11-2. HOUSING CONVERSION ACTIONS
HUD Section 8 Renewal Policy Guidebook · 2026 edition · updated 2026-07-29 · United States
A. Opt-outs. This term refers to a conversion action where an owner chooses to opt-out of the project-based Section 8 program by not renewing an expiring Section 8 project-based HAP contract.
To opt-out of the project-based Section 8 program, an owner must satisfy all notification requirements, including the provision of notice of the proposed HAP contract termination to the tenants and the contract administrator at least one year before termination, and submit the request and certification to the local HUD Office/Contract Administrator (CA) not less than 120 days before the expiration of the contract.
HUD is committed to protecting families living in assisted units, regardless of the actions a project owner may take. To protect families living in assisted units, section 524(d) of MAHRA requires HUD, subject to appropriations, to make enhanced vouchers available to low-income families who, on the date of expiration of the HAP contract, are living in an assisted unit.
Owners should refer to HUD Handbook 1378 for guidance regarding HUD real estate acquisition and relocation policy and procedures. Specifically, Chapter 3 contains guidance on planning for and providing appropriate access to relocation assistance and housing for persons with disabilities.
Chapter Eleven – Published March 2023
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- B. HUD enforcement actions. In these cases, (or in conjunction with a HUD Property Disposition (PD) action), HUD is either terminating the project-based Section 8 HAP contract or not offering the owner the option to renew an expiring contract due to an owner’s failure to comply with the terms of the HAP contract or other HUD requirements.
HUD enforcement actions may result from material adverse financial or managerial actions or omissions as described in Section 13-1. B. of this Guide, which lead to either owner default under a FHA-insured mortgage (monetary or technical) or a documented material violation of one or more of the obligations under the project’s Regulatory Agreement. Regular housing choice vouchers will normally be provided in these circumstances to assist eligible families affected by the enforcement action because property condition or other issues will not allow tenants to remain in the project.
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Ask AI about this code▸ Contents — HUD Section 8 Renewal Policy Guidebook
- U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
- SPECIAL ATTENTION OF
- TRANSMITTAL
- A. Purpose
- Explanation of Changes
- Section 8 Renewal Policy Guidebook
- Office of Multifamily Housing
- Table of Contents
- Chapter One
- Introduction
- Chapter 1: Introduction
- Chapter 2: Section 8 Renewals
- Chapter 3: Option One: Mark-Up-To-Market
- Chapter 4: Option Two: Contract Renewals For Other Projects wi…
- Chapter 5: Option Three: Referral to Recap
- Chapter 6: Option Four: Renewal of Projects Exempt from or not…
- Chapter 7: Option Five: Renewal of Portfolio Reengineering Dem…
- Chapter 8: Option Six: Opt-Outs
- Chapter 9: Rent Comparability Studies
- Chapter 10: Residual Receipts
- Chapter 11: Tenant Issues
- Chapter 12: Physical Condition of the Project
- Chapter 13: HUD’s Refusal to Renew Section 8 Contracts
- Chapter 14: Rural Housing Service (RHS) Section 515/8
- Chapter 15: Section 8 Preservation Efforts
- — Chapter 16: “Old Regulation” State Housing Finance Agency Pr…
- 1-2. LEGISLATIVE HISTORY
- 1-3. RULEMAKING
- 1-4. ADMINISTRATIVE POLICY
- 1-5. APPLICABILITY
- 1-6. PAPERWORK REDUCTION ACT
- Chapter Two
- Section 8 Renewals
- 2-1. INTRODUCTION
- 2-2. OWNER OPTIONS
- 2-3. TYPES OF RENEWALS
- 2-4. EARLY TERMINATION OF A CONTRACT
- 2-5. RENT COMPARABILITY STUDY (RCS)
- Note: The AE/CA shall not lower the comparable market rents in…
- Note: A RCS is not required at any subsequent renewal of an EL…
- 2-6. CONTRACTS
- 2-8. SHORT-TERM CONTRACT RENEWALS
- 2-10. COMBINING CONTRACTS
- 2-11. REQUEST FOR A CONTRACT EXTENSION
- 2-12. DISTRIBUTIONS
- Note: The conditions listed above for receiving access to incr…
- 2-13. RENT ADJUSTMENTS
- 2-14. OPERATING COST ADJUSTMENT FACTOR (OCAF)
- 2-15. BUDGET-BASED RENT ADJUSTMENT REQUESTS
- 2-16. INCREASES IN DEPOSITS TO THE RESERVE FOR REPLACEMENT
- 2-17. PROCESSING INSTRUCTIONS
- Note: If the project has a budget approved by the AE/CA less t…
- Note: HUD does not accept the RHS utility analysis. The owner …
- 2-18. WAIVERS
- 2-19. DUNS NUMBER
- Chapter Three
- 3-1. OVERVIEW
- 3-3. OPTION ONE-A ENTITLEMENT MARK-UP-TO-MARKET ELIGIBILITY
- Note: Nonprofit controlled for profit entities as described in…
- 3-4. 150 PERCENT RENT CAP FOR OPTION ONE-A
- 3-5. EXCEEDING THE 150 PERCENT OF FMR CAP
- 3-6. OPTION ONE-B DISCRETIONARY MUTM ELIGIBILITY
- Note: Non-profit owned projects that meet one of the three cri…
- 3-7. RENEWAL REQUESTS
- 3-8. PROCESSING INSTRUCTIONS
- 3-9. ANNUAL RENT ADJUSTMENTS DURING A MULTIYEAR CONTRACT
- Chapter Four
- 4-1. ELIGIBILITY
- Note: Projects currently renewed under either Option Two or Op…
- 4-2. CONTRACT RENEWAL
- 4-3. ANNUAL RENT ADJUSTMENTS DURING A MULTIYEAR CONTRACT
- 4-4. PROCESSING INSTRUCTIONS
- Chapter Five
- Note: WAIVERS TO CHAPTER FIVE WILL BE IN ACCORDANCE WITH RECAP…
- Note: Risk Sharing Projects do not meet the definition of “eli…
- 5-2. BINDING COMMITMENT
- 5-3. ENTRY INTO RECAP
- Note: In cases where a CA makes the determination that contrac…
- 5-4. CONTRACT RENEWALS — RENT OR DEBT RESTRUCTURING
- 5-5. SUBSEQUENT RENEWALS
- 5-6. “WATCH LIST” MTM PROJECTS
- 5-7. GENERAL INFORMATION
- Chapter Six
- 6-1. ELIGIBILITY
- Note: State and local government financed projects that are no…
- Note: In cases where referral to Recap is necessary, CAs must …
- Note: Section 202 and 811 Capital Advance projects are not eli…
- Note: Projects financed under the risk-sharing loan programs u…
- 6-2. RENEWALS
- Reminder: For projects (including 202 projects) that are being…
- 6-3. RENT ADJUSTMENTS FOR MULTI-YEAR CONTRACTS
- 6-4. SECTION 202 REFINANCINGS
- Chapter Seven
- 7-1. ELIGIBILITY
- Portfolio Reengineering Demonstration Program Projects
- 7-2. RENEWAL OF PORTFOLIO REENGINEERING DEMONSTRATION PROJECTS
- FIVE
- Note: Owners can request that the existing Demo Program Use Ag…
- 7-4. PROCESSING INSTRUCTIONS FOR DEMONSTRATION PROJECTS
- 7-5. PRESERVATION PROJECTS (LIHPRHA AND ELIHPA)
- 7-6. OWNER’S SUBMISSION FOR PRESERVATION PROJECTS
- Note: Owners can request that the existing Preservation Use Ag…
- 7-7. PROCESSING INSTRUCTIONS FOR PRESERVATION PROJECTS
- 7-8. PROJECT SPECIFIC RENTS (PSRS)
- Chapter Eight
- 8-1. OVERVIEW
- 8-2. OWNER REQUIREMENTS FOR TENANT NOTIFICATION
- 8-3. PROCESSING INSTRUCTIONS
- Note: If proper notification was not provided, the owner must …
- Chapter Nine
- 9-1. BACKGROUND
- 9-2. APPLICABILITY OF CHAPTER NINE
- 9-3. ROAD MAP TO CHAPTER NINE
- 9-4. ALTERNATIVES TO RENT COMPARABILITY STUDY
- 9-6. METHOD TWO: COMPARING PROPOSED SECTION 8 RENTS WITH RENTS…
- 9-7. PREPARING A RENT COMPARABILITY STUDY
- 9-8. APPRAISER QUALIFICATIONS
- 9-9. ANALYZING THE SUBJECT PROJECT
- Note: Appraisers should not take into consideration demographi…
- Note: Government boundaries like state or county lines often d…
- 9-10. SELECTING COMPARABLE UNITS
- 9-11. COLLECTING AND DOCUMENTING DATA ON COMPARABLE UNITS
- 9-12. COMPUTING ADJUSTED RENTS FOR COMPARABLE UNITS
- 9-13. DERIVING ESTIMATED MARKET RENTS
- 9-14. PROCEDURE FOR MANDATORY MARKET RENT THRESHOLD
- Example Project in ZIP code 76469
- 9-15. HUD REVIEW OF RENT COMPARABILITY STUDY
- 9-16. INITIAL AND SUBSTANTIVE REVIEW OF OWNER’S RCS
- 9-17. COMMUNICATING RESULTS OF HUD/CA REVIEWS
- 9-18. OWNER APPEALS
- 9-19. IMPOSING SANCTIONS ON APPRAISERS
- APPENDICES
- - Instructions for Completing the HUD Form 92273 S8
- Part A: Rents Charged (lines 1 through 5)
- Part B. Design, Location, Condition (lines 6 through 10)
- Part C. Unit Equipment/Amenities (lines 11 through 23)
- Part D. Site Equipment/Amenities (lines 24 through 32)
- Part E. Utilities (lines 33 through 39)
- Part F. Adjustments Recap (lines 40 through 43)
- Part G. Adjusted Rents (lines 44 through 45)
- Required Contents of a Rent Comparability Study
-
▸ Comparable Project Profile
Overview- Address
- Place Photo Below:
- By my/our signature below, I/We certify that, to the best of m…
- Sample RCS Appraiser’s Transmittal Letter
- Re: Rent Comparability Study/[Project Name]
- Mandatory Market Rent Threshold Test
- Sample Owner’s Cover Letter
- RCS Submittal Cover Letter for [Project Name]
- Owner’s Materials
- RCS Materials
- Mandatory Market Rent Threshold Materials
- Owner’s Signature & Date
- Notes for Rent Grid Analysis and Triggers for Secondary Review
- Sample Issues Memo from Substantive Reviewer
- Special Project Types
- Forms Used in Preparation and Review of an RCS
- Chapter Ten
- Residual Recei pts
- Chapter Eleven
- 11-1. DEFINITIONS
- 11-2. HOUSING CONVERSION ACTIONS
- 11-3. TENANT PROTECTIONS
- 11-4. OWNER NOTIFICATION REQUIREMENTS
- Note: The one-year notification is not required when an owner …
- Note: Taping the Notice to the outside of each unit is not acc…
- 11-5. LIMITED ENGLISH PROFICIENCY ASSISTANCE
- 11-6. EFFECTIVE COMMUNICATIONS
- ( Date )
- THIS LETTER IS TO NOTIFY YOU THAT WE DO NOT INTEND TO RENEW TH…
- HUD Web
- ( Date )
- THIS LETTER IS TO NOTIFY YOU THAT WE INTEND TO RENEW THE CURRE…
- HUD Web
- ( Date )
- HUD Web
- Chapter Twelve
- 12-1. PHYSICAL CONDITION
- 12-2. EXIGENT HEALTH AND SAFETY (EH&S) DEFICIENCY NOTICE AND P…
- Note: hud@work is an internal site with no access for the publ…
- Chapter Thirteen
- 13-1. HUD’S REFUSAL TO RENEW A SECTION 8 HAP CONTRACT
- 13-2. HUD’S DECISION NOT TO RENEW THE EXPIRING CONTRACT
- 13-3. OWNER’S APPEAL OF HUD’S REFUSAL TO RENEW A SECTION 8 HAP…
- 13-4. HUD’S TENANT NOTIFICATION OF REFUSAL TO RENEW
- Chapter Fourteen
- 14-1. OVERVIEW
- 14-2. PROCESSING
- Note: HUD does not accept the RHS utility analysis. The owner …
- Note: If the owner of the project is a for profit who is not r…
- Note: RHS projects are exempted from debt restructuring under …
- Chapter Fifteen
- Section 8 Preservation Efforts
- 15-1. OVERVIEW
- PART ONE: DEFINITION OF NONPROFIT OWNER
- 15-2. NONPROFIT OWNER/PURCHASER
- 15-3. NONPROFIT CONTROLLED FOR PROFIT ENTITY (OWNER OR PURCHAS…
- PART TWO: GENERAL CRITERIA FOR BOTH CAPITAL REPAIRS AND TRANSF…
- 15-4. APPLICABILITY
- 15-5. BASIC REQUIREMENTS
- Note: HUD lacks the authority to allow a project to reduce ren…
- 15-6. RENT INCREASES
- 15-7. UNASSISTED UNITS IN A HUD PROJECT
- 15-8. CAP ON MARKET RENTS
- 15-9. PROJECT CAPITAL NEEDS ASSESSMENT AND INCREASED DEPOSITS …
- Note: For a non-insured project with an old regulation/LMSA/PD…
- PART THREE: CAPITAL REPAIRS PROGRAM
- 15-11. GENERAL
- 15-12. ADDITIONAL ACCEPTABILITY REQUIREMENTS FOR THE OWNER
- 15-13. PROJECT ELIGIBILITY
- Part Four: Transfer Program
- 15-14. GENERAL
- 15-15. ADDITIONAL PURCHASER REQUIREMENTS
- 15-16. PROJECT ELIGIBILITY
- 15-17. TRANSFER OF PHYSICAL ASSETS (TPA) FOR A HUD INSURED TRA…
- Chapter Sixteen
- 16-1. BACKGROUND, APPLICABILITY AND OVERVIEW
- 16-2. OWNER OPTIONS
- 16-3. TIMELINESS
- Rent Comparability Study (RCS) . See Comparability Study.