RENT STABILIZATION PROCESS

All information on this website pertains to the City of Takoma Park only. Other state, county or municipal laws may apply to other jurisdictions.

Takoma Park's Rent Stabilization Law, which sets annual percentage guidelines for increases in rents has been in effect since 1980 and is considered one of the City's successful affordable housing programs. The Office on Landlord-Tenant Affairs monitors this program and also maintains the Rent Stabilization Reports that are submitted each year by the owners/agents of rental properties that are subject to this law.

Who is Subject to Rent Stabilization? All landlords owning two or more rental units (apartments, single family houses, condominiums) in Takoma Park.

Who is Exempt from Rent Stabilization?

• Owner-occupied group homes
• Accessory apartments (a second dwelling unit either in or added to the existing owner-occupied dwelling or located separately in the same lot)
• Landlords owning one rental unit in the City
• Properties that are used for treatment of illnesses.

Annual Rent Stabilization Report A landlord is required to complete and submit an annual rent stabilization report to the Office of Landlord-Tenant Affairs in September of each year. The report includes the unit numbers, number of bedrooms, dates tenancy began, increases and decreases in actual rents, allowable rents, and dates of increases and decreases in allowable rents. This information is important to the City because it will show if a landlord is complying with the Rent Stabilization Program. The rent report is considered public information.

Rent Stabilization Allowance The Rent Stabilization Allowance is the percentage that a rent on a rental unit may be increased on a yearly basis. This Allowance is set yearly by the City using the Consumer Price Index (70% of CPI) and becomes effective July 1 st of that year through June 30 th of the following year.

What is Allowable Rent? The highest rent that can be charged for a vacant unit as listed on the rent stabilization report. The Allowable Rent includes any rent stabilization allowances and capital improvement petition increases that have not been charged to the current tenant. For example, if a landlord chooses not to give the current tenant an increase in rent for a given year, he can still take the increase and put it in COLUMN J (allowable rent) on the rent report so that he/she doesn't lose the higher base rent once he/she re-rents the unit

Notice of Rent Increase A landlord must give a two-month's written notice to a tenant prior to the rent due date. For example, if a tenant had a rent increase on 9/1/00, and the landlord wants to increase the tenant's rent on 9/1/01, the tenant must receive the written notice by 6/30/01.

Rent Increases on Occupied Units The rent on an occupied unit may be increased only once every 12 months up to the Rent Stabilization Allowance (%) in effect at the time the notice is given to a tenant. For example, if a tenant moves into a unit on 9/1/00 and there was an increase in rent taken on 9/1/00, then the next rent increase could take place no earlier than 9/1/01. A landlord cannot take a rent increase on an occupied unit if there are serious, outstanding code violations, unpaid city taxes, fees or fines, an invalid City rental license, has failed to file annual rent reports, or has failed to comply with an Order of the Commission on Landlord-Tenant Affairs (COLTA).

Rent Increases on Vacant Units A landlord can increase the rent upon vacancy of a unit up to the highest Allowable Rent (see definition of Allowable Rent) which is documented on the most recent Rent Stabilization Report (Column J) only if the previous tenant voluntarily vacated the rental unit or breached the lease and was given a notice by the landlord of the termination of the lease agreement. If this rent increase takes place a full 12 months from the last increase, then the landlord may also add in the current rent stabilization allowance increase that he/she is entitled to take on the unit. For example, a unit becomes available because the tenant voluntarily vacated on 4/1/02. The tenant paid $600/month and the allowable rent is $700. The last increase in rent was 4/1/01. The rent increase on the vacant unit could be $700+ 2.3% which is the rent stabilization allowance in effect for that period. If the tenant voluntarily vacated on 1/1/02, then the landlord could increase the rent to $700 only, but could utilize the rent escalation clause in the lease to increase the rent by 2.3% on 4/1/02, the anniversary date of increase for that unit. IT IS UNLAWFUL FOR THE LANDLORD TO GIVE A TWO-MONTH NOTICE TO VACATE WITHOUT CAUSE TO A TENANT AND THEN RE-RENT THE UNIT FOR THE ALLOWABLE RENT.

Capital Improvement Rent Increase Petitions A landlord can seek a rent increase that is greater than the Rent Stabilization Allowance (%) by filing a capital improvement rent increase petition with the Commission on Landlord-Tenant Affairs (COLTA). The landlord must show that he has made or will make capital improvements to the property. The petition has to be filed with COLTA within six months of completion of the work and must have a direct cost of $200 or more per affected unit, or $2,500 for the entire building, whichever is less. There is a required form and the landlord must submit copies of receipts, canceled checks, financial records, etc. The landlord must give the affected tenant(s) a Notice of Rent Increase Form 7 - General Regulations and Rules of Procedure) along with a copy of the petition filed with COLTA within one week of the filing.

Hardship Rent Increase Petitions A landlord can also seek a rent increase that is greater than the Rent Stabilization Allowance (%) by filing a hardship petition with COLTA if he can show that the net operating income in the base year usually 1990 is larger after adjusting for inflation, than the net operating income in the petition year. The landlord must give the affected tenant(s) a Notice of Rent Increase Form 7 - General Regulations and Rules of Procedure) along with a copy of the petition filed with COLTA within one week of the filing.

Violation of the Rent Stabilization Program A municipal infraction citation can be issued to a landlord for violation of the rent stabilization law.

If you have additional questions, please contact the Housing & Community Development at (301) 891-7216.

3/18/02

Guidelines for Landlords and Tenants

LANDLORDS & TENANTS