Section 8 Contract Renewal Options
A.gov website belongs to an official government organization in the United States.
Secure.gov sites use HTTPS
A lock (A locked padlock) or https:// means you have actually securely connected to the.gov site. Share delicate details only on authorities, protected sites.
FHA/Housing Resources
Aid with Homeownership
Find Affordable Places to Live
Find a HUD-certified counselor
Housing Choice Voucher
Experiencing Homelessness
Report an Issue
Current HUD Residents
Experiencing a Natural Disaster
Find State Resources
HUD Partners
FHA/Housing Resources
Public and Indian Housing Resources
Policies, Guidance, & Forms
IT Systems
Grants.
Native American Programs.
Affordable Places to Live.
Inspections for HUD Housing.
Housing Financing & Counseling.
Opportunity Zones & Community Development.
Healthy Homes.
Fair Housing.
Researchers
HUDuser.gov.
Data.hud.gov.
News About Contact
Search
U.S. Department of Housing and Urban Development
Helping Americans
HUD Partners
Researchers
News
About
Contact
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 webpage. This resource contains descriptions of choices offered to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP agreements. The information provided here is not detailed and rather is intended to assist owners navigate the choices readily 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 restore a HAP agreement, 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 similar market rents as determined by a rent comparability research study. An owner might ask for that their eligible current HAP contract be ended and renewed under this alternative.
Term: Between 5 and 20 years.
Renewal Rent Increase: At HAP renewal, rents are set at market comparable levels, as determined by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner satisfies particular criteria to qualify under the discretionary criteria described 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 alternative is available to owners whose contract leas are listed below or equal to comparable market rents. An owner might lower their leas to market levels to participate 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 leas may not exceed market similar levels, as shown by a lease comparability research study.
Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement rents are gotten used to present market levels. The owner needs to submit a rent comparability research study which is utilized to set the rents on the 5th, 10th, and 15th anniversaries of the HAP contract.
Forms and files for Option 2:
Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
Option 3: Mark-to-Market
Eligibility: This alternative is readily available to particular jobs whose leas surpass levels as identified by a lease comparability research study. Typically, this uses to projects whose mortgages are insured by the Federal Housing Administration. Congress gave 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: 20 years.
Annual Rent Increase: At HAP renewal, leas are reduced to a market similar 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 subordinate financial obligation. The brand-new main mortgage will be sized so that market comparable leas suffice to support the financial obligation service on that mortgage. Use constraints will remain in place at the residential or commercial property so long as the subordinate debt balance stays. If the task can stay financially practical in spite of a rent decrease 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 inquiries 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 means that the job is exempt to an FHA-insured mortgage, however rather has a standard mortgage or is tax-credit financed.
Term: Between 1 and 20 years.
Rent Increase: At HAP renewal, leas are either adjusted by the Operating expense Adjustment Factor or by a HUD-approved budget (topped by market leas as determined by a Rent Comparability Study), whichever is lesser.
Annual Rent Adjustment: The agreement rents will be changed up each year by the Operating expense Adjustment Factor released 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 indicators and is planned to record the effects of inflation and other market factors on the expense of running 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-term HUD usage contract are required to restore under this Option. This usually includes projects 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 leas upon HAP renewal depend on each job's specific HAP contract, Use Agreement and, if applicable, Plan of Action. Please review those files and contact your HUD Account Executive with questions relating to choices for your residential or commercial property.
Annual Rent Adjustment: Which lease adjustment systems are offered 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 alternatives for your residential or commercial property. Many Preservation tasks might ask for a budget-based lease 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 job's Use Agreement should 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, Chapter 7
Option 6: Opt-out
Eligibility: An owner might elect to not renew their HAP agreement upon expiration. This does not use to owners subject to a legal commitment to restore the HAP agreement resulting from an Usage Agreement that is connected to the residential or commercial property.
An owner needs to offer HUD and renters notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible tenants 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 restoring their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and local laws might 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 commitments under these laws.
If you are preparing to choose out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program permits HUD to ensure that budget friendly housing remains offered in your neighborhood even if you do not want to restore 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
commercial-matting.net
Section 8 Preservation Efforts
Eligibility: An owner who is eligible to renew their HAP contract under Option 1 or 2 may likewise take part 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 task 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 variety of advantages to owners who want to guarantee long-term conservation of the housing support at their residential or commercial property.