Earlier this year, the Prince George’s County Council enacted the Rent Stabilization Act of 2023. This law prohibits landlords from raising in-place tenant rents more than 3% per annum. Some exclusions exist for certain affordable housing units receiving subsidies (see FAQs).
Following suit, Montgomery County passed similar legislation, limiting allowable annual rent increases to the lesser of a) the local consumer price index for all urban consumers plus 3% or b) 6%. Multifamily housing constructed after January 1, 2000 is excluded for 23 years. There are several other exemptions from rental increase restrictions, including for individual landlords who rent two or fewer units and for the rental of units in religious facilities, licensed assisted-living facilities, and nursing homes. See more details here.
Although temporary, both counties are currently looking to prolong or extend these rent control restrictions beyond the original term. Without question, these rent control measures have already and will continue to severely impact landlords, arguably diminishing affected sites’ market values. Multifamily owner operators are now restricted to rental increase thresholds, contrary to market parameters such as inflation, making these limitations punitive. Additionally, often conflicting underwriting assumptions were made during acquisition of these impacted assets. As a result of these restrictive measures, landlords may now need to defer essential maintenance costs and other capital expenditure necessities to account for this rent loss.
It is critical to closely scrutinize property tax assessments that often fail to account for this value loss. The subject matter experts at Ryan are available to assist you in managing your property tax liabilities. We urge you to reach out to one of the team members listed below to discuss how we can help.
TECHNICAL INFORMATION CONTACTS:
Cutchin Powell
Principal
Ryan
202.470.3094
cutchin.powell@ryan.com
Shawn Eskow
Principal
Ryan
571.481.9427
shawn.eskow@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.