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 web page. This resource includes descriptions of choices offered to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP contracts. The information offered here is not detailed and rather is planned to assist owners navigate the options readily available to them. For full guidelines and requirements for renewal of a HAP agreement, please refer to the Section 8 Renewal Policy Guide.
For particular question about a project's eligibility to renew a HAP agreement, please contact your local HUD Multifamily Account Executive.
Option 1: Increase to Market
Eligibility: This choice is readily available to owners whose agreement rents are listed below equivalent market leas as determined by a rent comparability research study. An owner might ask for that their qualified existing HAP contract be ended and restored under this alternative.
Term: Between 5 and twenty years.
Renewal Rent Increase: At HAP renewal, rents are set at market comparable levels, as figured out by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner meets specific criteria to certify under the discretionary requirements 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 choice is available to owners whose agreement rents are listed below or equal to equivalent market leas. An owner might minimize their rents to market levels to get involved 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 demonstrated by a lease comparability study.
Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the contract rents are adapted to existing market levels. The owner needs to send a lease 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 option is available to certain tasks whose leas go beyond market similar levels as figured out by a lease comparability research study. Typically, this uses to tasks whose mortgages are guaranteed by the Federal Housing Administration. Congress granted HUD the authority to restructure an owner's mortgage so that debt service is lowered to a level that can be supported by market similar levels. If projects can
Term: twenty years.
Annual Rent Increase: At HAP renewal, leas are decreased to a market similar level as demonstrated by a rent comparability study.
Mortgage Restructuring: The owner may request that their eligible mortgage be reorganized into a main mortgage and secondary debt. The new main mortgage will be sized so that market equivalent leas are enough to support the debt service on that mortgage. Use restrictions 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 reduction to market levels, then no mortgage restructuring may be needed.
More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market website. All questions concerning a HAP renewal under Option 3 must be directed to m2minfo@hud.gov.
Option 4: Exception Projects
Eligibility: This option is available to tasks which are exempt from reorganizing under MAHRA. This typically means that the task is exempt 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 Cost Adjustment Factor or by a HUD-approved spending plan (topped by market rents as figured out by a Lease Comparability Study), whichever is lesser.
Annual Rent Adjustment: The contract leas will be changed up each year by the Operating Cost Adjustment Factor released for the area. This multiplicative rent change is released by HUD in October of each year and works in February of the list below year. The OCAF is based on a variety of market signs and is meant to record the results of inflation and other market factors on the cost of running rental housing.
Forms and documents for Option 4:
Section 8 Renewal Policy Guidebook, Chapter 6
Option 5: Preservation Projects
Eligibility: Certain tasks based on a long-lasting HUD use arrangement are needed to restore under this Option. This typically consists of tasks 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 project's particular HAP contract, Use Agreement and, if suitable, Strategy. Please evaluate those documents and call your HUD Account Executive with concerns regarding choices for your residential or commercial property.
Annual Rent Adjustment: Which lease modification systems are readily available to your task vary depending upon the HAP contract, Use Agreement, and Strategy. Please review those documents and call your HUD Account Executive with questions concerning choices for your residential or commercial property. Many Preservation jobs may ask for a budget-based lease increase to help with unpredicted circumstances at a residential or commercial property or to attend to physical conditions needs.
Forms and documents for Option 5:
- The job's Use Agreement should be examined to identify 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, Chapter 7
Option 6: Opt-out
Eligibility: An owner might choose to not restore their HAP contract upon expiration. This does not use to owners based on a contractual responsibility to renew the HAP agreement resulting from an Usage Agreement that is connected to the residential or commercial property.
An owner needs to provide HUD and tenants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible tenants will be provided improved vouchers pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wishes to pull out of renewing their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional laws might impact 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 planning to opt out of HAP contract renewal, please review the 8( bb) Preservation Tool. This program allows HUD to ensure that cost effective housing remains readily available in your neighborhood even if you do not wish to restore 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 qualified to renew their HAP contract under Option 1 or 2 may likewise take part in the Section 8 Preservation Efforts programs described 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 ensures that the HAP renewal These programs provide a range of benefits to owners who want to ensure long-term conservation of the housing assistance at their residential or commercial property.