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 webpage. This resource includes descriptions of alternatives offered to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP contracts. The information provided here is not extensive and instead is meant to assist owners navigate the options available to them. For full directions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
For particular question about a job's eligibility to restore a HAP agreement, please contact your local HUD Multifamily Account Executive.
Option 1: Mark up to Market
Eligibility: This choice is offered to owners whose agreement leas are listed below similar market rents as determined by a rent comparability study. An owner might ask for that their eligible existing HAP agreement be terminated and restored under this option.
Term: Between 5 and twenty years.
Renewal Rent Increase: At HAP renewal, rents are set at market comparable levels, as identified by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills certain requirements 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: Mark up to Budget
Eligibility: This option is readily available to owners whose agreement rents are below or equivalent to equivalent market leas. An owner may lower their leas to market levels to participate under Option 2.
Renewal Rent Increase: At HAP renewal, rents are set at a level needed to support a HUD-approved job budget plan. These leas may not exceed market comparable levels, as shown by a rent comparability research study.
Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the contract leas are adapted to current market levels. The owner needs to send a rent comparability study which is utilized to set the rents on the 5th, 10th, and 15th anniversaries of the HAP contract.
Forms and files for Option 2:
Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
Option 3: Mark-to-Market
Eligibility: This alternative is available to particular jobs whose leas go beyond market comparable levels as identified by a lease comparability research study. Typically, this uses to projects 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 comparable levels. If tasks can
Term: 20 years.
Annual Rent Increase: At HAP renewal, rents are decreased to a market similar level as demonstrated by a lease comparability study.
Mortgage Restructuring: The owner might ask for that their qualified mortgage be reorganized into a main mortgage and secondary debt. The brand-new primary mortgage will be sized so that market equivalent rents suffice to support the debt service on that mortgage. Use restrictions will stay in place at the residential or commercial property so long as the subordinate debt balance stays. If the job can remain economically practical despite a rent decrease to market levels, then no mortgage restructuring may be required.
More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market site. All inquiries concerning a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.
Option 4: Exception Projects
Eligibility: This choice is readily available to jobs which are exempt from reorganizing under MAHRA. This usually means that the task is not subject to an FHA-insured mortgage, however rather has a conventional 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 spending plan (capped by market leas as figured out by a Rent Comparability Study), whichever is lesser.
Annual Rent Adjustment: The contract leas will be adjusted upward each year by the Operating expense Adjustment Factor published for the locality. This multiplicative lease change is released by HUD in October of each year and is efficient in February of the list below year. The OCAF is based on a range of market indicators and is intended to record the results of inflation and other market aspects 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 projects based on a long-term HUD use contract are required to renew 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 contract requirements.
Rent Increase at HAP Renewal: The leas upon HAP renewal depend upon each job's specific HAP agreement, Use Agreement and, if suitable, Strategy. Please examine those files and contact your HUD Account Executive with concerns regarding choices for your residential or commercial property.
Annual Rent Adjustment: Which rent change mechanisms are readily available to your job vary depending on the HAP agreement, Use Agreement, and Plan of Action. Please examine those files and call your HUD Account Executive with questions regarding alternatives for your residential or commercial property. Many Preservation jobs may request a budget-based rent boost to assist with unexpected circumstances at a residential or commercial property or to deal with physical conditions needs.
Forms and documents for Option 5:
- The task's Use Agreement ought to 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 restore their HAP agreement upon expiration. This does not use to owners based on a contractual obligation to renew the HAP agreement arising from an Use Agreement that is connected to the residential or commercial property.
An owner must provide HUD and renters notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible occupants will be provided boosted vouchers pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wishes to decide out of renewing their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and regional laws might impact an owner's ability to opt-out of restoring their HAP agreement. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not recommend an owner of their commitments under these laws.
If you are preparing to pull out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program allows HUD to make sure that cost effective housing remains available in your community even if you do not wish to restore your HAP agreement.
Forms and documents for Option 6:
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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 restore their HAP agreement under Option 1 or 2 might likewise get involved in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program offers incentives for the assignment of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs supply a range of advantages to owners who want to guarantee long-term preservation of the housing help at their residential or commercial property.