In November 2021, HUD issued an updated memo clarifying the valuation of non-shelter services during Rent Comparability Studies for Section 8 properties. The memo explains HUD’s interpretation of existing policies related to an appraiser’s determination of market comparable rents for a Section 8-assisted property. 

RCS are conducted at five-year intervals at certain HUD-assisted Multifamily Housing properties. In valuing services at properties during an RCS, an appraiser determines how the services are offered and funded, compares similar properties, and assigns a market value to the services. These are capped at a maximum of $50 per unit or 5% of rent.

Specifically, the memo discusses the following components of an appraiser’s rent comparability analysis related to non-shelter services valuation during a Rent Comparability Study (RCS):

• Identifying which services at a property are to be included in the valuation;
• Identifying the funding source for a property’s services;
• Identifying properties that offer comparable services;
• Assigning market value to each service at the property; and
• Documenting service valuation following each rent grid.

The clarification will impact the value of services that are included in rent setting. LeadingAge had previously argued for greater flexibility to incorporate accurate reflections of services costs into rent setting for HUD properties, and will continue to advocate for changes to the renewal guide policy and interpretation.

A deeper LeadingAge analysis on the impacts of service-enriched affordable housing options for low-income older adults is forthcoming. The memo is available here.