The purpose of being a landlord is to earn income. And, in order to do this successfully, you have to charge enough rent. In this article, we'll explore the rent increase laws in Washington, DC, and offer tips for landlords to navigate this complex process.
Note: The following offers general information for DC property owners, but it does not constitute legal advice. Please contact an attorney or the DC Department of Consumer and Regulatory Affairs if you need advice on your specific situation.
The terms of the lease typically govern rental increases in DC, and whether the unit is rent-controlled. Rentals are subject to rent control unless they are registered as exempt. Notable exemptions to rent control include properties built after 1975 and those owned by a person (not an LLC or trust) with four or fewer rental properties. Landlords cannot raise the rent during the lease term if there is an agreement – usually a written lease – between the landlord and tenant with a specified rental amount.
As long as they follow the terms of the lease, landlords who rent units that are exempt from rent control may typically raise the rent by any reasonable amount, and at any time, as long as such rent increases are not done for any illegal purposes, like seeking vengeance on a tenant for taking lawful action against the landlord or trying to vacate a tenant to sell. Landlords must give a 30-day written notice. While the laws may not limit the increase’s size, landlords should carefully consider the market. Increasing the rent too much is a sure way to lose tenants, and vacant apartments don’t earn any rental income. Something to note for DC owners, if your tenant is month to month, you must provide a 45-day written notice. Another example, if you require 60 day notice for tenants to provide termination, you must provide rental increases 75 days prior to lease end date.
Before deciding on a rent increase, research the local market to ensure the new rent is competitive and fair. Look for similar properties in the area and compare their rental prices. If the new rent is significantly higher than comparable units, you may face vacancies and difficulty finding new tenants. On the other hand, if the rent is too low, you may be losing out on potential income. Striking the right balance is essential to maintaining a steady stream of rental income.
If the unit is subject to rent control, landlords may raise the rent if the following criteria are met:
Landlords may only raise the rent by the amount specified by the DCRA each year, which is based on the Consumer Price Index. Increases in rent-controlled apartments cannot exceed 10 percent. For tenants who are elderly or disabled, allowable increases are more limited and cannot exceed 5 percent.
Landlords can refer to the district’s rent control fact sheet for further detail on allowable rent increases.
If a unit becomes vacant, the law does allow property owners to raise the rent on rent-controlled units, even if the last increase was less than one year ago. The owner may then increase the rent by 10 percent or up to 30 percent to match the rent of a comparable unit. But then no other increases are allowed for a full year.
There are a few other circumstances, such as hardship or renovations to the unit, where owners of rent-controlled units may be allowed to raise the rent or raise it by more than the standard allowable percentage. Landlords who are not making at least a 12 percent rate of return on their rental unit can send in a request to the city’s rent administrator to increase the rent by more than the approved amount. It requires filing a “Hardship Petition,” which outlines equity in the property, expenses, rental collections, and other key information. Information on other allowable increases can be found in the district’s rent control fact sheet.
When making renovations to a rent-controlled unit, landlords should be aware that certain improvements may allow for a temporary rent increase. This is known as a "capital improvement petition" and can be filed with the rent administrator. If approved, the landlord can raise the rent to cover the costs of the improvements, but the increase is usually limited and temporary.
When increasing the rent, it's important to maintain a positive relationship with your tenants. Communicate the rent increase in a professional and clear manner. Be prepared to explain the reasons behind the increase, whether it's due to market changes, property improvements, or increased operating costs. Providing context can help tenants understand the necessity of the increase and may reduce any potential backlash.
If a tenant approaches you with concerns about the rent increase, be open to negotiation. While you're not obligated to accommodate their requests, it's important to consider the value of a long-term, reliable tenant. If lowering the rent increase slightly helps retain a good tenant, it may be worth the compromise. This can also eliminate any vacancies and you avoid turnover costs.
Did you know in DC that you are required to provide a month to month option for the tenant? You are not required to offer another long term lease, but you are required to give them the option to go month to month. Typically the month to month option is given at a premium and is priced higher than a year long renewal option. Landlords who rent units that are exempt from rent control may typically raise the rent by any reasonable amount, and at any time, as long as such rent increases are not done for any illegal purposes, like seeking vengeance on a tenant for taking lawful action against the landlord or trying get a tenant to move out so they can sell the property. It is best to have market comparables of units that have recently rented to justify the pricing.
Navigating rent increase laws in Washington, DC, can be complex and time-consuming. Partnering with a professional property management company like Gordon James Realty can simplify the process and help you stay compliant with local regulations. Our experienced team will ensure your rental property operates smoothly and efficiently, maximizing your investment returns. Contact us today to learn more.
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