Expiring Use
The point at which a subsidized property's affordability restrictions or rental assistance contract ends, letting the owner raise rents, convert to market rate, or sell unless the affordability is renewed.
What Is Expiring Use?
Expiring use describes the moment a subsidized rental property’s affordability obligations end. Most federal and state housing programs do not restrict a property forever. They require below-market rents for a fixed term in exchange for a subsidy: a tax credit, a below-market mortgage, or a rental assistance contract. When the term runs out, the owner may be free to raise rents to market levels, convert the building, or sell it.
Expiration can take several forms: a rental assistance contract that is not renewed, an owner prepaying a HUD-insured mortgage that carried restrictions, or a tax credit property reaching the end of its required affordability term.
How Expiring Use Works
The rules depend on the program:
| Program | What expires | Key protection |
|---|---|---|
| Project-based Section 8 | The housing assistance payments contract | At least one year’s written notice to HUD and tenants |
| HUD-insured or assisted mortgages | Restrictions tied to the mortgage, which can end at prepayment | Enhanced vouchers for eligible tenants |
| Low-income housing tax credit | The extended use period, at least 15 years after the 15-year compliance period | For three years after an early exit, existing tenants cannot be evicted without good cause or charged rents above program limits |
Federal law treats certain mortgage prepayments and the end of a project-based Section 8 contract as an “eligibility event.” Eligible tenants can then receive enhanced vouchers. These let a household stay in its unit even if the new rent is higher than a regular voucher would normally cover. The household must generally keep paying at least as much rent as it paid before the event.
For tax credit properties, an owner can ask the state agency, after year 14, to find a buyer who will keep the building affordable, at a price set by a formula. If the agency cannot present a qualified contract within one year, the restrictions can end early. States can require applicants to give up this option. Delaware’s allocation plan does.
Example
Delaware’s 2025–2026 tax credit allocation plan cites 2023 data showing 2,426 assisted units in the state with restrictions expiring within five years. The plan sets aside a preservation and rehabilitation pool of credits. Tax credit properties that need substantial rehabilitation and are within five years of the end of their extended use period can compete in it. So can other subsidized properties that are within two years of losing their affordability.
Criticisms and Limitations
Expiration does not automatically mean loss. Owners can renew a rental assistance contract, and many properties carry restrictions from more than one program. Delaware’s plan notes that not every property with expiring restrictions is at high risk. The risk is greatest where market rents are well above restricted rents. Enhanced vouchers protect current tenants, but once those households move out, the unit may no longer be affordable to the next renter.
Sources
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