The HOME Rule Reversal: How HUD's Proposed Rollback Reshapes Affordable Housing Rehab and Tenant Rights

On April 30, 2026, the U.S. Department of Housing and Urban Development (HUD) issued a sweeping proposal to strip a suite of newly established tenant protections and green-building incentives from the HOME Investment Partnerships Program. The supplemental notice of proposed rulemaking effectively dismantles the core of a landmark January 2025 final rule, which had introduced 22 federal landlord-tenant requirements designed to shield low-income renters. By indefinitely delaying and proposing to revoke these provisions, HUD is signaling a major policy pivot, arguing that the regulatory burden of the 2025 rule was actively deterring private landlords and developers from participating in the federal affordable housing pipeline.[1]

To understand the stakes of the reversal, it is necessary to understand the mechanics of the HOME program itself. As the largest federal block grant dedicated exclusively to creating affordable housing for low-income households, HOME funds are distributed to states and localities to build, buy, and rehabilitate rental housing, as well as to provide direct tenant-based rental assistance (TBRA). Because a significant portion of HOME funds goes toward the physical remodeling and rehabilitation of aging properties, the rules governing how landlords must handle tenants during major repairs—and what building standards they must meet—dictate the financial viability of thousands of projects nationwide.[1][2]

The January 2025 Final Rule was celebrated by housing advocates as a generational upgrade to tenant rights. Among its most significant changes was a strict mandate regarding property rehabilitation and life-threatening unit deficiencies. Under the 2025 framework, if a property owner could not resolve a severe health or safety hazard on the same day it was identified, they were legally required to relocate the affected tenants to temporary housing at no additional cost to the renter. This provision was designed to prevent 'self-help evictions,' where landlords might use prolonged remodeling or utility shut-offs to force tenants out of their units.[1]

However, the April 2026 proposal entirely removes this unconditional relocation requirement. HUD's revised stance reverts to the pre-2025 standards, applying the mandate for immediate correction only to specific life-threatening deficiencies rather than all health and safety issues, and stripping the financial obligation for landlords to fund temporary hotel stays or alternate apartments during extensive unit repairs. For property owners, this removes a massive financial liability from the balance sheet of a rehabilitation project; for tenants, it removes a critical safety net during major structural interventions.

Beyond physical repairs, the 2026 rollback targets the legal relationship between landlords and tenants. The 2025 rule introduced a broad prohibition against 'unreasonable interference or retaliation,' which barred property owners from retaliating against tenants who organized, complained about code violations, or requested necessary remodeling. In its April 2026 notice, HUD proposed deleting this prohibition entirely, stating bluntly that the regulatory test for unreasonable interference has no basis in the underlying statute.

The rollback also targets the physical construction standards of the housing itself. The 2025 rule included a mechanism that permitted participating jurisdictions to exceed the maximum per-unit federal subsidy if a rehabilitation or new construction project met specific green building standards. This was intended to incentivize developers to install energy-efficient HVAC systems, superior insulation, and sustainable materials. The April 2026 supplemental notice proposes to revoke this green-building flexibility, prioritizing raw unit volume and lower upfront costs over long-term environmental performance and tenant utility savings.[1]

The housing industry has largely welcomed the reversal, arguing that the 2025 rule was a classic case of regulatory overreach that threatened to freeze affordable housing development. Groups like the National Apartment Association had previously warned HUD that overlaying 22 new federal mandates on top of an already complex web of state and local landlord-tenant laws would create an administrative nightmare. Industry advocates argued that the threat of federal penalties for complex retaliation claims, combined with the open-ended costs of tenant relocation during rehab, would cause private property owners to simply refuse HOME funds and exit the program entirely.

HUD's official justification echoes this industry anxiety. In the Federal Register notice, the agency stated that reverting to the pre-2025 tenant protections will better incentivize the production of affordable housing and improve private landlord participation in HOME tenant-based rental assistance. The fundamental mechanism of the HOME program relies on private-sector cooperation; if the compliance costs of accepting federal funds exceed the financial benefit, developers will pivot to market-rate projects, leaving low-income renters with fewer housing options, even if those options come with fewer federal guarantees.[2]

Tenant advocates view the reversal as a dangerous capitulation. The National Low Income Housing Coalition and other advocacy groups have mobilized against the April 2026 proposal, arguing that it strips away basic human rights for vulnerable populations. They point out that without the anti-retaliation provisions, tenants living in properties undergoing disruptive remodeling or suffering from severe deferred maintenance will be afraid to report unsafe conditions to local code enforcement, fearing eviction or lease non-renewal.

Despite the sweeping nature of the rollback, HUD is not abandoning every element of the 2025 framework. The agency is proposing to maintain the 'good cause' eviction standards, which limit the circumstances under which a landlord can terminate or refuse to renew a tenancy. Additionally, the statutory requirements for the Violence Against Women Act (VAWA) lease addendum remain intact, ensuring that survivors of domestic violence retain specific housing protections regardless of the broader regulatory rollback.

The regulatory whiplash has left local housing authorities and developers in a state of administrative limbo. HUD had already delayed the implementation of the 2025 tenant protections multiple times—first to October 2025, and then to April 2026—before finally issuing the indefinite delay and proposed revocation. Property owners are currently instructed to follow the pre-2025 HOME program lease requirements while the federal government processes the new round of public comments, which are due by June 1, 2026.

Ultimately, the HOME rule reversal highlights the inherent tension in federal housing policy: the trade-off between maximizing the sheer volume of affordable units and guaranteeing the quality and security of those units. By stripping away relocation mandates during remodeling, anti-retaliation clauses, and green building incentives, HUD is betting that a lighter regulatory touch will keep private capital flowing into the affordable housing sector. Whether that capital will produce safe, sustainable, and secure housing for the nation's most vulnerable renters remains the central question of the 2026 housing landscape.[2]