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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 options readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP contracts. The info supplied here is not comprehensive and instead is planned to assist owners browse the options readily available to them. For complete directions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.

For specific question about a job's eligibility to renew a HAP agreement, please contact your regional HUD Multifamily Account Executive.

Option 1: Mark up to Market

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

Term: Between 5 and 20 years.

Renewal Rent Increase: At HAP renewal, leas 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 satisfies specific requirements to certify under the discretionary requirements 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 files

Option 2: Mark up to Budget

Eligibility: This alternative is available to owners whose agreement leas are listed below or equal to similar market rents. An owner may decrease their rents to market levels to get involved under Option 2.

Renewal Rent Increase: At HAP renewal, rents are set at a level needed to support a HUD-approved project spending plan. These rents might not surpass market equivalent levels, as shown by a rent comparability study.

Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the agreement rents are gotten used to current market levels. The owner must submit a lease comparability research 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 readily available to specific tasks whose leas surpass market similar levels as identified by a rent comparability research study. Typically, this applies to tasks whose mortgages are insured by the Federal Housing Administration. Congress approved HUD the authority to reorganize an owner's mortgage so that financial obligation service is decreased to a level that can be supported by market equivalent levels. If jobs can

Term: 20 years.

Annual Rent Increase: At HAP renewal, leas are minimized to a market equivalent level as demonstrated by a lease comparability study.

Mortgage Restructuring: The owner may request that their eligible mortgage be reorganized into a main mortgage and secondary debt. The new primary mortgage will be sized so that market similar leas suffice to support the financial obligation service on that mortgage. Use restrictions will stay in place at the residential or commercial property so long as the secondary debt balance remains. If the job can stay economically viable despite a lease decrease to market levels, then no mortgage restructuring may be required.

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

Option 4: Exception Projects

Eligibility: This alternative is readily available to projects which are exempt from restructuring under MAHRA. This usually suggests that the project is exempt to an FHA-insured mortgage, however rather has a standard mortgage or is tax-credit financed.

Term: Between 1 and twenty years.

Rent Increase: At HAP renewal, rents are either adjusted by the Operating Cost Adjustment Factor or by a HUD-approved budget (capped by market rents as figured out by a Lease Comparability Study), whichever is lesser.

Annual Rent Adjustment: The contract leas will be changed upward each year by the Operating Cost Adjustment Factor published for the region. 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 upon a range of market signs and is meant to catch the impacts of inflation and other market aspects on the cost of operating rental housing.

Forms and documents for Option 4:

Section 8 Renewal Policy Guidebook, Chapter 6

Option 5: Preservation Projects

Eligibility: Certain jobs based on a long-lasting HUD use arrangement are required to renew under this Option. This normally includes tasks with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.

Term: Varies depending on HAP contract requirements.

Rent Increase at HAP Renewal: The rents upon HAP renewal depend upon each job's specific HAP contract, Use Agreement and, if suitable, Plan of Action. Please review those documents and call your HUD Account Executive with questions relating to choices for your residential or commercial property.

Annual Rent Adjustment: Which lease modification systems are available to your job differ depending on the HAP contract, Use Agreement, and Plan of Action. Please review those documents and call your HUD Account Executive with concerns concerning alternatives for your residential or commercial property. Many Preservation projects might request a budget-based rent increase to assist with unforeseen situations at a residential or commercial property or to deal with physical conditions needs.

Forms and files for Option 5:

- The task's Use Agreement ought to 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 agreement upon expiration. This does not use to owners based on a contractual obligation to renew the HAP contract resulting from an Usage Agreement that is connected to the residential or commercial property.

An owner should supply 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 vouchers pursuant to 42 U.S.C. § 1437f( t).

Full HUD requirements for an owner who wishes to pull out of restoring their HAP contract can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local laws may affect an owner's capability to opt-out of restoring their HAP contract. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not encourage an owner of their commitments under these laws.

If you are preparing to decide out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This program permits HUD to ensure that cost effective housing remains readily available in your community even if you do not wish to renew your HAP contract.

Forms and files for Option 6:

HAP Renewal Request Form (HUD-9624)

Enhanced Voucher Fact Sheet

Section 8 Renewal Policy Guidebook, Chapter 8
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Section 8 Preservation Efforts

Eligibility: An owner who is qualified to renew their HAP contract under Option 1 or 2 might likewise take part in the Section 8 Preservation Efforts programs described in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides rewards for the project of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs supply a variety of benefits to owners who wish to guarantee long-term preservation of the housing support at their residential or .
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