Budget Based Rent Adjustments

Budget-Based Rent Adjustment requests are based on the past and proposed annual expenses of the property. These requests are ideal when rents are not sufficient to cover expenses. The primary guidance on these adjustments can be found in Chapter 7 of HUD Handbook 4350.1. User-friendly copies of the forms can be found here.

Eligibility Criteria:

Eligibility is determined by the Rent Adjustment section your HAP Contract.

• If the Rent Adjustment section of your contract refers to the Regulatory Agreement, you are required to submit a Budget-Based Rent Adjustment.
• If you renewed under Option 2 or Option 4 and have a Basic Renewal Contract, you are eligible to submit a Budget-Based Rent Adjustment request.
• If you renewed under Option 5, eligibility is determined by the Plan of Action, which is an attachment to your HAP Contract.
• If you renewed under Option 1 or Option 3, you are not eligible to submit Budget-Based Rent Adjustment request during the term of the contract.

Submission Requirements:

A complete list of submission requirements can be found on our Budget-Based Owner Checklist. Requirements vary by property type and are detailed in Chapter 7 of the 4350.1. If you are renewing your contract or submitting a rent adjustment for a contract effective after October 1997, additional guidance for submitting budget-based rent adustments can be found in the Section 8 Renewal Policy. You should refer to the Chapter on the contract renewal option used to to renew your contract.

If you are in a renewal year and you choose to renew your HAP Contract under Option 4, you will only need to submit a Budget Worksheet. The other submission requirements in Chapter 7 are not applicable to Option 4 renewals. Since SHCC will perform the Lesser Of Test (The Lesser Of Test means that SHCC will process the Budget-Based adjustment and the OCAF adjustment. The resulting rents will be the lesser of the two), the other documents required in the 4350.1 will not be required. However, if you propose substantial increases (over 5% or $500) over previous spending, you should also include explanations and/or supporting documentation.