24 C.F.R. § 886.310
§ 886.310 Initial contract rents. (24 CFR Part 886)
Operative Text
HUD will establish contract rents at levels that, together with other resources available to the purchasers, provide sufficient amounts for the necessary costs of rehabilitating and operating the multifamily housing project and do not exceed 120 percent of the most recently published Section 8 Fair Market Rents for Existing Housing (24 CFR part 888, subpart A).
Under 24 CFR Part 886 § 886.310, HUD sets the initial contract rents for multifamily housing projects at a level designed to cover rehabilitation and operating costs when combined with other available funding, while keeping those rents within a defined ceiling tied to published Section 8 Fair Market Rents. Specifically, the ceiling is set at 120 percent of the most recently published Fair Market Rents for Existing Housing. This provision balances financial feasibility for project owners against a cap intended to prevent rents from exceeding a federally benchmarked threshold.
Plain English — not legal advice.
Operators and purchasers of multifamily projects subject to 24 CFR Part 886 § 886.310 should understand that HUD determines the starting contract rent, taking into account both the project's rehabilitation needs and its ongoing operating costs alongside any other available resources. A compliant operator generally documents all anticipated rehabilitation and operating expenses to support the rent-setting process, since HUD uses that information to arrive at an approvable figure. Because the resulting rent cannot exceed 120 percent of the applicable Section 8 Fair Market Rents, owners typically review current Fair Market Rent publications early in project planning to gauge the upper boundary of what HUD may approve.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under 24 CFR Part 886 § 886.310, tenants living in projects covered by this program benefit from a federally imposed ceiling on contract rents, meaning HUD's approved rent cannot exceed a set percentage of published Fair Market Rents for the area. If a tenant believes the contract rent in their building was set above the allowable limit, they may raise that concern as a potential violation with HUD's local field office or a regional housing authority. Tenant-rights organizations familiar with Section 8 project-based programs can help residents understand how § 886.310 applies and what complaint or review processes may be available.
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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