2022 | Government

Elrich, Jawando propose legislation to limit annual residential rent increases to 4.4%

Proposed bill would extend components of law that expired May 15

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Montgomery County Executive Marc Elrich and County Council Member Will Jawando proposed legislation Wednesday that would limit annual rental increases to 4.4% for residential landlords countywide. 

Federal Bureau of Labor statistics and market factors led Montgomery County to lower its voluntary rent guidelines to 0.4% in January, and prior legislation spearheaded by Jawando made that voluntary figure a mandatory cap.

The law expired May 15. Elrich announced in a county executive forum last month that he planned on introducing legislation to cap annual rental increases at 3%. The proposed bill setting the 4.4% percent cap will likely be introduced in a County Council meeting in the coming weeks, Jawando said. 

During a news briefing with reporters on Wednesday, Elrich said the 4.4% mandatory cap was tied to the same Bureau of Labor Statistics data and market factors that led to the earlier 0.4% cap.

“That number is higher than I would like, but it does reflect the way we would normally guide things,” Elrich said.

The rent increase limit “applies to all County licensed residential rentals, including rental units in multifamily buildings, houses, townhouses, individual condominium units, and accessory dwelling units,” according to the county. 

Under current county law, landlords must give renters 90 days’ notice when they intend to increase the rent above the voluntary rent guidelines. 

According to the law which expired in May, if landlords attempted to raise rent above the voluntary guidelines, they faced a $500 fine, and then $750 fine for any repeat offenses after that.

Jawando told reporters that he’s heard from renters in the county that landlords have increased rents by as much as 15% to 20%. For a tenant paying a monthly rent of $1,000, for example, a 20% increase would raise the rent to $1,200, which is a considerable increase, Jawando said.

Elrich and Jawando both said they hope the council passes the legislation before 90 days pass after May 15, the expiration of the previous law. That will allow tenants to have a better chance at staying in their homes.

During public hearings late last year for Jawando’s bill to extend the mandatory limits on rent, representatives of local landlords and property owners said the mandatory cap would mean that they would need to cut costs to make up for the loss of income — which ultimately would include cutting staff.

Alex Rossello is director of policy communications of the Apartment & Office Building Association of Metropolitan Washington (AOBA), whose members own and manage over 60,000 of the county’s rental units.

Rossello said in an interview Thursday that AOBA officials are discussing the proposed bill with Elrich and Jawando. He didn’t deny that some local landlords might be increasing rents by 15% to 20%, but said they don’t represent the overall picture of what’s happening in the county.

For example, one AOBA member with about 3,500 units has increasing rates by an average of about 3.4% for lease renewals since the county law expired in May, he said. Another member with roughly 4,000 units set a 3.22% increase for lease renewals.

“There’s a lot of inflationary pressure right now and that’s been putting pressure on operational costs … but for some of our largest companies, that’s not translating to skyrocketing rates for lease renewals,” Rossello said.

Elrich said Wednesday that it’s uncertain whether landlords will continue to face the impacts of inflation and increased costs, which means that if they are allowed to raise rents above the proposed cap, they could end up with more revenue and lower costs than anticipated in the coming years.

And, if given a choice, he said, he would rather help families struggling to pay rent, noting the potential impact of a higher rent increase than what the proposed legislation would allow.

“That’s bags of groceries off the table, that’s clothes the kids don’t get, that’s access to medical care the kids don’t get,” Elrich told reporters. “There’s a huge social penalty that gets paid by increasing the poverty that people live in. So if I have to pick a side, I want to do the least damage to the most people we can possibly do.”

Jawando added that he believes the proposed cap of 4.4% is reasonable.

A large majority of landlords are working with their tenants and keeping increases low, Jawando said. But in a county of over 1 million people and where over 30% of residents are renters, rent gouging can be an issue even if it’s happening to just 5% to 10% of residents, he said.

In addition to pushing for passage of the proposed bill, Elrich and Jawando agreed that the county needs to develop a plan for long-term rent stabilization. Elrich said he would like to propose a targeted law that focuses on older buildings that are most vulnerable to redevelopment and rent increases.

“I get in these discussions with people. And they’ll acknowledge that this is a problem,” Elrich said. “But they don’t like the solution — but actually the solution works. And if you ask somebody, ‘Well, how else could you address this?’ You get crickets, and that’s the problem. There is no way to do this without making some tough choices.”

Jawando agreed. He said he had prior legislation that proposed rent stabilization for units near transit. According to the bill, the protections would have applied within a mile of stations for MARC, Metro or the under-construction light-rail Purple Line, and within a half-mile of bus rapid transit stations. But it expired earlier this month, without reaching a vote.

He said he’s open to applying protections to other areas of the county, but county officials need to have a broader discussion on rent stabilization.

“You can’t do this with just one thing,” Jawando said. “We’re not going to be able to build our way out of it. And I’m a proponent of building more housing and different types of housing. But you have to also have a stabilization protection for renters and an anti-rent gouging component to it.”

Steve Bohnel can be reached at steve.bohnel@bethesdamagazine.com