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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 webpage. This resource includes descriptions of options readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP contracts. The details offered here is not thorough and rather is planned to help owners navigate the choices readily available to them. For full guidelines 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 call your local HUD Multifamily Account Executive.

Option 1: Mark up to Market

Eligibility: This option is offered to owners whose contract leas are below comparable market leas as identified by a lease comparability study. An owner may request that their eligible existing HAP agreement be terminated and renewed under this option.

Term: Between 5 and twenty years.

Renewal Rent Increase: At HAP renewal, leas are set at market similar levels, as identified by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner fulfills certain criteria to certify 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 choice is offered to owners whose contract leas are listed below or equal to similar market rents. An owner may minimize their leas to market levels to take part under Option 2.

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

Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the agreement leas are gotten used to existing market levels. The owner must submit a rent comparability research study which is utilized 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 offered to certain jobs whose rents surpass market comparable levels as identified by a lease comparability study. Typically, this uses to jobs whose mortgages are guaranteed by the Federal Housing Administration. Congress gave HUD the authority to reorganize an owner's mortgage so that debt service is minimized to a level that can be supported by market similar levels. If jobs can

Term: twenty years.

Annual Rent Increase: At HAP renewal, leas are lowered to a market comparable level as demonstrated by a rent comparability study.

Mortgage Restructuring: The owner may ask for that their qualified mortgage be restructured into a main mortgage and secondary debt. The new main mortgage will be sized so that market comparable rents are enough to support the debt service on that mortgage. Use limitations will remain in location at the residential or commercial property so long as the subordinate debt balance remains. If the job can stay economically viable despite a rent decrease to market levels, then no mortgage restructuring may be required.

More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market site. All queries regarding a HAP renewal under Option 3 should be directed to [email protected].

Option 4: Exception Projects

Eligibility: This alternative is available to jobs which are exempt from reorganizing under MAHRA. This typically indicates that the task is not subject to an FHA-insured mortgage, but rather has a conventional mortgage or is tax-credit funded.

Term: Between 1 and 20 years.

Rent Increase: At HAP renewal, rents 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 lower.

Annual Rent Adjustment: The agreement leas will be adjusted up each year by the Operating Cost Adjustment Factor published for the area. This multiplicative lease modification is released by HUD in October of each year and works in February of the following year. The OCAF is based upon a variety of market signs and is meant to record the effects of inflation and other market elements 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 jobs subject to a long-lasting HUD usage contract are needed to restore under this Option. This normally includes jobs 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 job's particular HAP contract, Use Agreement and, if relevant, Strategy. Please examine those documents and contact your HUD Account Executive with concerns relating to options for your residential or commercial property.

Annual Rent Adjustment: Which rent modification systems are readily available to your task differ depending upon the HAP agreement, Use Agreement, and Plan of Action. Please review those documents and call your HUD Account Executive with questions concerning options for your residential or commercial property. Many Preservation jobs may ask for a budget-based lease increase to help with unpredicted scenarios at a residential or commercial property or to deal with physical conditions requires.

Forms and files for Option 5:

- The task's Use Agreement ought to be examined to figure out 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 may elect to not renew their HAP contract upon expiration. This does not use to owners subject to a legal commitment to restore the HAP contract resulting from an Use Agreement that is connected to the residential or commercial property.

An owner needs to offer HUD and occupants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, qualified occupants will be issued improved vouchers pursuant to 42 U.S.C. § 1437f( t).

Full HUD requirements for an owner who wishes to choose out of renewing their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and local laws may impact 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 responsibilities under these laws.

If you are preparing to pull out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program permits HUD to make sure that economical housing stays offered in your community even if you do not wish to restore your HAP agreement.

Forms and documents 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 eligible to restore their HAP agreement 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 provides rewards for the project of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs provide a variety of advantages to owners who wish to ensure long-term conservation of the housing assistance at their residential or commercial property.