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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 readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP agreements. The details provided here is not thorough and rather is meant to assist owners navigate the choices readily available to them. For complete guidelines and requirements for renewal of a HAP contract, please describe the Section 8 Renewal Policy Guide.

For particular concern about a task's eligibility to renew a HAP agreement, please contact your regional HUD Multifamily Account Executive.

Option 1: Mark up to Market

Eligibility: This alternative is available to owners whose agreement rents are listed below similar market rents as figured out by a rent comparability research study. An owner might request that their qualified current HAP agreement be terminated and restored 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 meets specific criteria to qualify 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 files

Option 2: Increase to Budget

Eligibility: This option is available to owners whose contract rents are listed below or equal to equivalent market rents. An owner might decrease their leas 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. These rents might not exceed market equivalent levels, as shown by a lease comparability study.

Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the contract leas are adjusted to current market levels. The owner should submit 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 documents for Option 2:

Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9

Option 3: Mark-to-Market

Eligibility: This option is offered to specific jobs whose leas surpass market equivalent levels as identified by a rent comparability study. Typically, this applies to tasks whose mortgages are guaranteed by the Federal Housing Administration. Congress approved HUD the authority to reorganize an owner's mortgage so that financial obligation service is minimized to a level that can be supported by market equivalent levels. If jobs can

Term: twenty years.

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

Mortgage Restructuring: The owner might request that their eligible mortgage be restructured into a primary mortgage and subordinate financial obligation. The brand-new main mortgage will be sized so that market equivalent leas are sufficient to support the financial obligation service on that mortgage. Use restrictions will stay in location at the residential or commercial property so long as the secondary debt balance remains. If the job can remain financially feasible 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 found on the About Mark-to-Market site. All questions regarding a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.

Option 4: Exception Projects

Eligibility: This choice is offered to tasks which are exempt from reorganizing under MAHRA. This usually means that the job is not subject 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, leas are either changed by the Operating expense Adjustment Factor or by a HUD-approved spending plan (capped by market leas as identified by a Lease Comparability Study), whichever is lower.

Annual Rent Adjustment: The contract leas will be adjusted up each year by the Operating expense 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 upon a range of market indications and is meant to catch the results of inflation and other market elements 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 tasks subject to a long-lasting HUD usage contract are needed to restore under this Option. This normally includes projects with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.

Term: Varies depending upon HAP contract requirements.

Rent Increase at HAP Renewal: The leas upon HAP renewal depend upon each task's particular HAP agreement, Use Agreement and, if suitable, Strategy. Please review those documents and call your HUD Account Executive with questions concerning alternatives for your residential or commercial property.

Annual Rent Adjustment: Which lease adjustment mechanisms are available to your job differ depending on the HAP contract, Use Agreement, and Strategy. Please evaluate those documents and contact your HUD Account Executive with concerns relating to choices for your residential or commercial property. Many Preservation projects may request a budget-based lease increase to help with unexpected situations at a residential or commercial property or to deal with physical conditions needs.

Forms and documents for Option 5:

- The job's Use Agreement must 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 choose to not renew their HAP contract upon expiration. This does not apply to owners based on a contractual commitment to restore the HAP contract arising from an Usage Agreement that is attached to the residential or commercial property.

An owner must supply HUD and occupants notice of the opt-out one year prior to expiration of the HAP agreement. 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 note that state and local laws might impact an owner's ability 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 pull out of HAP contract renewal, please review the 8( bb) Preservation Tool. This program permits HUD to guarantee that inexpensive housing stays available in your neighborhood even if you do not want to restore 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

Section 8 Preservation Efforts

Eligibility: An owner who is qualified to restore their HAP contract under Option 1 or 2 might likewise participate in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides incentives for the task of a HAP contract to a nonprofit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs offer a range of advantages to owners who want to ensure long-lasting preservation of the housing help at their residential or commercial property.