24 C.F.R. § 888.203
§ 888.203 Use of contract rent automatic annual adjustment factors. (24 CFR Part 888)
Operative Text
(a) To compute an adjustment to a Contract Rent, find the schedule of Automatic Annual Adjustment Factors for the appropriate Census Region or Standard Metropolitan Statistical Area— (1) If the Contract Rent includes all utilities, use the factor shown on the basic schedule for the rent bracket within which the particular Contract Rent falls and for the applicable size of unit (by number of bedrooms). (2) If the Contract Rent does not include all utilities but does include the highest cost utility, use the appropriate factor shown on the basic schedule. (3) If the Contract Rent does not include any utilities or includes some utilities but not the highest cost utility, use the Annual Adjustment Factor for Contract Rent (Excluding Utilities). (b) The adjusted monthly amount of the Contract Rent of a dwelling unit shall be determined by multiplying the Contract Rent in effect on the anniversary date of the contract by the applicable Automatic Annual Adjustment Factor (see paragraph (a) of this section) and rounding the result as follows: (1) If the result contains a fractional dollar amount ranging from $0.01 to $0.49, round to the next lower whole dollar amount; (2) If the result contains a fractional dollar amount ranging from $0.50 to $0.99, round to the next higher whole dollar amount.
Under 24 CFR Part 888 § 888.203, contract rents in certain federal housing assistance programs are adjusted annually using Automatic Annual Adjustment Factors published by HUD for specific geographic areas. The correct factor to apply depends on whether the contract rent covers all utilities, only the highest-cost utility, or no utilities at all. Once the appropriate factor is identified and multiplied against the existing contract rent, the resulting figure is rounded to the nearest whole dollar using a standard half-dollar threshold.
Plain English — not legal advice.
Property owners participating in programs governed by 24 CFR Part 888 § 888.203 generally identify the correct Census Region or Standard Metropolitan Statistical Area schedule, then select the adjustment factor that matches their unit's utility-inclusion arrangement and bedroom size. Compliant operators apply the factor to the contract rent in effect on the contract's anniversary date and round the result according to the provision's specified rounding rules. Maintaining clear records of which utilities are included in the contract rent helps ensure the correct factor is consistently selected at each annual adjustment.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under 24 CFR Part 888 § 888.203, tenants in covered federal housing programs have an interest in ensuring that any annual contract rent adjustment uses the factor that accurately reflects the utility arrangement for their unit. If a tenant believes the wrong adjustment factor was applied — for example, a factor for a utility-inclusive rent was used when utilities are not included — that concern can generally be raised with the local HUD field office or a tenant-rights organization familiar with federal housing assistance programs. Reviewing the contract and any adjustment notices can help a tenant identify whether the geographic area, unit size, and utility coverage were correctly accounted for.
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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