of tenants are not being charged current rents.
Q: Can I appeal MHDC’s rent increase decision?
A: Yes - A property may appeal MHDC’s decision to amend or deny a rent increase request. The property must submit their appeal in writing within 30 days from the date of the initial decision letter. Appeals must include additional information for consideration. The appeal process is your opportunity to provide additional information that you hope would change the outcome of our decision. Please refer to the MHDC Rent Increase Appeal Process section of MHDC’s website for further information.
