HUD issued Notice 2018-10 providing best practices regarding situations in which guest suites are permissible in Multifamily rental projects with mortgages insured or held by HUD under the National Housing Act. Section 513 of that act prohibits renting for “transient or hotel purposes.” Leases and occupancy agreements for fewer than 30 days are prohibited.
The guidance applies to Section 221(d)(3), Section 236, Rent Supplement (Rent Supp), and Rental Assistance Program (RAP) projects, along with Project-based Section 8 properties that have Federal Housing Administration (FHA) mortgage insurance.
Notice 2018-10 states that in certain circumstances one or more units may be set aside as an amenity for residents. However, such guest suites are typically available for reservation by residents as an overnight accommodation for residents’ relatives or guests.
The Notice provides “best practices” that include:
- Rent is not charged
- Guest suites are not available to the public and are limited to residents’ family and friends
- Residents are limited to two reservations per year with up to seven days per resident
Notice 2018-10 is at: https://bit.ly/2zduA1z
More about HUD’s Multifamily programs is on page 4-23 of NLIHC’s 2018 Advocates’ Guide.