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 renew their HAP agreements. The details offered here is not comprehensive and rather is planned to help owners browse the options available to them. For full directions and requirements for renewal of a HAP contract, please refer to the Section 8 Renewal Policy Guide.
For specific question about a project's eligibility to renew a HAP agreement, please call your local HUD Multifamily Account Executive.
Option 1: Mark up to Market
Eligibility: This alternative is offered to owners whose contract rents are listed below comparable market rents as figured out by a rent comparability study. An owner may request that their eligible current HAP contract be ended 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 identified by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner meets particular criteria 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: Mark up to Budget
Eligibility: This choice is available to owners whose contract leas are below or equal to equivalent market rents. An owner might minimize their leas to market levels to take part under Option 2.
Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved job budget. These leas might not surpass market equivalent levels, as demonstrated by a rent comparability study.
Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement rents are adapted to current market levels. The owner should send a rent comparability study which is utilized 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 option is available to particular jobs whose rents go beyond market equivalent levels as figured out by a lease comparability research study. Typically, this applies to jobs 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 lowered 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 shown by a lease comparability research study.
Mortgage Restructuring: The owner might ask for that their qualified mortgage be reorganized into a main mortgage and secondary financial obligation. The new main mortgage will be sized so that market comparable rents suffice 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 subordinate financial obligation balance remains. If the task can stay financially practical regardless of a lease reduction 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 site. All questions concerning 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 usually means that the job is exempt to an FHA-insured mortgage, but instead has a standard mortgage or is tax-credit financed.
Term: Between 1 and 20 years.
Rent Increase: At HAP renewal, rents are either changed by the Operating Cost Adjustment Factor or by a HUD-approved spending plan (capped by market leas as figured out by a Lease Comparability Study), whichever is lesser.
Annual Rent Adjustment: The contract rents will be adjusted upward each year by the Operating Cost Adjustment Factor released for the locality. This multiplicative rent adjustment is published by HUD in October of each year and works in February of the list below year. The OCAF is based on a range of market signs and is intended to capture the effects of inflation and other market factors on the cost of running 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 agreement are needed to restore under this Option. This generally 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 leas upon HAP renewal depend on each project's particular HAP agreement, Use Agreement and, if suitable, Strategy. Please examine those documents and call your HUD Account Executive with questions relating to options for your residential or commercial property.
Annual Rent Adjustment: Which lease change systems are available to your task vary depending on the HAP agreement, Use Agreement, and Strategy. Please examine those documents and call your HUD Account Executive with concerns relating to alternatives for your residential or commercial property. Many Preservation projects may request a budget-based lease boost to help with unexpected situations at a residential or commercial property or to address physical conditions needs.
Forms and documents for Option 5:
- The task's Use Agreement need to be examined to figure out HAP renewal options.
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, 7
Option 6: Opt-out
Eligibility: An owner might elect to not restore their HAP contract upon expiration. This does not use to owners subject to a legal commitment to restore the HAP agreement resulting from an Use Agreement that is connected to the residential or commercial property.
An owner should offer HUD and occupants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible tenants will be released improved coupons pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wants 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 affect an owner's ability to opt-out of renewing 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 decide out of HAP contract renewal, please evaluate the 8( bb) Preservation Tool. This program permits HUD to make sure that budget friendly housing stays available in your neighborhood even if you do not want to renew your HAP contract.
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 renew their HAP agreement under Option 1 or 2 might also participate in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies incentives for the assignment of a HAP contract to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs provide a range of advantages to owners who wish to guarantee long-lasting conservation of the housing assistance at their residential or commercial property.