Montgomery County Council Approves Rent Increase Cap

Posted By: Nicola Y. Whiteman, Esq. Headlines ,

On April 23, the Council approved expedited legislation, B18-20E - Landlord-Tenant Relations - Rent Stabilization During Emergencies, limiting allowable rent increases during the COVID-19 public health emergency to the County’s voluntary rent guideline.  The current voluntary rent guideline is set at 2.6%. Note, that the bill as introduced proposed suspending all rent increases during the COVID-19 public health emergency. Members with questions can contact Nicola Whiteman.

Department of Housing and Community Affairs (DHCA) Updates: DHCA sent an email to all licensed housing providers in the County to alert them to the immediate impacts of the Act. The agency is also updating its website with answers to frequently asked questions and additional summaries of the implications of the Act for residents and housing providers. Please visit the DHCA website for those updates.

Summary of key changes: The following is a summary of key provisions considered and included in the approved legislation. Also included are examples from DHCA on how the Act impacts different scenarios.

  • “Emergency” means the catastrophic health emergency declared by the Governor of Maryland on March 5, 2020, as amended or extended by the Governor.
  • Capping rent increases at the Voluntary Rent Guidelines: Housing providers cannot increase a resident’s rent to an amount that exceeds the voluntary rent guideline if: (1) the rent increase would take effect during the emergency; or (2) notice of the rent increase does not comply with new notice requirements and Montgomery County Code Sec. 29-54 governing notice of rent adjustments. 
  • Applicable time period: The cap on rent increases is effective during and for 90 days following the public health emergency declared by the Governor. The immediate implementation requirement of the Act causes the 2.6% limit to apply to rent increases scheduled for May 1.
  • Housing provider notice requirement.
    • During the emergency and within 90 days after the expiration of an emergency, a housing provider must not notify a resident of a rent increase if the increase would exceed the voluntary rent guideline.
    • If a housing provider provided notice of a rent increase to a resident prior to the emergency and the increase would exceed the voluntary rent guideline, it must inform the resident in writing:
      • to disregard the notice; or
      • that the increase is amended to be less than or equal to the voluntary rent guideline.
  • DHCA notice requirement: DHCA must post on its website information about the new requirements, including the date that the emergency expires, and the date that is 90 days after the expiration of the emergency.  See DHCA - COVID-19 Renter Relief Act.
  • Applicable to existing tenants: The law defines “tenant” to mean an existing tenant only and excludes prospective tenants.
  • Deleted reference to “rent stabilization” from bill title. In response to AOBA concerns, the Council renamed the law, the “COVID-19 Renter Relief Act.” 
  • Sunset: The law will sunset on the 181st day after the expiration of the public health emergency.
    • Friedson/Glass: AOBA supported their amendment to allow rent increases up to the voluntary rent guideline during and for 30 days following the emergency. The approved language, per a Hucker amendment, adds an additional 60 days.
    • Jawando/suspending late fees:  Most of the Council voted against this amendment citing concerns that, if approved, this could incentivize nonpayment of rent.
    • Friedson/Hardship exception: In addition to allowing rent increases up to the voluntary rent guidelines, the Friedson amendment proposed allowing increases up to 5%. Amendment: (1) The  DHCA Director may grant an exemption ---- to a landlord if the Director finds that: (A) the landlord demonstrates financial hardship; (B) the rent increase proposed by the landlord reasonably reflects increased costs to the landlord; and (C) the rent increase proposed by the landlord does not exceed 5% above the current rent. (2) If a landlord has an agreement with the County to follow Voluntary Rent Guidelines under Section 29-53, the Director may permit the landlord to issue a one-time fee that reasonably reflects increased operational costs to the landlord.

Rental assistance funding/Companion Legislation: AOBA successfully advocated for local funding of rental assistance programs. On April 21, lead sponsor Councilmember Evan Glass and his colleagues introduced legislation to approve a special $2 million appropriation to the FY20 Operating Budget to provide a short-term rental subsidy program to low and moderate-income households and more. NEXT STEPS: The proposed $2 million appropriation will be the subject of an April 28 public hearing.