The COLA increase and HUD guidance for 2026 are key topics for property owners and managers this fall. As inflation continues to impact residents, HUD has issued new direction on how to handle cost-of-living adjustments (COLA) for Social Security and SSI benefits during annual recertifications.
Understanding the 2026 COLA Increase
Every October, the Social Security Administration (SSA) announces a cost-of-living adjustment (COLA) to help offset inflation. These changes affect residents’ income and, therefore, their rent calculations. HUD requires owners and public housing authorities to incorporate the COLA as soon as the SSA releases the official figures.
According to Housing Notice 2023-10, paragraph B3 on page 35, owners and PHAs are required to factor in the COLA when determining annual income. This rule takes effect the day after the SSA announces the increase.
HUD’s Requirements Under HOTMA
This change aligns with new requirements under the Housing Opportunity Through Modernization Act (HOTMA). HUD expects all multifamily owners and PHAs to apply the 2026 COLA for annual recertifications effective January 1, 2026, or later.
If your 2026 certifications are still pending, make sure the new COLA is applied. HUD’s intention is to simplify how income adjustments are handled and reduce the need for interim recertifications (IRs).
How to Apply the COLA Correctly
Once the COLA amount is released, you can implement it immediately in your certification process. HUD guidance allows you to:
- Use the new COLA figures for January through April 2026 recertifications.
- Apply the COLA as soon as your software system supports the update.
- Add a note to the file stating you’re using HUD’s 2023 guidance (Notice 2023-10).
If your property management software doesn’t yet allow COLA implementation, contact your software vendor. Many vendors have already updated their systems to comply with HOTMA’s rules.
Review the Updated HOTMA Forms
HUD has also released updated HOTMA forms for public review. Owners and agents should review these carefully. If you notice any issues or confusing changes, HUD encourages you to submit comments during the open feedback period.
This is your opportunity to influence the forms and make them more effective for real-world use.
Prepare for the Changes
The 2026 COLA increase is expected soon, but timing may be affected by the current government shutdown. Don’t be discouraged if the figures arrive late in October. Stay prepared so you can apply the new rates as soon as they’re released.
HUD’s new flexibility aims to make the recertification process smoother and ensure residents’ benefits are counted accurately.
COLA Increase and HUD Guidance
- COLA updates will apply starting January 2026.
- Follow HUD Notice 2023-10 for documentation.
- Check your software readiness for COLA integration.
- Review and comment on the HOTMA forms before final adoption.
- Stay alert for the SSA’s COLA announcement this October.
By planning now, you can ensure a seamless transition to the new COLA requirements and maintain compliance with HUD’s updated guidance.
