HUD Publishes HCV Cost Savings Notice
By: Tushar Gurjal, Senior Policy Manager
November 19, 2025 – Earlier today (though the notice is dated November 17, 2025), HUD published a notice titled “Cost-Savings Measures in the Housing Choice Voucher (HCV) and Project Based Voucher (PBV) Programs” (Notice PIH 2025-28). The notice provides a list of options that PHAs may take to reduce Housing Assistance Payment (HAP) expenses to prevent shortfall scenarios in the HCV program. While this notice applies to Moving to Work (MTW) agencies, MTW agencies are also “encouraged to evaluate approved MTW activities for possible cost savings . . . .”
The various cost-saving activities listed in the notice are categorized into three distinct groups (the names of these categories have been shortened for brevity): 1) standard program management practices; 2) additional PHA actions; and 3) further PHA actions that require HUD approval. After these three groups, the notice includes an additional section on terminating assistance because of insufficient funding. Finally, the notice discusses reasonable accommodations, PHA plan requirements, and PHA requests for regulatory waivers.
The Department recommends taking actions that have smaller or lesser effects on families before taking actions that might have strong adverse effects on families (e.g., actions that might increase a family’s rent burden).
The following is a summarized version of the actions listed in the notice. Please read the full notice to ensure that all requirements are met before taking any of the suggested actions.
Standard Program Management Practices
Ensuring Correct Voucher Size – Housing agencies must ensure that payment standards are based on appropriate family size irrespective of unit being leased (i.e., a single-member household in a three-bedroom unit should have the zero- or one-bedroom standard applied). For the project-based voucher (PBV) program, the unit leased should be appropriate for the size of the family.
Review Payment Standards – Housing agencies should review their basic payment standards to ensure that they remain within the basic range of 90% to 110% of the Fair Market Rent. Housing agencies may discontinue the use of exception payment standards without notification to HUD.
Utility Allowances – Housing agencies should review their utility allowances at least annually. The PHA must use the appropriate utility allowance for the size of the dwelling unit leased by the family. Housing agencies may also use an area-wide, energy-efficient utility allowance schedule to be used for units that are in a building that meet the Leadership in Energy and Environmental Design (LEED) or Energy Star standards.
Conducting Rent Reasonableness – The housing agency should determine whether the rent to owner is a reasonable rent in comparison to other comparable unassisted units.
Evaluating Entering New PBV HAP Contracts – In general, a PHA in shortfall should not issue new requests for proposals or undertake new selection processes, except for new PBV Rental Assistance Demonstration (RAD) developments.
Determining PBV Rent to Owner – Housing agencies should follow all applicable regulations and requirements in determining PBV rents to owners including not exceeding the rent requested by the owner and not exceeding the reasonable rent.
Additional PHA Actions
Reducing or Stopping Voucher Issuance to Applicants – Housing agencies may decide to reduce or stop issuing turnover vouchers to new applicants.
Increasing the Minimum Rent – Housing agencies may increase the minimum rent up to $50. Moving to Work agencies may exceed this among with an approved waiver.
Stopping Portability Absorption – A receiving PHA may elect to stop absorbing new portable families and elect to bill the initial PHA.
Reducing Subsidy Standards – Housing agencies may revise subsidy standards that exceed minimum HUD requirements to reduce voucher size eligibility, though HCV or PBV units must still have at least one bedroom or living/sleeping room per two people.
Further PHA Actions that Require HUD Approval
Denying Portability and Moves within the PHA Jurisdiction – in some instances, PHAs may deny requests from families receiving tenant-based assistance to move, if the PHA lacks sufficient funding. This is subject to certain requirements (for tenant-based assistance, see Notice PIH 2016-09; for PBVs, the notice details the additional requirements).
Rescinding Vouchers Issued to Applicants – Housing agencies may rescind vouchers issued to applicants that have not yet resulted in an executed HAP contract, but the PHA should work with HUD’s shortfall prevention team (SPT) and the local HUD field office.
Request a Waiver to Apply Decreases in Payment Standards During the HAP Contract Term Immediately – Normally decreasing a payment standard will not apply immediately to families currently in the program.
Request Approval to Establish Payment Standards Below 90 Percent of the Applicable FMR – This request will only be granted if the family share for more than 40% of the PHA’s voucher participants does not exceed 30% of monthly adjusted incomes. The exception to this may be in instances where this approval is required to prevent termination of program participants.
Termination of Assistance Due to Insufficient Funding
Prior to any termination of a family from the HCV program, the PHA must notify HUD’s SPT and local field office. The PHA must comply with all instructions from the SPT and field office to implement additional cost-savings measures.
Reasonable Accommodations
In some instances, a PHA may deny a reasonable accommodation request if it imposes a undue financial or administrative burden. If the PHA denies a reasonable accommodation for this reason, it must meet with the family to discuss alternatives that would address the family’s disability-related needs and still be reasonable.
Miscellaneous
The notice notes that any measures that require changes to a PHA or MTW plan and constitute a significant amendment must include a public hearing and comment period subject to regulatory requirements. The notice also discusses how to request regulatory waivers.
The full notice can be found here.