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 contains descriptions of alternatives offered to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP agreements. The information offered here is not extensive and rather is intended to assist owners browse the choices available to them. For complete directions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
For particular question about a task's eligibility to renew a HAP contract, please call your regional HUD Multifamily Account Executive.
Option 1: Increase to Market
Eligibility: This alternative is readily available to owners whose contract rents are listed below similar market rents as figured out by a rent comparability research study. An owner might ask for that their eligible current HAP contract be ended and renewed under this option.
Term: Between 5 and twenty years.
Renewal Rent Increase: At HAP renewal, rents are set at market equivalent levels, as determined by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner meets particular requirements to certify under the discretionary criteria explained at Section 9-3.
Forms and files 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 alternative is offered to owners whose agreement leas are below or equal to similar market rents. An owner might lower their rents to market levels to participate under Option 2.
Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved job spending plan. These rents might not go beyond market equivalent levels, as demonstrated by a rent comparability research study.
Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract leas are adapted to present market levels. The owner needs to send a lease comparability study which is utilized to set the rents 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 choice is readily available to certain tasks whose leas exceed market comparable levels as figured out by a lease comparability research study. Typically, this applies to projects whose mortgages are guaranteed by the Federal Housing Administration. Congress approved HUD the authority to restructure 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: 20 years.
Annual Rent Increase: At HAP renewal, rents are lowered to a market similar level as shown by a rent comparability study.
Mortgage Restructuring: The owner might ask for that their eligible mortgage be restructured into a main mortgage and subordinate debt. The new main mortgage will be sized so that market similar rents are adequate to support the financial obligation service on that mortgage. Use limitations will stay in location at the residential or commercial property so long as the secondary debt balance stays. If the job can remain financially feasible regardless of a rent reduction to market levels, then no mortgage restructuring might be needed.
More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market site. All queries relating to a HAP renewal under Option 3 should 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 typically indicates that the project is not subject to an FHA-insured mortgage, however rather has a traditional mortgage or is tax-credit funded.
Term: Between 1 and twenty years.
Rent Increase: At HAP renewal, leas are either adjusted by the Operating expense Adjustment Factor or by a HUD-approved budget plan (topped by market rents as figured out by a Lease Comparability Study), whichever is lower.
Annual Rent Adjustment: The agreement leas will be adjusted upward each year by the Operating Cost Adjustment Factor released for the region. This multiplicative rent change is released by HUD in October of each year and is reliable in February of the following year. The OCAF is based on a range of market indicators and is meant to catch the impacts of inflation and other market factors 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 based on a long-term HUD use arrangement are required to restore under this Option. This usually consists of projects with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.
Term: Varies depending on HAP agreement requirements.
Rent Increase at HAP Renewal: The rents upon HAP renewal depend upon each task's particular HAP contract, Use Agreement and, if applicable, Plan of Action. Please evaluate those documents and call your HUD Account Executive with concerns relating to options for your residential or commercial property.
Annual Rent Adjustment: Which rent adjustment systems are available to your task differ depending upon the HAP agreement, Use Agreement, and Strategy. Please review those documents and contact your HUD Account Executive with questions concerning alternatives for your residential or commercial property. Many Preservation jobs might ask for a budget-based lease boost to help with unforeseen scenarios at a residential or commercial property or to attend to physical conditions needs.
Forms and files for Option 5:
- The job's Use Agreement should be evaluated 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 contract upon expiration. This does not use to owners based on a contractual commitment to renew the HAP contract arising from an Usage Agreement that is attached to the residential or commercial property.
An owner should supply HUD and occupants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible occupants will be issued enhanced coupons pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wishes to pull out of renewing their HAP contract can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local laws may impact an owner's capability to opt-out of renewing their HAP contract. 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 preparing to opt out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program permits HUD to ensure that inexpensive housing stays available in your neighborhood even if you do not want to restore your HAP agreement.
Forms and documents 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 restore their HAP contract under Option 1 or 2 may likewise participate 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 not-for-profit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs provide a variety of advantages to owners who wish to ensure long-lasting conservation of the housing help at their or commercial property.
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