Plan to cap how much landlords can raise rent moves ahead

  • By Laurel Demkovich Washington State Standard
  • Saturday, February 17, 2024 1:30am
  • Politics

OLYMPIA — Statewide caps on annual rent increases could take effect in Washington as soon as this year after the state House of Representatives passed a bill aimed at giving tenants financial relief.

House Bill 2114, approved in the House on Tuesday, would prohibit landlords from raising an existing tenant’s rent more than 7 percent in a year. At the time a rental home turns over to a new tenant, the cap would not apply. The bill also would restrict late fees to 1.5 percent of a tenant’s total monthly rent.

The proposal has split support in the Legislature, even among majority Democrats. In the House, it passed 54-43.

Among Democrats voting against it was Rep. Mike Chapman of Port Angeles, who represents Legislative District 24 which includes Clallam and Jefferson counties and part of Grays Harbor County.

Other Democrats who joined Republicans in voting against it were Reps. Dan Bronoske, of Lakewood; Mari Leavitt, of University Place; and Amy Walen, of Kirkland.

The bill likely faces an even tougher road in the Senate, where similar legislation fell apart last month.

Opponents say the policy could have unintended consequences on the housing market as a whole and could hurt landlords, some of whom are also struggling to make ends meet. But supporters say the proposal is an essential part of alleviating homelessness and ensuring middle- and low-income renters aren’t driven from their homes by rent spikes.

A December report from the Washington State Housing Finance Commission and the Washington State Department of Commerce found that a lack of housing and a growing gap between incomes and rents have led to a greater rent burden for many households, especially people of color.

“This situation is dire, but the solution is clear,” said bill sponsor Rep. Emily Alvarado, D-Seattle. “This is the right policy.”

The proposal allows a tenant to break their lease at any time if their landlord raises the rent beyond 7 percent. This cap applies to both annual and month-to-month leases. The bill also provides new requirements for when landlords have to notify tenants of rent or fee increases.

Landlords who violate the caps in the bill could end up paying damages to tenants equal to three months of the unlawful rent and fees charged, plus legal costs.

Exemptions to the new rules include residential construction that is 10 years old or less, situations where the owner is also a resident of the property and some buildings owned by nonprofit organizations.

Michele Thomas, policy and advocacy director for the Washington Low Income Housing Alliance, said in a statement that the bill would help prevent excessive rent increases straining seniors’ finances, and noted that a disproportionate share of renters are people of color.

“This policy is an important step toward addressing worsening inequities in housing,” she said.

‘Housing is mandatory’

Opponents of the bill said it will only result in more landlords selling their property, which will increase the cost of rent for everyone. Other critics said it would dissuade developers from bringing more housing online in Washington.

Rep. Leonard Christian, R-Spokane Valley, said that while the policy caps what landlords can charge, it doesn’t cap their annual maintenance costs or their utility costs, both of which have gone up in recent years.

“We’re not leaving (property owners) with a lot of options. Their only option is to sell the property,” Christian said. “We want more homes, not less.”

Supporters of the policy, however, say it does not put a cap on the price of rent but rather, it limits how much rent can be increased every year. Under the proposal, after a tenant moves out, the landlord can raise the rent however high they want.

Seattle Democratic Rep. Chipalo Street, who is a landlord, said it is possible to run a stable rental business while having limits on rent increases. A 7 percent increase is enough to cover utilities and maintenance expenses, which Street said are minimal compared to the fixed cost of his mortgage.

But renters need this relief, he added.

“Housing is mandatory,” Street said. “You can’t just choose to go without housing. You either pay what the market bears or you become homeless.”

Rep. Andrew Barkis, R-Olympia, who owns a residential property management firm, told reporters after the debate on Tuesday that there was no collaboration with lawmakers across the aisle on this bill.

He pointed to other policies that he believed could have protected tenants more than a rent cap, including vouchers for those who can’t pay their rent or incentives to landlords who don’t raise rents every year. Neither of those policies are still alive in the Legislature.

This proposal is only going to cause more landlords to sell their property, he added.

“You can’t have a tenant without a housing provider,” Barkis said.

After the vote, William Shadbolt, managing director of the Washington Business Properties Association, said the group will be working to ensure the property rights of its members are protected from this “failed policy.”

“Rent control doesn’t pencil out for providers or those struggling with our state’s housing affordability crisis,” Shadbolt said in a statement. “The Senate must stop this bad legislation.”

The proposal now moves to the Senate where a version of the bill died last month after it failed to receive enough support among Democrats to get out of a committee.

On Friday, a group of Democrats who support the policy in both chambers called on Democratic leadership to find a path forward for the proposal.

“This is a plea,” Sen. T’wina Nobles, D-Fircrest, said. “This is certainly impacting every community. Every single legislator has heard from somebody in their district.”

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Laurel Demkovich writes for the Washington State Standard (https://washingtonstatestandard.com), an independent, nonprofit news organization that produces original reporting on policy and politics.

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