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 consists of descriptions of alternatives readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP agreements. The details supplied here is not detailed and rather is intended to assist owners navigate the alternatives offered to them. For complete guidelines and requirements for renewal of a HAP contract, please describe the Section 8 Renewal Policy Guide.
For particular question about a project's eligibility to restore a HAP agreement, please call your local HUD Multifamily Account Executive.
Option 1: Mark up to Market
Eligibility: This choice is readily available to owners whose contract leas are below comparable market rents as figured out by a lease comparability study. An owner might request that their eligible existing HAP agreement be terminated and renewed under this choice.
Term: Between 5 and 20 years.
Renewal Rent Increase: At HAP renewal, rents are set at market comparable levels, as determined by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner satisfies certain criteria to qualify under the discretionary criteria described 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: Increase to Budget
Eligibility: This option is offered to owners whose contract leas are below or equivalent to comparable market leas. An owner may decrease their leas to market levels to participate under Option 2.
Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved task budget plan. These leas might not surpass market similar levels, as shown by a lease comparability research study.
Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the contract leas are adapted to current market levels. The owner must submit a lease comparability research study which is used to set the leas on the 5th, 10th, and 15th anniversaries of the HAP agreement.
Forms and documents for Option 2:
Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
Option 3: Mark-to-Market
Eligibility: This choice is offered to particular projects whose rents surpass market similar levels as figured out by a rent comparability research study. Typically, this applies to tasks whose mortgages are insured by the Federal Housing Administration. Congress gave 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 projects can
Term: twenty years.
Annual Rent Increase: At HAP renewal, leas are decreased to a market equivalent level as demonstrated by a lease comparability study.
Mortgage Restructuring: The owner might request that their eligible mortgage be restructured into a main mortgage and secondary financial obligation. The brand-new primary mortgage will be sized so that market equivalent leas are adequate 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 task can stay financially viable regardless of a lease decrease to market levels, then no mortgage restructuring might be required.
More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market website. All questions concerning a HAP renewal under Option 3 ought to be directed to m2minfo@hud.gov.
Option 4: Exception Projects
Eligibility: This option is available to projects which are exempt from restructuring under MAHRA. This generally means that the task is exempt to an FHA-insured mortgage, but instead has a traditional mortgage or is tax-credit funded.
Term: Between 1 and twenty years.
Rent Increase: At HAP renewal, leas are either changed by the Operating expense Adjustment Factor or by a HUD-approved budget (topped by market leas as determined by a Lease Comparability Study), whichever is lower.
Annual Rent Adjustment: The agreement leas will be changed upward each year by the Operating expense Adjustment Factor released for the locality. This multiplicative rent modification is released by HUD in October of each year and works in February of the list below year. The OCAF is based upon a range of market indications and is planned to the impacts of inflation and other market aspects on the cost of operating rental housing.
Forms and files for Option 4:
Section 8 Renewal Policy Guidebook, Chapter 6
Option 5: Preservation Projects
Eligibility: Certain tasks subject to a long-term HUD use agreement are required to restore under this Option. This typically includes projects with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.
Term: Varies depending upon HAP agreement requirements.
Rent Increase at HAP Renewal: The leas upon HAP renewal depend upon each task's specific HAP contract, Use Agreement and, if appropriate, Strategy. Please examine those files and contact your HUD Account Executive with questions regarding options for your residential or commercial property.
Annual Rent Adjustment: Which rent adjustment mechanisms are available to your task vary depending on the HAP agreement, Use Agreement, and Strategy. Please examine those files and contact your HUD Account Executive with questions concerning options for your residential or commercial property. Many Preservation jobs might request a budget-based rent increase to help with unanticipated circumstances at a residential or commercial property or to attend to physical conditions needs.
Forms and files for Option 5:
- The task's Use Agreement ought to be reviewed to determine HAP renewal alternatives.
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 based on a contractual obligation to restore the HAP contract resulting from an Use Agreement that is connected to the residential or commercial property.
An owner must provide HUD and occupants notice of the opt-out one year prior to expiration of the HAP contract. Upon expiration, qualified renters will be provided enhanced coupons pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wishes to decide out of restoring their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind 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 encourage an owner of their commitments under these laws.
If you are preparing to decide out of HAP contract renewal, please review the 8( bb) Preservation Tool. This program enables HUD to guarantee that inexpensive housing stays readily available in your neighborhood even if you do not want 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 contract under Option 1 or 2 may also take part 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 project of a HAP contract to a nonprofit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs provide a variety of benefits to owners who want to ensure long-lasting conservation of the housing assistance at their residential or commercial property.
