Multifamily April Alert

This month’s Alert updates recent housing legislation, including proposed amendments to the DC Tenant Opportunity to Purchase Act (TOPA), the launch of the DC RentRegistry portal, and updates to Montgomery County's rent control matters. Additionally, this Alert discusses an upcoming Maryland housing roundtable, as well as updates on Maryland's Housing Development Act, affordable housing tax incentives, and the rescinding of certain federal multifamily housing rules.

DC TOPA Reform. On March 3, 2025, DC Council Chairman Phil Mendelson introduced proposed amendments to the Tenant Opportunity to Purchase (TOPA) law and the Emergency Rental Assistance Program (ERAP). The bill, known as the RENTAL Act, was referred to several committees on March 18, 2025. The RENTAL Act proposes TOPA exemptions for, among other things, (i) buildings built or substantially improved within 25 years of the sale or substantial rehab, if at least 51 percent of the units in the building have average rents that exceed a rental rate affordable to households earning at or below 80 percent of the area median income (AMI), and (ii) properties subject to recorded affordability covenants that require at least 50 percent of the units in the building to be rented at a rate affordable to households earning at or below 80 percent AMI for a period of at least 20 years. Details of the RENTAL Act can be found here: TOPA Alert. The DC Council has now taken the ERAP section out of the RENTAL Act due to an identical bill that had previously been introduced. The Council has postponed consideration of the TOPA provisions of the RENTAL Act to focus on the budget for the 2026 fiscal year. Amendments and/or counterproposals to the RENTAL Act may be introduced before public hearings are scheduled, so it is difficult to predict when hearings will be scheduled or what the RENTAL Act will look like when/if enacted. In recent weeks, a grass-roots campaign has generated more than 3,000 emails to the DC Council in support of a public hearing on the RENTAL Act. Campaign leaders believe if that number gets up to 10,000 emails, the DC Council will not be able to ignore the calls for a hearing.  We worked with the DC Policy Center as well as an investment consultant group to formulate policy papers supporting TOPA reform. If you would like a copy of these materials, please contact us.

DC RentRegistry. The Department of Housing and Community Development (DHCD) recently announced the DC RentRegistry, a new online portal where housing providers will soon have to register rental housing properties. While the requirement to register rental housing with DHCD is not new, in the past, registration was done by submitting a paper form. When the DC RentRegistry portal launches later this year, property owners will be required to reregister their rental housing properties online, including entering all rental accommodation data. DHCD ultimately plans to make the portal publicly accessible. The DHCD announcement on the RentRegistry portal can be found here.

Montgomery County By-Right Payments in Lieu of Taxes (PILOT). Multifamily owners participating in the County PILOT program receive a tax abatement in exchange for providing affordable units at their properties. Historically, the County set an annual limit for the PILOT program, and that significantly limited the availability of this tool to support affordability objectives. However, certain PILOTs are now required to be provided to developers of qualifying housing developments (i.e. they are available by-right). Qualifying housing developments must be “owned or controlled by a nonprofit housing developer” and at least 50 percent of the dwelling units must be “built under a government regulation or binding agreement with the County” that restricts occupancy to households earning at or below 60 percent of the area median income for at least 15 years. To participate in this program, the Montgomery County Department of Housing and Community Affairs (DHCA), requires developers to submit (i) a by-right PILOT application form, and (ii) a legal opinion regarding the eligibility of the applicant and the project, if the property is not wholly-owned and controlled by a nonprofit housing developer. Once approved, the by-right PILOT exempts 100% of the real property taxes for the duration of the affordability period. If you have questions about by-right PILOTs, please contact us.

Montgomery County Rent Control. Our prior Alerts (August 2024 Alert and September 2024 Alert) provided details on the rent control requirements in Montgomery County, including the fact that the rent and fee increase allowances for rent controlled properties change annually. This March, County Executive Marc Elrich published the 2025 rent increase allowance and revised fee schedule for rent controlled properties. Under Montgomery County’s rent control law, the maximum allowable annual rent increase rate is the lower of either (i) Consumer Price Index for the Washington-Arlington-Alexandria Area (CPI-U) plus three percent, or (ii) six percent. Effective July 1, 2025, rents cannot be raised more than 5.7 percent because the CPI-U over the prior 12 months was 2.7 percent. The revised fee schedule, also effective July 1, 2025, is shown in the chart below. Click here for the full press release.

Montgomery County Gets Tougher on Noncompliant Landlords. On Tuesday, April 1, the Montgomery County Council passed Bill 6-25, expanding the County’s power to enforce consumer protection laws against residential landlords. The bill, which will take effect this summer, does not levy new requirements on landlords, but expands the County’s ability to sue for larger amounts.

Urban Land Institute (ULI) Executive Conversation. In light of the many critically important ongoing issues in Montgomery County, we collaborated with ULI and hosted an Executive Conversation with Montgomery County Councilmember Andrew Friedson in our DC office on March 26, 2025. Friedson, who has traditionally viewed rent laws with disfavor, engaged in a candid discussion with industry leaders about the impact of rent control on the financing and operation of multifamily properties, as well as the impact on investment in new housing in the County. The upshot? Meaningful changes to rent control may be unlikely until after the next election in November 2026.

Maryland Housing Development Act. Introduced on January 22, 2025, as House Bill 503, the Maryland Housing Development Act seeks to address Maryland’s housing shortage of nearly 100,000 units by providing developers with greater certainty for land use and zoning approvals. The bill requires local jurisdictions to expeditiously approve housing development applications, which would then have a minimum five-year vested right for the approved use. If enacted in its present form, the bill would require the Maryland Department of Housing and Community Development to evaluate state housing targets and establish the Housing Opportunities Made Equitable Commission to evaluate the housing supply issue and develop potential solutions for Maryland’s housing shortage.

Maryland State Comptroller Housing Roundtable. Another effort to evaluate and address Maryland’s housing shortage is the upcoming Maryland Comptroller’s Office roundtable discussion on housing and residential development in the National Capital region. The Comptroller has asked us to join other stakeholders in this roundtable, scheduled for Thursday, April 17. The purpose of this roundtable is to help inform an upcoming report in the Comptroller’s State of the Economy Series about the impacts of housing costs and housing inventory on Maryland’s economic growth. Last January, the Office of the Comptroller released the inaugural State of the Economy Report that examined economic trends in Maryland compared to the U.S. and neighboring states. This report revealed relatively stagnant economic growth in Maryland since 2016 (compared to the U.S. and neighboring states) and significant net domestic outmigration, culminating in population decline in Maryland in 2021, for the first time since WWII. The report found that domestic outmigration followed a national trend of people moving from higher cost of living to lower cost of living states. The report identified housing as the top driver of cost of living. This upcoming report on housing will be the third in the “State of the Economy Series.” The purpose of this roundtable is to gather qualitative data from developers, builders, and other housing practitioners and experts with insights into the local and regional housing markets to complement their quantitative analysis. The meeting will begin with a presentation of relevant data, followed by an open dialogue to learn from attendees about challenges, both historic and new, to building all types of new housing in Maryland, including rental, ownership, single, and multifamily. If you would like to provide input or participate in this roundtable, please let us know.

Federal Housing Finance Agency (FHFA) Rescinds Multifamily Rules. On March 24, 2025, the FHFA Acting Director rescinded a Biden-era directive that created new tenant protection requirements for multifamily properties financed by Fannie Mae and Freddie Mac. The tenant protections included (i) a 30-day written notice of rent increase, (ii) a 30-day written notice of a lease expiration, and (iii) a five-day grace period for late fees due to nonpayment of rent. Noncompliance with these requirements carried a penalty of 0.20 percent of the original loan amount, and the possibility of finding that the landlord defaulted on their loan obligations. However, as this directive has been rescinded, these requirements will not apply to new loans for covered multifamily properties.

If you have any questions or want to learn more about any of these issues, please contact us at CondoMultifamilyTeam@ballardspahr.com.