To address rising insurance and property management costs, the U.S. Department of Housing and Urban Development (HUD) updated the operating cost adjustment factors (OCAFs) for eligible multifamily housing projects under the Section 8 program.

The adjustment aims to help housing providers’ allowable operating cost adjustments better reflect rising operational expenses, specifically insurance costs, while ensuring residents have access to affordable, quality homes with stable rental rates.

“As I have traveled across the nation, I have heard from property owners who have difficulty maintaining affordable rents while keeping up with rising expenses, impeding our efforts to boost the supply of available affordable homes,” HUD acting Secretary Adrianne Todman said in a release.“Today, our new adjustment factors will help families and affordable housing providers keep up with increasing housing costs.”

The new OCAFs apply to eligible multifamily housing projects with contract anniversary dates on or after Feb. 11, 2025.

The Multifamily Assisted Housing Reform and Affordability Act of 1997 requires HUD to set OCAFs on a yearly basis to establish contract rental rates. OCAFs, which vary by state and territory, are developed with industry feedback and account for changes in market conditions, including fluctuations in energy costs, labor expenses, maintenance and repairs, and insurance premiums. According to HUD data, assisted multifamily properties have seen their insurance costs almost double over the last five years. Properties along the Gulf and Atlantic coasts saw the largest increases.

“The escalating cost of property expenses and insurance is a growing concern for families and affordable housing providers across the country,” said Julia Gordon, assistant secretary for housing and federal housing commissioner. “The new OCAFs represents a significant policy response by HUD and the Biden-Harris Administration to address these ongoing challenges for multifamily property owners, managers, and residents.”

HUD is also seeking public comment on the calculation methodology used to determine the 2025 OCAFs. Views, comments, and recommendation which may be submitted electronically through www.regulations.gov by Jan. 11, 2025.