Earlier this week, Montgomery County Council had its final reading on Bill 15-23, Landlord-Tenant Relations- Anti Rent Gouging. This bill will protect Montgomery County residents from unfair rent increases.
What Bill 15-23 Would Do
Bill 15-23 introduces significant rent control measures in Montgomery County. According to the bill, the Director of the Department of Housing and Community Affairs (DHCA) would annually publish a "rent increase allowance," which combines 8 percent of the existing rent with the Consumer Price Index for All Urban Consumers (CPI-U) for the DC area. The bill strictly prohibits yearly rent increases surpassing the CPI-U plus 8 percent.
Key provisions of Expedited Bill 15-23 include:
Threshold Protections: The bill aims to establish safeguards against rent increases beyond a specified threshold for certain rental units.
Base Rental Amount: It sets a base rental amount for specific rental units, providing a foundation for future calculations.
Exemptions: Certain rental units and facilities will be exempt from the rent increase restrictions, such as units offered for rent for less than 15 years, units in licensed medical facilities, and units owned or leased by tax-exempt organizations providing temporary shelter to qualified clients under Section 501(c)(3) of the Internal Revenue Code.
Capital Improvements: Expedited Bill 15-23 permits certain rental increases to fund capital improvements, supporting property enhancements.
Landlord Reporting: Landlords will be required to submit annual reports regarding rents, promoting transparency and accountability.
Why Is It Important?
A recent report from NerdWallet found that over 35% of households in the U.S. rent homes, indicating a significant rental market. Recent data shows a 2.4% increase in rent during the first half of 2023, compared to a 3.5% rise in 2020. Various factors have contributed to the surge in rent prices, including inflation, limited housing inventory, changing workplace dynamics, and obstacles to homeownership.
In response to these challenges, Bill 15-23 is an attempt to shield Montgomery County residents from excessive rent price hikes driven by the constantly evolving economy. The bill aims to achieve this through the following measures:
Establishing Base Rental Amounts: Bill 15-23 will set specific base rental amounts for certain rental units, providing a standardized framework for rent calculations
Implementing Protections Against Rent Increases: The bill seeks to introduce safeguards against rent increases exceeding a defined threshold for certain rental units, ensuring tenants are shielded from exorbitant raises.
Permitting Rental Increases for Capital Improvements: Bill 15-23 would allow landlords to apply certain rental increases towards funding capital improvement projects, thereby enhancing the quality of rental properties.
Who Would Be Impacted?
This bill would impact a large subset of Montgomery County residents, particularly landlords, and citizens residing in rental units. The bill has sparked contrasting views among stakeholders, highlighting its potential impact on different segments of the rental housing market. Supporters of the bill argue that it offers an "equitable approach" by striking a balance between the needs of property owners and the rights of tenants. They point out that the bill's introduction comes amidst the challenging backdrop of the COVID-19 pandemic, during which operating expenses for landlords rose by 21%. Proponents believe the legislation will provide much-needed protections to tenants against exorbitant rent increases during uncertain economic times.
However, opponents of Expedited Bill 15-23 raise concerns about its potential adverse effects on small landlords. With nearly 40% of rental housing in the county being provided by these small-scale landlords, there are fears that the bill's rent control measures might disproportionately burden them financially. Critics argue that such repercussions could stifle investment in rental properties and hinder small landlords from maintaining their rental units at an optimal level. The bill's potential impacts are subject to ongoing debate, and its implications on the local rental market remain a crucial consideration for Montgomery County policymakers and residents alike.
Bill 15-23 Vote Report
On Tuesday, the Montgomery County Council voted (7-4) to enact Bill 15-23, which establishes maximum allowable rent increases to the lesser of the local annual Consumer Price Index for All Urban Consumers (CPI-U) plus three percent or six percent of the base rent.
Below is the Vote Report on how the Council voted: