How the income verification review would work: An example

The Income Verification Review

In the article, “Why the mayors housing plan will fail”, I laid out an idea that would create apartments for low and medium-income tenants. It would be used with the new corrected definition of “Affordable”. In this housing plan, there is a yearly income verification review.  Below is an example of how that income verification review process would work.

Note: I set a rental max of 30% of the tenant’s income. Ideally, a tenant should use one-third of their income to pay rent. This allows the tenant to have funds for living expenses and quality of life. Lastly, this is for city housing, not private housing.

The Example

Note: The numbers used are for illustration purposes only.

The parameters

1. Obtain an affordable definition for the tenant’s income.
   1. This is obtained from census information.
2. The maximum that a tenant will pay towards their rent is 30%.
3. Income statements from all income-earning members of the household.
4. Acceptable living expenses from income-earning members of the household.

Preliminary Calculation

1. The median income for a low-income family is 15,000/year.
   1. This is the definition of “Affordable” for low income.
2. Income Limit: 15,000 divided by 12 months = 1250.00
3. Income Limit for apartment is 1250.00 with expenses.
4. Maximum rent for an apartment is 375.00

The Example

Tenant A: Initial Review

• Total  Gross Income = 10,800 per year
• Monthly Gross Income = 900.00
• Acceptable  Expenses: none tenant also receives Snap and Welfare
• 900.00 x 30% = 270.00
• Monthly rent =270.00

Note: This can be used with new applicants. It sets a baseline for the tenant’s income.

The Following Year

Tenant A: One Year Later

• The affordable definition remains the same as the previous year.
• Affordable Definition = 15,000 per year.
• Total Gross Income = 15,000.00
• Monthly Gross Income= 1,250.00
• Additional Living Expense 200.00 Benefits reduced due to increased income.

Calculations

• Adjusted income 1250 – 200 =1050
• Monthly rent is 1050.00 x 30% =315.00
• Income Limit = 1250.00

Determination

Tenant entitled to apartment.

Reason: Tenant does not exceed the income limit

1. Income after expenses does not exceed the income limit of 1250.00
2. Monthly rent does not exceed maximum rent of 375.00

What Do You Think?

I have tried to make this process fair to the city and tenants. If you have any comments or suggestion I would like to hear them. Perhaps together we can start to repair this broken housing system.

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Disclaimer: I am not a lawyer and nothing stated here is legal advice. This article applies to the five boroughs of New York. All information deemed accurate but not guaranteed. Always check the real estate laws in your part of the country.

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