Rent Stabilization - Bill 16-23: The Housing Opportunity, Mobility, and Equity Act
Renters are celebrating Montgomery County’s Ppermanent rent stabilization bill The Home Act, Bill 16-23
Marylanders want to remain in Montgomery County for job opportunities, school quality, and cultural diversity, but they suffer from endless price escalation in the private commercial market where they overwhelmingly reside. To stay housed in the County, they make daily decisions that impact their family’s nutrition, health, and welfare because they need to commit exorbitant portions of their income to housing.
Rent stabilization will change their lives.
In its current form, this bill:
- Limits rent-stabilized units to annual rent increases matching the Voluntary Rent Guidelines (VRG) or 3%, whichever is lower
- Exempts newly constructed units for 10 years
- Exempts units connected to government programs (housing in which increases are already governed by other regulations, such as MPDUs), healthcare facilities, nursing homes, owner-occupied units, units owned by religious organizations, and accessory dwelling units, amongst other types of units
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Provides landlords the opportunity to apply for rent increases above the normal annual allowance by filing a Fair Return Petition
- Fair Return is a system used in multiple jurisdictions to allow landlords reasonable increases above the standard rent increase allowance by comparing their current net operating income to a base year’s net operating income, adjusted by CPI.
Why is 3% (or a Fair Return Petition increase above 3%) a reasonable limit for rent increases?
- Many landlords already follow the VRGs established in 1983, but some do not, placing families in situations of extreme uncertainty regarding their housing costs.
- The VRG has averaged 2.25% over the last 10 years and 3% over the last 20 years. A 3% cap is in line with standards the County has held for decades and provides much-needed predictability to tenants.
- The H.O.M.E. Act allows landlords to recoup missed increases from years the VRG surpasses 3% in years the VRG falls below 3%. (Ex. If VRG is 5% this year and 1% next year, landlords can do 3% next year.)
- Prince George’s County is passing a law limiting rent increases to 3%, with the support of County Executive Angela Alsobrooks. This number is in line with local trends.
- If wage growth keeps pace with inflation, but landlords can raise rents at a significant percentage above inflation, renters are never able to get ahead. In fact, this situation exacerbates our current housing instability crisis.
