Seyfarth Synopsis: Montgomery County has enacted a comprehensive rent stabilization law that will limit annual rent increases for rental housing in the County to three percent plus CPI, with a maximum limit of 6%. The law includes several exemptions, notably for units that are located in buildings constructed after January 1, 2000 and for increases to fund capital improvements. Landlords will also be able to “bank” certain unused increases for future years.

On July 18, 2023, following more than eight hours of heated debate and more than four months after competing rent control bills were first introduced, the Montgomery County Council approved Bill 15-23, a comprehensive rent stabilization measure, by a vote of 7-4. The bill was signed into law by Montgomery County Executive Marc Elrich on July 25, 2023 and will go into effect 91 days thereafter, but will not be operational and enforceable until regulations implementing the bill are drafted by the Montgomery County Department of Housing and Community Affairs (DHCA) and approved by the County Executive.  Full adoption of the law is likely to be several months away.

The centerpiece of Bill 15-23 is a cap on annual rent increases. The bill provides that annual rent increases will be limited to the lesser of (a) the local Consumer Price Index for All Urban Consumers plus 3% or (b) 6%. 

The law exempts multifamily housing constructed after January 1, 2000 for a period of 23 years and includes 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. The law also permits certain rental increases to fund capital improvements and allows landlords to bank some unused increases for future years. There is some ambiguity in Bill 15-23 as to the extent and applicability of the exemptions listed in the bill, but this should be resolved by DHCA’s implementing regulations.

Montgomery County is the latest locality in the DMV to adopt rent control measures. In February, Prince George’s County set a 3% cap on rent increases for one year, and in June, the DC Council voted to cap rent increases at 6% on rent-stabilized buildings for the next two years.