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Section 8 Contract Renewal Options

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1. HUD Partners.
2. Multifamily Housing – Section 8 Contract Renewal Options

Section 8 Contract Renewal Options

Welcome to the Section 8 Housing Assistance Payment Contract Renewal Options website. This resource includes descriptions of alternatives readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP contracts. The details supplied here is not extensive and instead is intended to help owners navigate the alternatives offered to them. For full guidelines and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.

For specific concern about a project’s eligibility to restore a HAP contract, please call your regional HUD Multifamily Account Executive.

Option 1: Increase to Market

Eligibility: This option is offered to owners whose contract leas are below equivalent market leas as identified by a lease comparability research study. An owner might ask for that their qualified present HAP contract be ended and restored under this choice.

Term: Between 5 and twenty years.

Renewal Rent Increase: At HAP renewal, leas are set at market equivalent levels, as figured out by an owner’s RCS. Rents are topped at 150% of Fair Market Rents unless the owner fulfills specific requirements to qualify under the discretionary requirements explained at Section 9-3.

Forms and documents for Option 1:

Worksheets for Mark-up-to-Market.
Blank worksheets as PDF files

Sample worksheets as PDF files

Worksheets as Microsoft Excel submits

Option 2: Mark up to Budget

Eligibility: This choice is available to owners whose agreement rents are below or equal to comparable market rents. An owner may lower their rents to market levels to get involved under Option 2.

Renewal Rent Increase: At HAP renewal, rents are set at a level needed to support a HUD-approved job spending plan. These rents might not go beyond market equivalent levels, as demonstrated by a lease comparability study.

Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract leas are adapted to existing market levels. The owner must send a rent comparability study which is used to set the leas on the 5th, 10th, and 15th anniversaries of the HAP contract.

Forms and documents for Option 2:

Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9

Option 3: Mark-to-Market

Eligibility: This alternative is readily available to specific tasks whose rents surpass market comparable levels as figured out by a lease comparability research study. Typically, this uses to jobs whose mortgages are insured by the Federal Housing Administration. Congress granted HUD the authority to reorganize an owner’s mortgage so that financial obligation service is minimized to a level that can be supported by market equivalent levels. If tasks can

Term: 20 years.

Annual Rent Increase: At HAP renewal, rents are decreased to a market comparable level as demonstrated by a rent comparability research study.

Mortgage Restructuring: The owner might request that their eligible mortgage be reorganized into a main mortgage and subordinate debt. The brand-new primary mortgage will be sized so that market equivalent leas suffice to support the financial obligation service on that mortgage. Use constraints will remain in place at the residential or commercial property so long as the subordinate debt balance stays. If the project can remain economically practical regardless of a lease decrease to market levels, then no mortgage restructuring might be needed.

More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market site. All inquiries regarding a HAP renewal under Option 3 ought to be directed to m2minfo@hud.gov.

Option 4: Exception Projects

Eligibility: This alternative is offered to projects which are exempt from reorganizing under MAHRA. This typically indicates that the task is not subject to an FHA-insured mortgage, however rather has a conventional mortgage or is tax-credit financed.

Term: Between 1 and 20 years.

Rent Increase: At HAP renewal, rents are either changed by the Operating expense Adjustment Factor or by a HUD-approved spending plan (topped by market rents as identified by a Rent Comparability Study), whichever is lower.

Annual Rent Adjustment: The contract rents will be changed up each year by the Operating Cost Adjustment Factor released for the area. This multiplicative rent modification is released by HUD in October of each year and is reliable in February of the list below year. The OCAF is based on a variety of market signs and is planned to catch the impacts of inflation and other market elements on the expense of operating rental housing.

Forms and files for Option 4:

Section 8 Renewal Policy Guidebook, Chapter 6

Option 5: Preservation Projects

Eligibility: Certain jobs subject to a long-lasting HUD use arrangement are required to restore under this Option. This normally consists of tasks with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.

Term: Varies depending on HAP contract requirements.

Rent Increase at HAP Renewal: The leas upon HAP renewal depend upon each job’s specific HAP contract, Use Agreement and, if applicable, Plan of Action. Please evaluate those documents and call your HUD Account Executive with concerns regarding alternatives for your residential or commercial property.

Annual Rent Adjustment: Which lease modification systems are offered to your project vary depending on the HAP contract, Use Agreement, and Strategy. Please review those files and contact your HUD Account Executive with concerns concerning alternatives for your residential or commercial property. Many Preservation jobs might ask for a budget-based rent increase to help with unforeseen situations at a residential or commercial property or to address physical conditions needs.

Forms and files for Option 5:

– The project’s Use Agreement must be evaluated to figure out HAP renewal choices.

HAP Renewal Request Form (HUD-9624)

HUD Handbook 4350.1 Chapter 7: Processing Budgeted Rent Increases

OCAF Adjustment Worksheet (HUD-9625)

Section 8 Renewal Policy Guidebook, Chapter 7

Option 6: Opt-out

Eligibility: An owner might choose to not renew their HAP agreement upon expiration. This does not use to owners subject to a contractual responsibility to restore the HAP agreement arising from an Usage Agreement that is attached to the residential or commercial property.

An owner must offer HUD and renters notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible tenants will be issued improved vouchers pursuant to 42 U.S.C. § 1437f( t).

Full HUD requirements for an owner who wishes to opt out of restoring their HAP contract can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional laws may impact an owner’s capability to opt-out of restoring their HAP agreement. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not advise an owner of their responsibilities under these laws.

If you are planning to pull out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program allows HUD to ensure that cost effective housing remains available in your community even if you do not wish to renew your HAP agreement.

Forms and files for Option 6:

HAP Renewal Request Form (HUD-9624)

Enhanced Voucher Fact Sheet

Section 8 Renewal Policy Guidebook, Chapter 8

Section 8 Preservation Efforts

Eligibility: An owner who is eligible to renew their HAP agreement under Option 1 or 2 may likewise get involved in the Section 8 Preservation Efforts programs described in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides rewards for the task of a HAP contract to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs a range of benefits to owners who want to make sure long-lasting preservation of the housing help at their residential or commercial property.