HUD’s Office of Multifamily Housing Programs has updated Chapter 9 of the Section 8 Renewal Policy Guidebook. A HUD media release states that the changes to the chapter – which deals with Rent Comparability Studies (RCS) – are designed to streamline the Section 8 Project-Based Rental Assistance (PBRA) contract renewal process by making it easier for owners to prepare and submit Rent Comparability Studies used to establish contract rents at PBRA-assisted properties. The changes will apply to renewal and amend-rent packages received by Multifamily on or after May 1, 2023.
For Housing Assistance Payment (HAP) contracts renewed under Options One, Two, and Three, the “Multifamily Assisted Housing and Reform Act of 1997” (MAHRA) requires that renewal rents be based on the comparable market rents for the market area. A Rent Comparability Study (RCS) is used in determining the comparable market rents for each unit type covered under a HAP contract. Contract rents are estimated based on rents paid at comparable properties. The term “comparable properties” is defined in MAHRA as properties in the same market areas, where practicable, that (1) are similar “as to neighborhood (including risk of crime), type of location, access, street appeal, age, property size, apartment mix, physical configuration, property and unit amenities, utilities, and other relevant characteristics;” and (2) are “not receiving project-based assistance.” To prepare an RCS, an appraiser analyzes the property, identifies comparable properties, and determines the rents paid at those properties. The appraiser then makes adjustments to these rents based on differences between the comparable properties and the subject property to arrive at estimated market rents.
The Transmittal cover sheet for the updated Guidebook lists 14 substantive changes to Chapter 9 (which begins on page 62). Key changes include the following:
- Fair housing language is updated throughout the chapter to ensure consistency with current jurisprudence.
- Alternatives to an RCS are expanded. For Option 2 (current rents at or below comparable market rents) renewals and comparability adjustments, some renewals may use 90% of the Small Area Fair Market Rent (SAFMR) in lieu of an RCS. For Option 1 (Mark-up-to-Market) and 2 renewals and comparability adjustments, unassisted units in a project may be used in lieu of an RCS in some situations.
- The criteria for identifying project amenities and services and assigning a value to those features are updated to provide clear appraiser guidelines.
- For owners intending to add amenities or services as part of capital repairs, there is now a process for including those features in an as-renovated RCS submitted pursuant to Chapter 15 of the Guidebook.
- Criteria are added for identifying appropriate comparables in municipalities with universal or majority rent control.
The Section 8 Renewal Policy Guidebook is available at: https://bit.ly/3G40boO. Chapter 9 begins on page 62.
Read more about the Project-Based Section 8 Rental Assistance program on page 4-47 of NLIHC’s 2023 Advocates’ Guide.