<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
                     of the Securities Exchange Act of 1934
                    for the quarter ended September 30, 1996


                             Commission File Number
                                    0-17669
                                    -------


                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
                          (A Delaware Limited Partnership)
                                        

                 I.R.S. Employer Identification No.  04-2981989
                                                     ----------

                   2335 North Bank Drive, Columbus, OH  43220
      Registrant's Telephone Number, Including Area Code:  (614) 451-9929


       Securities Registered Pursuant to Section 12(b) of the Act:  None
          Securities Registered Pursuant to Section 12(g) of the Act:

                     Units of Limited Partnership Interest



Indicate by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.



                               Yes   X    No   
                                   -----     -----
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
                         A DELAWARE LIMITED PARTNERSHIP
                          September 30, 1996 FORM 10-Q

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

PART I   FINANCIAL INFORMATION                                            PAGE NO.
-----------------------------                                             -------
<S>                                                                       <C>
Item 1.     Unaudited Combined Financial Statements

      Combined Balance Sheet.................................................  3

      Combined Statement of Operations.......................................  5

      Combined Statement of Cash Flows.......................................  7

      Notes to Combined Financial Statements.................................  8

Item 2.     Management's Discussion and Analysis of
            Financial Condition and Results
            of Operations....................................................  9

PART II  OTHER INFORMATION
--------------------------

      Other Information......................................................  13
      Signatures.............................................................  14
</TABLE>

                                       2
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
  COMBINED BALANCE SHEET SEPTEMBER 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995
                                 (In Thousands)

<TABLE>
<CAPTION>
 
 
 
                                             September 30      December 31
ASSETS                                           1996              1995
----------------------------------------   --------------    -------------
<S>                                       <C>                <C>
Current Assets:
     Cash and cash equivalents             $        1,155    $       1,130
     Tenants' security deposits                       442              415
     Mortgage escrow deposits                         530              642
     Prepaid expenses and other assets              1,001              724
                                           --------------    -------------
          Total current assets                      3,128            2,911
                                           --------------    -------------
 
 
Assets limited as to use                            5,107            4,966
 
Rental property:
     Buildings and improvements (Note B)           75,681           77,599
     Furniture and equipment                        2,454            2,428
                                           --------------    -------------
                                                   78,135           80,027
       Less accumulated depreciation              (20,388)         (18,235)
                                           --------------    -------------
                                                   57,747           61,792
     Land                                           4,269            4,269
                                           --------------    -------------
                                                   62,016           66,061
                                           --------------    -------------
Prepaid land leases, less current
     maturities                                        80              101
                                           --------------    -------------
 
          Total assets                     $       70,331    $      74,039
                                           ==============    =============
 
</TABLE>



                     The accompanying notes are an integral
                   part of the combined financial statements.

                                       3
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
                       COMBINED BALANCE SHEET, CONTINUED
                    (In Thousands, except Investment Units)

<TABLE>
<CAPTION>
 
 
LIABILITIES AND PARTNERS' CAPITAL                 September 30,            December 31, 
                                                      1996                     1995
---------------------------------                -------------             ------------
                                                  (Unaudited)
<S>                                              <C>                       <C>
Liabilities not subject to
 compromise:
Current liabilities:
   Accounts payable and accrued expenses          $    1,967                $    1,791
   Rents received in advance                              38                        25
   Deposits held                                         465                       462
   Accrued interest on mortgage notes           
     payable                                             159                       438
   Current maturities of term debt                       855                     3,631
                                                  -----------               -----------
      Total current liabilities                        3,484                     6,347
                                                  -----------               -----------  

Term debt, less current maturities:
   Mortgage notes payable                             42,098                    42,678
   Promissory notes, including accrued
     interest payable                                 23,948                    23,217
                                                  -----------               -----------  

                                                       66,046                    65,895
                                                  -----------               -----------       
 
Liabilities subject to compromise (Note C):            3,609                         0
                     
 
Partners' capital:
   General Partners:
     NHT, Inc.                                            (6)                       (2)
     Other Operating General Partners                     (3)                       54
 
   Limited partners:
     Issued and outstanding 1,014,668 
       investment units                               (2,799)                    1,745
                                                  -----------               -----------  
 
                                                      (2,808)                    1,797
                                                  -----------               -----------  
 
      Total liabilities and                                                
        partners' capital                         $   70,331                $   74,039 
                                                  ===========               ===========  
</TABLE>

                     The accompanying notes are an integral
                   part of the combined financial statements.


                                       4

<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
                  COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                    (In Thousands, except per Unit Amounts)

<TABLE>
<CAPTION>
 
 
                                             1996       1995
                                          -------    --------
<S>                                      <C>        <C>   
Rental revenues:
     Rental revenues                      $ 3,029    $  2,777
     Other income                             130         166
                                          -------    --------
 
        Total revenues                      3,159       2,943
                                          -------    --------
 
Rental expenses:
     Administration                           374         397
     Operating and maintenance                851       1,068
     Management fees                          242         227
     Utilities                                408         368
     Taxes and insurance                      500         428
     Depreciation and amortization            687         779
     Impairment loss (Note B)                   0           0
                                          -------    --------
 
        Total expenses                      3,062       3,267
                                          -------    --------
 
        Income (loss) from operations          97        (324)
                                          -------    --------
 
Other revenues and (expenses):
     Interest income                           89          85
     Interest expense                        (808)       (862)
     Partnership management fees              (75)        (66)
                                          -------    --------
 
          Net loss                        $  (697)   $ (1,167)
                                          =======    ========
 
 
Net loss per limited partnership unit     $  (.69)   $  (1.15)
                                          =======    ========
 
</TABLE>



                     The accompanying notes are an integral
                   part of the combined financial statements.

                                       5
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
                  COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                    (In Thousands, except per Unit Amounts)

<TABLE>
<CAPTION>
 
 
                                              1996        1995
                                           --------    --------
<S>                                       <C>         <C>
Rental revenues:
     Rental revenues                       $  9,208    $  9,154
     Other income                               303         371
                                           --------    --------
 
        Total revenues                        9,511       9,525
                                           --------    --------
 
Rental expenses:
     Administration                           1,165       1,189
     Operating and maintenance                2,258       2,659
     Management fees                            784         644
     Utilities                                1,293       1,267
     Taxes and insurance                      1,473       1,373
     Depreciation and amortization            2,174       2,312
     Impairment loss (Note B)                 2,300           0
                                           --------    --------
 
        Total expenses                       11,447       9,444
                                           --------    --------
 
          Income (loss) from operations      (1,936)         81
                                           --------    --------
 
Other revenues and (expenses):
     Interest income                            143         158
     Interest expense                        (2,576)     (2,677)
     Partnership management fees               (225)       (198)
                                           --------    --------
 
          Net loss                         $ (4,594)   $ (2,636)
                                           ========    ========
 
 
Net loss per limited partnership unit      $  (4.53)   $  (2.60)
                                           ========    ========
 
</TABLE>



                     The accompanying notes are an integral
                   part of the combined financial statements.

                                       6
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
                  COMBINED STATEMENT OF CASH FLOWS (UNAUDITED)
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                                 (In Thousands)
<TABLE>
<CAPTION>
 
                                              1996        1995
                                           --------    --------
<S>                                       <C>         <C>
Cash flows from operating activities:
     Net loss                              $ (4,594)   $ (2,636)
     Adjustments to reconcile net loss
       to net cash provided by operating
       activities:
          Impairment loss                     2,300           0
          Depreciation and amortization       2,174       2,312
          Accrued interest on                 1,029         999
           promissory notes
     Changes in operating assets and
         liabilities:
     Increase in deposits,
          prepaids and other assets            (192)        (97)
     Increase in accounts payable and
          accrued expenses                      309         147
        (Decrease)Increase in other
         current liabilities                    117         (45)
                                           --------    --------       
Cash provided by operations                   1,143         680
                                           --------    --------
Investing activities:
     Additions to buildings, furniture
      and equipment, net                       (408)       (445)
     Withdrawals  (Deposits) to assets
        limited as to use, net                 (141)         65
                                           --------    --------
        Cash used for investing
            activities                         (549)       (380)
                                           --------    --------
Financing Activities:
     General partners cash contributions         21           0
     General partners cash distributions        (32)          0
     Additions to term debt                      55           0
     Payments of term debt                     (613)       (575)
                                           --------    --------
       Net  cash used for
          financing activities                 (569)       (575)
                                           --------    --------
     (Decrease) Increase in cash and cash
        equivalents                              25        (275)
Cash and cash equivalents beginning
  of year                                     1,130       1,206
                                           --------    --------
  Cash and cash equivalents end
    of period                              $  1,155    $    931
                                           ========    ========
 
</TABLE>


                     The accompanying notes are an integral
                   part of the combined financial statements.

                                       7
<PAGE>
 
                 NATIONAL HOUSING TRUST LIMITED PARTNERSHIP AND
             ITS SUBSTANTIALLY WHOLLY OWNED OPERATING PARTNERSHIPS
                                  (UNAUDITED)
                     NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE A--BASIS OF PRESENTATION

The accompanying combined financial statements include the accounts of National
Housing Trust Limited Partnership (Investment Partnership) and the Operating
Partnerships in which it has acquired a significant limited partnership
interest.

The information furnished reflects all adjustments (all of which were of a
normal recurring nature) which are, in the opinion of management, necessary to
fairly present the combined financial position, results of operations, and cash
flows on a consistent basis.

The accompanying unaudited combined financial statements are presented in
accordance with the requirements for Form 10-Q and consequently do not include
all disclosures normally required by generally accepted accounting principles.
Reference should be made to the Partnership's 1995 Annual Report on Form 10-K
for additional disclosures including a summary of the Partnership's accounting
policies which are not significantly different.

NOTE B--IMPAIRMENT OF LONG-LIVED ASSETS

The Investor Partnership has two Fort Worth, Texas Operating Partnerships which
had been in default of their mortgage obligations for their two properties with
mortgages held by HUD.

In November 1995, the General Partner was notified that the mortgage loans on
these two properties had been acquired from HUD by a Texas bank, which demanded
that the mortgages be brought current immediately.  On March 14, 1996 the bank
notified the General Partner that the properties would be foreclosed upon if the
related mortgages were not paid in full by April 2, 1996.  On March 26 and 28,
1996 the General Partner filed a petition for relief under Chapter 11 of the
Bankruptcy Code for each of the two Operating Partnerships.  The General Partner
does not currently anticipate that this action will have any significant impact
on the combined operations of the Investment Partnership.

In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", which requires impairment losses to be recognized for
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows are not sufficient to recover the assets'
carrying amount.  The impairment loss is measured by comparing the fair value of
the asset to its carrying amount.  The Investment Partnership has adopted
Statement 121 in the first quarter of 1996.  The fair value was based on the
purchase price of the mortgages of the two Operating Partnerships.  The new
impairment rules resulted in the recognition of an impairment loss of $2.3
million related to the two properties referred to above that was charged against
operations in first quarter 1996.

Further, if the lender is successful in its foreclosure proceedings, the
cancellation of the debt and related accrued interest would be recorded as an
extraordinary gain in the period the foreclosure is consummated.  A foreclosure
or sale of the properties would result in adverse tax consequences to the
investors of the Investment Partnership, including the recapture of a portion of
the low income tax credits allocated to these two properties as well as a
reduction of tax credits in future years.

NOTE C--LIABILITIES SUBJECT TO COMPROMISE

On March 26 and 28, 1996, the two Fort Worth, Texas Operating Partnerships (see
Note B) filed petitions for relief under Chapter 11 of the Bankruptcy Code in
the Northern District of Texas, Fort Worth Division.    

                                       8
<PAGE>
 
Under Chapter 11, certain claims (including the mortgage notes payable) against
each of the Operating Partnerships in existence prior to the filing are
automatically stayed while the Operating Partnerships continues business
operations as a debtor-in-possession. The claims have been reflected in the
accompanying balance sheet as "liabilities subject to compromise". Additional
claims may arise subsequent to the filing date resulting from various sources,
including a determination of allowed claims by the bankruptcy court. These
additional claims will be reflected as "liabilities subject to compromise" when
the likelihood of the claim is probable and the allowed claim can be reasonably
estimated.

As of the date of this report, the Operating Partnerships have submitted their
proposed Plans of Reorganization.  It is indeterminable at this time what
impact, if any, the Plans of Reorganization will have on the Operating
Partnerships.  Management believes that a Plan, once filed and approved, will
allow each of the Operating Partnerships to continue as a going concern; but
there can be no assurance that the court will approve such a plan.

Liabilities subject to compromise consist of the following as of September 30,
1996:


<TABLE>
<S>                                       <C>
Mortgage notes payable                    $2,742,000
Accrued interest mortgage notes payable      381,000
Promissory notes                             353,000
Accounts payable and accrued expenses        133,000
                                          ----------
 
                                          $3,609,000
                                          ==========
 
</TABLE>

ITEM 2    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

General
-------

In 1988, the Investment Partnership raised $20,293,000 in gross proceeds through
a public offering.  After  paying the selling, offering and organization
expenses of the offering the Investment Partnership had $17,249,000 in net
proceeds.  Of the net proceeds, $260,000 was deposited in the Investment
Partnership reserve and $16,989,000 was invested in 31 Operating Partnerships.
The 31 Operating Partnerships that were acquired own low-income housing
developments (the "Properties") that were eligible for the low-income housing
tax credit.  One of the Properties was also eligible for the historic
rehabilitation tax credit.  The 31 acquisitions occurred from October 1988
through March 1990.

Each Operating Partnership's Property qualifies for the low-income housing tax
credit (LIHTC).  The LIHTC  was created by the 1986 Tax Reform Act and is
governed by Section 42 of the Internal Revenue Code. The Investment Partnership
serves as a conduit of the Operating Partnerships' tax credits, passive losses,
portfolio income and other tax information to the holders of Units of limited
partnership interest in the Investment Partnership (the "Unit holders").  The
tax credits are allocated to the Unit holders for 10 years after a property has
been placed in service and rented up.  The tax credits were first allocated to
Unit holders in 1988 and are anticipated to continue until 2001.  In addition,
in order for a Property to qualify for the tax credits, the Property must be
utilized as a low-income property for 15 years before it can be sold.  The
General Partner anticipates the Properties to be sold between the years 2003
through 2008.

The Investment Partnership elected a special option available in 1990 to
accelerate the LIHTC for individuals who had an interest in the Investment
Partnership before October 26, 1990. Qualifying Unit holders received a tax
credit of 150% of the credit otherwise allowable for the first tax year ending
December 31, 1990. The remaining tax credit available for 1991 and subsequent
tax years is being reduced on a pro rata basis by the amount of the 1990
increased credit. Non-qualifying Unit holders will receive the original
unaccelerated tax credit for the remaining qualifying tax years of their
investment.

                                       9
<PAGE>
 
Properties
----------

Two properties located in Ft. Worth, Texas have experienced cash flow
difficulties and a decline in value (See Footnotes B and C of the Combined
Financial Statements).  During 1993, the General Partner resolved a dispute with
a former managing general partner who had not made mortgage payments on one of
the properties and failed to comply with its Operating Deficit Guarantee.  An
agreement completed in May 1993 required the former managing general partner to
make a lump sum payment of $20,000 and continue to pay an additional amount
totaling $40,000 over 36 months.  All the payments agreed to by the former
managing general partner have been received.

Due to the nonpayment of the two properties' mortgages by the former managing
general partner of the Operating Partnerships, the U.S. Department of Housing
and Urban Development (HUD) assumed the mortgages.  In September 1995, HUD
auctioned off the mortgage loans for these properties.  The General Partner bid
on the mortgage loans, but a Texas bank was the successful bidder.  Due to HUD
disclosure policies, the General Partner did not learn who bought the mortgages
until November 9, 1995.  With respect to one property, the bank demanded by
letter received November 13, 1995, that the loan be brought current by December
4, 1995 and threatened to foreclose if payment was not received by that date.
The Operating Partnerships did not have sufficient capital to bring the
mortgages current.  By letter proposal on November 22, 1995, the General Partner
commenced negotiation with the bank seeking a consensual agreement to
restructure the debt.  The bank responded with a counter proposal on February
22, 1996.  The General Partner evaluated the bank's proposal, found it
unworkable, and responded with a counter proposal on March 14, 1996.  The
General Partner received notice later that same day, by letter dated March 12,
1996, that the bank accelerated the maturity of the indebtedness under the
Notes, demanded payment in full and gave notice that if the indebtedness is not
paid in full, the bank would cause the trustee under the deeds of trust securing
the Notes to conduct a foreclosure sale on April 2, 1996.  The consequences of
foreclosure would include a recapture of a portion of the tax credits previously
received by the investors and the reduction of tax credits in future years.  A
foreclosure in 1996 could result in a reduction of an investor's return from
approximately 14% to approximately 10% in 1996 and to approximately 13% each
year thereafter through the year 2000.  The General Partner will employ all
actions to minimize the effect to the investors.  As part of its strategy, the
General Partner filed on March 26, 1996 for Trinidad Apartments Limited
Partnership and on March 28, 1996 for Springchase Apartments Limited Partnership
in the Northern District of Texas, Fort Worth Division, Case #496-41284 and Case
#496-4136 respectively, petitions for relief under Chapter 11 to enable the
Operating Partnerships to reorganize.  However, there can be no assurance as to
the outcome at this time.

In January 1994, the General Partner removed a managing general partner of
another Operating Partnership from its management responsibilities at a Property
located in Philadelphia, Pennsylvania.  The removal was due to nonpayment of the
mortgage and failure to fulfill the operating deficit guarantee.  During 1994,
the General Partner completed a debt restructure with the Pennsylvania Housing
Finance Agency (PHFA).  The restructuring required the Investment Partnership to
loan money to the Operating Partnership in order to pay off part of the first
mortgage.  PHFA provided funds to pay off the remaining balance.  In total, the
Investment Partnership has loaned $283,000 to the Operating Partnership for
operations and debt restructuring.  Due to the debt restructuring the Property
is not required to service any debt unless there is sufficient cash flow after
expenses relating to the Property.  The Property is expected to breakeven.  All
of the units are operational and available to rent to qualifying tenants.  An
agreement was entered into in December, 1995 between the City of Philadelphia,
through the Offices of  Services to the Homeless and Adults (OSHA) and the
Operating Partnership to provide project-based rental units for the shelter plus
care program.  These 14 units are to be utilized by designated homeless
individuals.

As of September 30, 1996, the average occupancy of all the Properties was 94%.

Results of Operations
---------------------

The September 30, 1996, net loss of $4,594,000 increased 74% from the September
30, 1995, net loss of $2,636,000.  The reasons for the difference are discussed
below.

                                      10
<PAGE>
 
An impairment loss of $2,300,000 was recorded in first quarter 1996 for the two
Fort Worth, Texas properties as required by FAS 121 (see Note B).

Total revenue decreased $14,000, or .2% when comparing the 9 months ended
September 30, 1996 and 1995.

Total rental expenses exclusive of depreciation and impairment loss for the 9
months ended September 30, 1996 and 1995 are $6,973,000 and $7,132,000,
respectively. The $159,000 (2.2%) decrease in rental expenses between 1996 and
1995 was due primarily to a $401,000 (15.1%) decrease in operating and
maintenance expenses, a $140,000 (21.7%) increase in management fee expense, and
a $100,000 (7.3%) increase in taxes and insurance expense.

The decrease in operating and maintenance costs results primarily from the fact
that more property improvements done this year were capitalized rather than
expensed.  The management fee increase is primarily caused by the payment of
incentive management fees for six of the properties in first quarter 1996.  The
increase in taxes and insurance expense is primarily related to a general
increase in tax and insurance costs.

To date, inflation has not had a significant impact on the Partnerships'
combined operations.  However, rent levels of the Properties are generally
limited by the requirements of the low-income housing tax credit and are subject
to strict governmental regulation. In the event of significant inflation, the
Operating Partnerships may be unable to increase rents sufficiently to
compensate for increases in expenses.  Due to the proposed changes in HUD
programs, future increases in subsidy income may be limited.  Overall, the
Properties are in good physical condition after taking into account the planned
repairs and maintenance discussed above and are producing positive cash flow,
and the managing general partners and management companies are consistently
seeking means to improve operational results.


Capital Resources and Liquidity
-------------------------------

Liquidity is defined as an Operating Partnership's ability to meet its current
and long-term financial obligations. If a Property were to lose its governmental
rent, interest subsidy or mortgage insurance, the Operating Partnership holding
such Property might be unable to fund expenses on an ongoing basis.

Liquidity shortfalls might be covered by new federal governmental subsidy
programs, by state and local agencies, by funds from the Investment Partnership
reserve, or by general partner operating deficit guarantees, although there is
no assurance that such sources would be available or, if available, sufficient
to cover any liquidity shortfall. A liquidity shortfall, for whatever reason,
might result in a sale, refinancing, or foreclosure of the property, any one of
which could have material adverse tax consequences to a Unit holder, including a
partial recapture of previously allocated low-income housing tax credits.

The programs of the U.S. Department of Housing and Urban Development (HUD) are
subject to being restructured, and the Clinton Administration and various
members of Congress have proposed a variety of program modifications.  Most
proposals call for restructuring debt on assisted housing to reflect current
market values and reducing subsidized rents accordingly.  In addition, many
proposals call for the conversion of subsidies from project-based subsidies to
tenant-based subsidies.

Public Law 104-204, effective October 1, 1996, provided that HUD generally will
renew Section 8 rental assistance contracts that expire in fiscal year 1997
(October 1, 1996 through September 30, 1997) for one year so long as the
subsidized rents on the properties do not exceed 120% of HUD-published Fair
Market Rents (FMRs) for the market areas in which the properties are located.
With respect to most properties with rents in excess of 120% of FMRs and Section
8 contracts that expire in fiscal year 1997, Congress authorized a demonstration
program to initiate restructuring of the loans and rent subsidies.  The
Operating Partnerships own 14 properties whose Section 8 contracts expire in
1997, of which two have rents in excess of 120% FMRs.  The General Partner
anticipates that HUD will renew for one year the Section 8 

                                      11
<PAGE>
 
contracts for the 12 properties with rents at or below 120% of FMRs, and
assuming agreement by the general partners of the respective Operating
Partnerships, the General Partner currently anticipates submitting proposals to
participate in the demonstration with respect to the two properties with Section
8 contracts with rents in excess of 120% of FMRs that expire in fiscal year
1997. In addition, two other properties owned by Local Partnerships have Section
8 contracts with rents in excess of 120% of FMRs that expire after fiscal year
1997.

The ramifications of these proposed changes could affect demand for and cash
flow of many of the Properties, as well as potentially create debt forgiveness
taxable income.  The General Partner is monitoring and preparing for the
potential impact of the proposed restructuring of HUD programs.  The General
Partner is unable to predict with specificity the impact of HUD program
restructuring on the Operating Partnerships, but it is possible that a
restructuring could have a material adverse effect on one or more of the
Properties, which in turn could have a material adverse effect on the Investment
Partnership.

At September 30, 1996, assets limited as to use were $5,107,000. The assets were
composed of the Investment Partnership reserve of $306,000 and Operating
Partnership reserves of $4,801,000. The Investment Partnership reserves are
available to fund repairs and maintenance as well as operational expenses, while
the reserves maintained by an Operating Partnership are typically available only
for the Property owned by such Operating Partnership. Historically, the
Investment Partnership reserve has been available to fund obligations of the
Investment Partnership, including the management fee payable by the Investment
Partnership to the General Partner. In 1995, the General Partner deferred
payment of $43,000 of its Management Fee due to a reduced level of the
Investment Partnership reserve. There can be no assurance, however, that the
Investment Partnership reserve will be sufficient to satisfy the liquidity
requirements of any given Operating Partnership in the event that the reserves
of such Operating Partnership are insufficient for this purpose. The deposits
and withdrawals from the Operating Partnership reserves are generally regulated
by a governing federal, state or local agency.

Low-income housing projects frequently generate limited cash flow and,
therefore, the potential of cash flow deficits exists. Accordingly, as discussed
above, the General Partner believes it is prudent not to deplete the Investment
Partnership reserve below a certain level unless no alternatives are, in the
judgment of the General Partner, reasonably available. The General Partner does
not anticipate that the Investment Partnership will distribute cash to Unit
holders in circumstances other than refinancing or disposition of its
investments in the Operating Partnerships.

                                      12
<PAGE>
 
PART II.  OTHER INFORMATION
---------------------------

ITEM 1.             LEGAL PROCEEDINGS

                    None

ITEM 2.             CHANGES IN SECURITIES

                    None

ITEM 3.             DEFAULTS UPON SENIOR SECURITIES

                    None

ITEM 4.             SUBMISSION OF MATTERS TO A VOTE OF
                    SECURITY HOLDERS

                    None

ITEM 5.             OTHER INFORMATION

                    None

ITEM 6.             EXHIBITS AND REPORTS ON FORM 8-K

                    None

                                      13
<PAGE>
 
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized


                          National Housing Trust Limited Partnership
                          ------------------------------------------
                                    (Registrant)



Date:  November 8, 1996                    By /s/ Charles R. Santer    
                                              -------------------------
                                           Charles R. Santer
                                           President, NHT, Inc.



Date:  November 8, 1996                    By /s/ Susan E. Basting     
                                              -------------------------
                                           Susan E. Basting
                                           Treasurer, NHT, Inc.

                                      14