Fair Rent Incentive Act – by Rep. Vikki Goodwin – 89th Legislative Session

Legislative Intent: Help renters on an ongoing basis, particularly those with a modest income, by incentivizing landlords to keep rent low and avoid sharp increases from one year to the next.

Rationale: Whether it is college students, young professionals, or working class individuals and families, renters are having a hard time affording rent in many parts of Texas.

Definitions:

Fair Market Rent – an amount determined based on income, zip code and number of bedrooms. Fair market rent is based on the idea that renters should not spend more than 40% of their income on rent and utilities, because they still need money for food, clothing, health care, transportation, etc. Fair market rent is calculated by HUD, and is available on their website. https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html

Homestead Exemption - A homeowner fills out a form claiming a house as his/her homestead and submits the form to the County Appraisal District. They then have their assessment value capped at a 10% increase year over year.

Affordable Rent Exemption - (proposal) - similar to a homestead exemption, this would provide a cap, a 10% maximum increase on a property where the landlord is charging fair market rent or below and doesn’t raise rent more than a specified percentage year over year.

Implementation:

Landlords would apply for the Fair Market Rent Exemption on their residential properties, either single-family homes or apartments/multi-family, just like a homeowner applies for a Homestead Exemption. Unlike homeowners, landlords would be required to update their good-standing annually, ensuring they are staying at or below fair market rent on an ongoing basis. On the form, the landlord would indicate that rents in his/her units are 85% of “fair market rent” or below (to allow for 15% to be for utilities).

The landlord would not have to provide proof, however, if a tenant made a complaint saying that the landlord is getting the “Fair Market Rent Exemption” but is charging higher rent, the exemption would be removed. The exemption would be the same 10% cap on assessment value (often referred to as appraisal caps). With a cap on the assessment value, property taxes will not escalate, which will help landlords maintain fair market rent.  

Enforcement would be handled by tenants and local appraisal district. Tenants can find the public information on whether or not their landlord has the exemption on the property and then assess whether or not the rent they are charged falls into the category of fair market rent or below. If not, they can make a complaint and if the landlord is out of compliance, the exemption would be removed and could not be reinstated for at least five years.