New RAD guidance increases the rent boosts PRAC properties may be eligible for (see HUD Notice H-2025-04 (Notice), “Capital Advance Preservation Rent Increase for 202 Project Rental Assistance Contracts (PRACs),” published on September 19, 2025). These rent boosts were first introduced in 2023 in Supplemental Notice 4B (HUD Notice H-2023-08/PIH-2023-19). This Notice increases the amount of the rent boosts and provides new eligibility for a rent increase for small projects. The changes in the Notice are designed to support greater financial stability and encourage more RAD for PRAC conversions.
Eligible RAD for PRAC Preservation Rent Increases
HUD now allows four options for Preservation Rent Increases:
- $300 PUPM for substantial rehabilitation. Owners can request a boost of up to $300 per unit per month for RAD for PRAC conversions that will undertake new construction or substantial rehabilitation. To qualify, construction or rehabilitation hard costs, overhead, profit, and payment and performance bonds must be more than 60% of the annual HUD-determined “Housing Construction Costs” for the project’s market area. Prior guidance allowed a rent boost of up to $250 per unit per month for substantial rehabilitation.
- $200 PUPM for moderate rehabilitation. This guidance also allows up to $200 per unit per month boosts for RAD for PRAC conversions undertaking moderate rehabilitation that falls short of the substantial rehabilitation threshold. To qualify, construction costs must be greater than 30% of the Housing Construction Costs for the market area. (Construction costs greater than 60% would be considered a substantial rehabilitation and are eligible for the larger increase of up to $300.) Prior guidance allowed a rent boost of up to $100 per unit per month for moderate rehabilitation.
- $50 PUPM for broadband. RAD for PRAC projects can also receive a boost of up to $50 per month for transactions that include the installation or upgrade of broadband infrastructure. This is a new type of Preservation Rent Increase introduced by this Notice. Broadband infrastructure, as defined by HUD and the Federal Communications Commission, is 25 megabits per second download and three megabits per second upload. This increase can be in addition to the above rent increases.
- Alternative 120% FMR rent level for small projects. HUD also offers an alternative to the above-mentioned increases for small projects of twenty units or fewer. Small projects can receive an increase of PRAC rents up to 120% of FMR instead of being limited to the PRAC rents as established by a budget-based rent increase request prior to the RAD for PRAC conversion.
Funds will be reserved on a first-come, first-served basis based on the time of the request submitted through HUD’s RAD Resource Desk. The final approved amount of a Preservation Rent Increase for a RAD for PRAC project will be issued in HUD’s RAD conditional approval. Preservation Rent Increases are only available for RAD for PRAC conversions proposing to convert the PRAC contract to a project-based rental assistance (PBRA) contract through RAD.
Additional eligibility requirements for Preservation Rent Increases
In addition to the items mentioned above, the project owner must represent to HUD that the PRAC will be converted to PBRA and the RAD conversion will include new third-party debt to finance the scope of work. Additionally, the scope of work must show that the project’s physical needs will be addressed by the RAD conversion, specifically with designs appropriate for elderly residents to age-in-place and/or will improve digital infrastructure for communities lacking access to high-speed internet.