Impact of Increased Regulation and Rent Control for DC CRE Owners

DC landlords who rent to the Housing Choice Voucher Program (HCVP) face increased regulation and stringent rent control measures that could undermine their property values. The HCVP is a federally funded program that helps low-income families, the elderly, and the disabled afford decent and safe housing. Participants pay 30% of their income towards rent, and the U.S. Department of Housing and Urban Development (HUD) covers the rest. Participants are free to choose from any of DC’s 3,400 properties that rent to HCVP participants. Landlords renting to HCVP participants historically charged rents that reflect the additional support voucher tenants need. However, on July 1, the District of Columbia Housing Authority (DCHA) enacted a rent reasonableness measure that requires closer scrutiny of rents for voucher tenants. This change has forced landlords to accept rents that are often below market and their historical rates.

Also, a new bill was introduced that would remove the exemption of HCVP participants from rent stabilization measures. This bill, known as the Frumin bill, would limit landlords to 2% annual rent increases (on apartments built before 1976), plus inflation, with a maximum of 6%, even with voucher tenants occupying the units.

With increased regulation, landlords who rent to HCVP participants will likely see an increase in operating costs, as their loans and property taxes are tied to their historical rents. These rent control measures exacerbate the strain and uncertainty that landlords face in the market, diminishing affected properties’ market value, and disincentivize them from renting to voucher or government-sponsored tenants.

DC housing providers should closely monitor their assessments, which may not reflect these value-inhibiting changes. If your assessment does not accurately reflect your property’s value, please contact a Ryan professional for assistance.