24 C.F.R. § 886.110
§ 886.110 Contract rents. (24 CFR Part 886)
Operative Text
(a) The sum of the Contract Rents plus an Allowance for Utilities and Other Services shall not exceed the published Section 8 Fair Market Rents for Existing Housing, except that they may be exceeded by: (1) Up to 10 percent if the Field Office Director determines that special circumstances warrant such higher rents, or (2) By up to 20 percent where the Regional Administrator determines that special circumstances warrant such higher rents, and in either case, such higher rents meet the test of reasonableness in paragraph (c) of this section. (b) In the case of any project completed not more than six years prior to the application for assistance under that part, or in the case of units converted to Section 8 which were previously assisted under Section 101 of the Housing and Urban Development Act of 1965 or Section 236(f)(2) of the National Housing Act, contract rents plus any allowance for utilities and other services may be as high as 75 percent of the published Section 8 Fair Market Rents for New Construction, which limitation may be increased: (1) By up to 10 percent if the Field Office Director determines that special circumstances warrant such higher rents, or (2) by up to 20 percent where the Regional Administrator determines that special circumstances warrant such higher rents, and in either case, such higher rents meet the test of reasonableness contained in paragraph (c) of this section. The project shall be converted using the current HUD approved rent level established pursuant to 24 CFR 207.19(e)(2)(i). (c) In any case, HUD shall determine and so certify that the Contract Rents for the project do not exceed rents which are reasonable for the location, quality, amenities, facilities, and management and maintenance services in relation to the rents paid for comparable units in the private unassisted market, nor shall the Contract Rents exceed the rents charged by the Owner to unassisted Families for comparable units. HUD shall maintain for three years all certifications and relevant documentation under this paragraph (c).
Under 24 CFR Part 886 § 886.110, the total of contract rents plus any utility allowance for Section 8 housing assistance projects is generally capped at the published Section 8 Fair Market Rents for Existing Housing, though HUD field or regional officials may approve exceptions of up to 10 or 20 percent respectively when special circumstances exist. For recently completed or converted projects meeting certain criteria, a separate ceiling tied to Fair Market Rents for New Construction applies instead. In all cases, HUD must certify that the contract rents are reasonable compared to rents charged for similar unassisted units in the same market, and that they do not exceed what the owner charges unassisted tenants for comparable units.
Plain English — not legal advice.
Operators participating in programs governed by 24 CFR Part 886 § 886.110 generally ensure that the combined total of contract rents and utility allowances stays within the applicable Fair Market Rent ceiling before executing or renewing assistance contracts. Compliant operators document the basis for any exception request—whether a 10-percent Field Office Director approval or a 20-percent Regional Administrator approval—and retain records supporting the reasonableness determination. Owners also take care that rents charged under the program do not exceed what they charge unassisted tenants for comparable units in the same property, since HUD is required to certify and document this comparison for at least three years.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Tenants living in housing covered by 24 CFR Part 886 § 886.110 have an interest in knowing that the contract rents for their units are subject to HUD-certified reasonableness standards, meaning the rents must be comparable to those charged for similar unassisted units in the local market. If a tenant believes the rents in their project exceed applicable Fair Market Rent limits or that the required reasonableness certification was not properly made, they may raise this concern with their local HUD Field Office or a tenant-rights organization familiar with Section 8 project-based programs. Tenants can also request information about HUD's certifications and supporting documentation, which § 886.110(c) requires to be retained for at least three years.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 4, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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