In 2024, the affordable housing industry will undergo the most significant period of change we’ve seen within the last decade. The Housing Opportunity Through Modernization Act (HOTMA), effective January 1, 2024, will kick off sweeping changes to how affordable housing programs are operated, including Multifamily Housing Programs and Public Housing.

Signed into law by the Department of Housing and Urban Development (HUD), HOTMA aims to reduce the burden of compliance paperwork and overall efforts for affordable housing property managers, while aligning HUD rules with changing economic conditions. A recent HOTMA Supplemental Notice from HUD provides implementation guidance and gives property managers an additional year to become fully compliant — by January 1st, 2025.

This will require quite an adjustment for affordable housing property managers and owners, who will need to implement the rules while navigating operations-specific challenges and bringing their teams up to speed. They will need to work proactively and build implementation into 2024 planning from the outset. But if done correctly, this period represents a major opportunity to streamline operations and increase efficiency for the long term.

Here’s what we’ve learned from HUD, our customers and affordable housing experts to help property managers get ahead of these changes and reap the operational benefits.

Streamlining Affordable Housing to Benefit Both Residents and Property Managers

One of HOTMA’s biggest goals is to streamline the often complex administration of affordable housing, ultimately easing the burden on property managers and simplifying the (re)certification process for residents. By reevaluating certification criteria and adjusting eligibility determination, HOTMA also aims to ensure that those most in need of affordable housing are able to access it.

HOTMA impacts both the Low Income Housing Tax Credit (LIHTC) and Project Based Section 8. HOTMA implementation for LIHTC properties is dependent on state-specific housing finance authorities’ (HFA) final implementation of HOTMA. LIHTC property managers will have to follow the implementation schedule set by their HFA. Check in with your state agency to stay up to date on how those programs will be impacted.

While the changes may seem daunting at first, the long-term impact will benefit both residents and property managers. For example, better alignment between affordable housing programs will enable property managers to more effectively train their staff and more efficiently operate vast portfolios. By reducing the burden of paperwork, managers will have more time to focus on the resident experience.

Three Crucial Steps for Implementing HOTMA

How can property managers realize these benefits and implement the new rules? Here are a few important steps to keep in mind as you start to navigate HOTMA:

1. Make HOTMA implementation a part of 2024 planning

This should not be a “let’s start thinking about this in Q4 of 2024” initiative. Affordable housing property managers need to begin implementing HOTMA in 2024 and must be fully compliant by January 1, 2025.

One important early step affordable housing property managers can take is seeking out training. Owners, property managers and staff should all receive training around HOTMA’s new regulations and best practices for implementation. HUD will be providing webinars and live Q&As for both residents and property managers, which can be found under the “Implementation Guidance” section of HUD’s HOTMA page once available.

There are also aspects of implementation that must be completed in early 2024. For example, owners must set certain policies into their Tenant Selection Plans (TSPs) and EIV policies and procedures by March 31, 2024.

2. Work With Your Software Vendor To Stay Up to Date With the Changes

HOTMA compliance will require software changes, so it’s important to work closely with your software vendor on efficient and effective implementation. A trusted technology partner can help you keep up to date with changes and make implementation as easy as possible. Vendors are waiting on HUD’s release of TRACS 203A to complete their technical builds, so it’s important to stay in contact with your software vendor for more specifics on their timeline. Familiarize yourself with the timeline and process beforehand so you’ll be ready to implement the software changes once they’re available.

3. Proactively Communicate With Residents

Providing resident education around these changes early on can go a long way in easing any potential anxiety or frustrations. Many residents may not be aware of HOTMA, and may be learning about these important changes for the first time from property managers. Make sure residents understand the benefits of the changes, that calculations may look different going forward, and that ultimately the recertification process will become easier on their end. Property managers should also take steps to make this information as digestible and easy to understand as possible.

A Trusted Partner Can Ease the Burden of Implementation

Working with knowledgeable and trusted partners can make this significant period of change more seamless and effective. At AppFolio, we are staying extremely close to HUD guidance, speaking with numerous industry experts on the topic, and reaching out to HFAs to gather information. We’re also partnering very closely with external compliance consultants on the HOTMA changes and working with customers to make implementation as efficient and user-friendly as possible.

We’re deeply committed to expanding access to affordable housing through our support of the National Multifamily Housing Council’s (NMHC) Foundations for Rental Housing and our membership in The National Affordable Housing Management Association (NAHMA). Our goal is to support affordable housing property managers and residents through all the complexities of this process.

Amid all of the changes brought on by HOTMA, there is also a valuable opportunity for affordable housing property managers to rethink processes with efficiency and resident experience in mind. We see this as a forcing function to put positive changes into place that will benefit the wider affordable housing ecosystem in the long term.

To learn more about how AppFolio Property Manager can help streamline affordable housing management, visit appfolio.com/markets/affordable-housing.