Rent Comparability Studies

 

ARent Comparability Study (RCS) must be submitted with a Section 8 contract renewal. Because the RCS is submitted to HUD, it must meet specific requirements and guidelines. The Rent Comparability Studies are prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and the supplemental standards of HUD Chapter 9. Market rents are defined and estimated in accordance with Section 9-7 through Section 9-13 of Chapter 9, and the reports are prepared in accordance with Section 9-14 through Section 9-16 of Chapter 9.

The purpose of the RCS is to determine market rents for each unit type in the subject property. This is achieved by selecting comparable market-rate properties and making detailed adjustments to the rents based on the differences between the subject property and the comparable properties. The RCS must be prepared by or signed off by a state certified General Appraiser licensed in the state in which the subject property is located.

Selecting proper comparable properties is a critical aspect of a proper RCS. Characteristics that are considered when determining comparability include: similarity of bedroom type, unit size (square feet), building design, age, quality, amenities, and location to the subject property. Adjustments are made to the comparable property’s rent that allow for the differences; this is done by using the HUD 92273-S8 grids.

Rent Comparability Study Summary:

The Rent Comparability Study (RCS) is required to renew the HAP Contract under the Mark Up to Market Program and Option 2. In some Pre-MAHRA cases, it is also required for an AAF rent adjustment.

  • For HAP Contract Renewals, the RCS is good for five years. In years two –five, the RCS comparable figure are increased by HUD’s published Operating Cost Adjustment Factor (OCAF).
  • For those required to submit a RCS with a Pre-MAHRA AAF rent adjustment, the study is good for one year and can be updated in subsequent years, as applicable.
  • The RCS must be completed by a certified general appraiser, licensed and in good standing in the state where the property is located.

The following is a checklist of RCS requirements. Please refer to the Section 8 Guidebook, Ch. 9, Sections 9 – 14; 9-16; & 9-20 for references on the following checklist and more details:

Rent Comparability Study Checklist:

Submission timeline: completed no earlier than 180 days prior to the contract expiration.

  • Appraiser’s Transmittal Letter (in accordance to Section 9 – 16)
  • Broaden the description of the scope of work to include all requirements of the RCS
  • Description of Subject Property (including color photograph of exterior & interior)
  • Do the facts presented in the appraiser’s narratives and grid accurately depict the subject? (Address, # of units, current rent; & amenities)
  • Identification of the Subject’s Market Area
  • Description of Neighborhood
  • Narrative Describing Selection of Comparable (The guidebook suggests five comparables)
  • Locator Map for Subject and Comparables
  • Rent Comparability Grid for each primary S8 unit type
  • Narrative explaining Adjustment and Market Rent Conclusions (one set of explanations for each rent grid)
  • Comparable Property Profiles (each including a color photograph)
  • Appraiser’s Certification (Guidebook, Appendix 9-1)

 

Rent Comparability Study Alternatives:

The Section 8 Guidebook allows for two alternative methods to demonstrate how the Section 8 rents proposed at renewal compare to the rents charged for other units:

  • Comparing proposed Section 8 rents to the fair market rents (FMSs); and
  • Comparing Section 8 rents to rents charged for other units in that Section 8 project

For more information on the RCS alternatives, reference the Section 8 Guidebook, Chapter 9, Section 9-4; 9-5; and 9-6

 

Rent Comparability Study Resources:

www.hud.gov - Access the Section 8 Guidebook or Rent Comparability HUD form, 92273-S8

www.appraisalfoundation.org – Details the Uniform Standards of Professional Appraisal Practice

 

For more information, contact us.