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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 contracts. The details offered here is not comprehensive and instead is meant to help owners navigate the alternatives available to them. For complete instructions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.

For particular concern about a task's eligibility to restore a HAP contract, please contact your local HUD Multifamily Account Executive.

Option 1: Increase to Market

Eligibility: This option is offered to owners whose agreement leas are listed below equivalent market rents as identified by a lease comparability research study. An owner may ask for that their qualified present HAP agreement be ended and renewed under this option.

Term: Between 5 and twenty years.

Renewal Rent Increase: At HAP renewal, leas are set at market equivalent levels, as figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills specific requirements to qualify under the discretionary criteria explained 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 available to owners whose contract leas are below or equivalent to similar market rents. An owner might reduce their rents 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 spending plan. These rents might 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 existing market levels. The owner should send 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 files for Option 2:

Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9

Option 3: Mark-to-Market

Eligibility: This alternative is available to certain jobs whose leas go beyond market equivalent levels as identified by a rent comparability study. Typically, this uses 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 decreased to a level that can be supported by market comparable levels. If tasks can

Term: 20 years.

Annual Rent Increase: At HAP renewal, leas are reduced to a market equivalent level as shown by a rent comparability research study.

Mortgage Restructuring: The owner may ask for that their eligible mortgage be reorganized into a main mortgage and secondary financial obligation. The brand-new main mortgage will be sized so that market equivalent rents are enough to support the financial obligation service on that mortgage. Use constraints will remain in location at the residential or commercial property so long as the subordinate debt balance stays. If the task can stay economically viable despite a rent reduction to market levels, then no mortgage restructuring might be required.

More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market website. All inquiries concerning a HAP renewal under Option 3 ought to be directed to m2minfo@hud.gov.

Option 4: Exception Projects

Eligibility: This option is readily available to projects which are exempt from reorganizing under MAHRA. This generally indicates that the project is exempt to an FHA-insured mortgage, but instead has a traditional mortgage or is tax-credit financed.

Term: Between 1 and 20 years.

Rent Increase: At HAP renewal, leas are either changed by the Operating Cost Adjustment Factor or by a HUD-approved budget (topped by market rents as identified 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 released for the locality. This multiplicative lease adjustment is published by HUD in October of each year and is effective in February of the list below year. The OCAF is based upon a variety 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 documents for Option 4:

Section 8 Renewal Policy Guidebook, Chapter 6

Option 5: Preservation Projects

Eligibility: Certain projects subject to a long-lasting HUD usage contract are required to restore under this Option. This generally includes jobs 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 job's specific HAP agreement, Use Agreement and, if relevant, Plan of Action. Please evaluate those files and call your HUD Account Executive with concerns regarding choices for your residential or commercial property.

Annual Rent Adjustment: Which rent change mechanisms are offered to your job vary depending upon the HAP contract, Use Agreement, and Strategy. Please evaluate those files and call your HUD Account Executive with concerns concerning choices for your residential or commercial property. Many Preservation tasks may ask for a budget-based lease increase to assist with unanticipated situations at a residential or commercial property or to address physical conditions needs.

Forms and documents for Option 5:

- The task's Use Agreement must be evaluated to identify 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 contract upon expiration. This does not apply to owners subject to a contractual responsibility to renew the HAP contract arising from an Usage Agreement that is connected to the residential or commercial property.

An owner should supply HUD and tenants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible renters will be released improved coupons pursuant to 42 U.S.C. § 1437f( t).

Full HUD requirements for an owner who wants to pull out of renewing their HAP contract 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 capability 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 allows HUD to make sure that affordable housing stays offered 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 qualified to renew their HAP agreement 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 supplies incentives for the assignment of a HAP agreement 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 want to ensure long-term conservation of the housing help at their residential or commercial property.