Section 8 Rent Comparability Studies

Rent comparability studies (RCS) are essential for balancing affordability, sustainability, and compliance in Section 8 housing. 

In a new Housing Huddle, I spoke with Jonathan Nguyen, Manager at Doyle Real Estate Advisors, about why an RCS matters, how they’re conducted, why AI can’t replace them, and what trends are shaping their future in Section 8 housing.

What is a Rent Comparability Study and how is it determined?

A rent comparability study is the method used to determine the rent paid to private owners under Section 8 project-based rental assistance. While tenants pay 30% of their income, HUD covers the difference so that owners receive rent comparable to market rates. The goal is to ensure rents are sustainable—high enough to keep owners in the program, but not excessive for HUD.

The process for setting rents has evolved significantly. How has the process changed?

Before 1997, rents were adjusted using manual factors. Today, the process is market-based, ensuring that Section 8 housing remains financially viable. If owners are underpaid, they may opt out of the program; if overpaid, HUD isn’t getting value for its investment.

Significant nuance and process go into an RCS. What does the RCS process involve?

It’s rigorous. Appraisers must quickly understand the property and its market context—whether it’s rural Nebraska or urban Massachusetts. Comparable properties may be nearby or miles away, depending on the market. After analysis, the report goes through multiple layers of review by contract administrators and HUD to ensure compliance and reasonableness.

Why can’t the RCS process be automated with AI?

Multifamily housing is highly fragmented, with no uniform national data feed. Section 8 properties often exist in markets where data isn’t readily available online. In rural areas, comparables may only be found through direct outreach. Algorithms can’t replicate this nuanced, localized approach.

What trends do you see for the future of RCS?

Increased use of RCS in RAD transactions and increasing complexity. We are seeing Section 18/RAD blend PBRA projects with potential rents exceeding 120% of FMR, which HUD will only approve if supported by an RCS. While recent HUD changes have eased some review thresholds, political and regulatory shifts could lead to renewed scrutiny and audits. Expect rent studies to remain critical for preservation deals.