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.
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