Section 8 Contract Renewal Options


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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 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 extensive and rather is planned to assist owners browse the alternatives available to them. For full directions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.


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


Option 1: Increase to Market


Eligibility: This alternative is offered to owners whose contract leas are listed below equivalent market rents as figured out by a lease comparability study. An owner may request that their eligible existing HAP agreement be terminated and restored under this option.


Term: Between 5 and 20 years.


Renewal Rent Increase: At HAP renewal, leas are set at market similar levels, as determined 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 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: Mark up to Budget


Eligibility: This option is available to owners whose agreement leas are listed below or equivalent to comparable market rents. An owner might minimize their rents 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 task budget. These leas might not go beyond market similar levels, as demonstrated by a lease comparability research study.


Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement rents are adjusted to existing market levels. The owner should send a rent comparability research study which is utilized 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 offered to particular jobs whose rents exceed market comparable levels as figured out by a lease comparability study. Typically, this uses to projects whose mortgages are insured by the Federal Housing Administration. Congress granted HUD the authority to restructure an owner's mortgage so that financial obligation service is reduced to a level that can be supported by market comparable levels. If jobs can


Term: twenty years.


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


Mortgage Restructuring: The owner may request that their eligible mortgage be restructured into a primary mortgage and subordinate financial obligation. The new main mortgage will be sized so that market equivalent leas are enough to support the financial obligation service on that mortgage. Use limitations will stay in place at the residential or commercial property so long as the secondary financial obligation balance remains. If the job can stay financially feasible regardless of a lease decrease 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 questions relating to a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.


Option 4: Exception Projects


Eligibility: This choice is available to tasks which are exempt from reorganizing under MAHRA. This typically means 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, leas are either adjusted by the Operating Cost Adjustment Factor or by a HUD-approved budget (capped by market leas as identified by a Lease Comparability Study), whichever is lesser.


Annual Rent Adjustment: The agreement rents will be changed upward each year by the Operating Cost Adjustment Factor published for the locality. This multiplicative rent change is released by HUD in October of each year and is effective in February of the following year. The OCAF is based on a variety of market indicators and is meant to catch the results of inflation and other market factors on the cost of housing.


Forms and files for Option 4:



Section 8 Renewal Policy Guidebook, Chapter 6




Option 5: Preservation Projects


Eligibility: Certain projects subject to a long-term HUD use arrangement are needed to renew under this Option. This typically consists of tasks 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 on each project's particular HAP contract, Use Agreement and, if appropriate, Plan of Action. Please review those documents and contact your HUD Account Executive with questions relating to options for your residential or commercial property.


Annual Rent Adjustment: Which rent modification mechanisms are offered to your task vary depending upon the HAP contract, Use Agreement, and Strategy. Please evaluate those files and call your HUD Account Executive with questions relating to options for your residential or commercial property. Many Preservation projects may request a budget-based lease increase to help with unpredicted circumstances at a residential or commercial property or to address physical conditions requires.


Forms and documents for Option 5:


- The job's Use Agreement need to be reviewed 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 renew their HAP agreement upon expiration. This does not use to owners based on a legal obligation to renew the HAP contract resulting from an Use Agreement that is connected to the residential or commercial property.


An owner must offer HUD and tenants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible tenants will be released boosted vouchers pursuant to 42 U.S.C. § 1437f( t).


Full HUD requirements for an owner who wishes to choose out of restoring 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 might affect an owner's ability 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 responsibilities under these laws.


If you are preparing to pull out of HAP agreement renewal, please examine the 8( bb) Preservation Tool. This program enables HUD to guarantee that cost effective housing stays offered in your community even if you do not wish 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 restore 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 project of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs supply a range of advantages to owners who want to ensure long-lasting conservation of the housing support at their residential or commercial property.