Washington Rent Control Laws in 2024

Washington has joined a number of other states with major new legislation limiting how much landlords can raise rents each year. In 2023, lawmakers passed House Bill 2114 which caps annual rent increases at 10% statewide.

This legislation marks a dramatic shift for a state that previously prohibited local rent control ordinances. The new rent control law went into effect on January 1, 2024 and will have major implications for both tenants and landlords going forward. 

Under the provisions of HB 2114, landlords in Washington can now only raise rents once per 12 month period, with a maximum increase of 10% annually. Landlords must provide tenants proper written notice 60-90 days before raising rents.

These new rent control measures aim to provide more stability and predictability for renters facing rapid inflation and soaring housing costs. However, industry groups argue the laws could end up decreasing the supply of available rental housing over time.

Washington's passage of statewide rent control puts it more in line with policies in states like California and Oregon. It remains to be seen what impact the 10% rent cap will have on the market long-term. But in the short term, the new laws provide important protections for tenants against excessive rent hikes.

Background on Rent Control in WA 

For decades, rent control was banned statewide in Washington. Previous laws like RCW 35.21.830 prohibited cities and counties from enacting rent regulation ordinances. This changed in July 2022 when the Washington State Legislature passed House Bill 1923, lifting the statewide ban on local rent control laws. 

The new law gives cities and counties the authority to implement rent control policies if they choose. Local jurisdictions can now limit how much landlords raise rent each year.

The passage of HB 1923 marked a major shift for Washington after over 40 years of banning rent control at the state level. However, the change was met with strong opposition from many landlords and real estate associations. 

Critics argued rent control would stifle new development and decrease housing supply. Landlords and investors warned that limiting rent increases could make rental housing projects unprofitable. Despite these concerns, state legislators ultimately voted to overturn the statewide preemption after rising rents and lack of affordable housing reached crisis levels in cities like Seattle.

The new law does not directly implement rent control statewide. It simply gives local authorities the power to regulate rents if they decide to do so. The detailed policies and caps on rent increases will depend on each individual city or county. But the lifting of the statewide ban opens the door for more renter protections.

Key Provisions of HB 2114

House Bill 2114, passed in 2023, placed major new restrictions on landlords in Washington state. The key provisions of HB 2114 include:

Annual Rent Increase Cap

Landlords may not raise rent by more than 10% per year. Any rent increases above 10% are considered an "excessive rent increase" and are illegal per the new law. 

60-90 Day Notice Required

Landlords must provide tenants with a written 60-90 day notice before raising rent. Verbal notices or notices less than 60 days are invalid.

Security Deposit Limits

Security deposits are capped at 1 month's rent under HB 2114. Landlords also cannot charge additional non-refundable fees. 

The 10% annual rent increase cap is one of the most impactful parts of HB 2114. This provision prevents landlords from raising rents excessively from year to year. Under the old laws, there was no limit on rent increases.

The 60-90 day written notice requirement ensures tenants have sufficient warning before a rent hike. This allows them time to adjust budgets or find new housing. Notice must list the new rental amount and effective date.

HB 2114 also standardized the security deposit limit across Washington at 1 month's rent. Non-refundable fees outside of the deposit are now prohibited. This prevents landlords from circumventing deposit limits.

Cities with Rent Control

A handful of cities in Washington have implemented additional restrictions and regulations around rent control at the local level beyond what is allowed under state law. The major cities with local rent control laws include:

Seattle

Seattle passed an ordinance in 2022 that limits annual rent increases to inflation plus 5%, which for 2023 means a maximum increase of 10.6%. Landlords in Seattle must also provide 60 days notice for any rent increases.  

Tacoma  

The Tacoma City Council approved a rent control policy in late 2022 capping rent increases at 6% annually. Landlords need to give 60 days notice before raising rents.

Bellevue

Bellevue City Council passed a rent stabilization ordinance in 2023 restricting annual rent increases to 7% with 90 days notice required. 

Other Cities

A few other cities in King County and Western Washington have additional rent regulations in place including Burien, Kirkland, Redmond, and Renton. These laws put further limits on the frequency and amount landlords can increase rents each year. Tenants should check their local city policies regarding rent control.

Impact on Landlords

Rent control laws can have a significant impact on landlords in Washington. With limits placed on how much rents can be increased each year, landlords may see lower revenues and profits from their rental properties. 

Lower Revenues

The 10% annual cap on rent increases under HB 2114 means landlords cannot raise rents to match growing market rates as quickly. This could prevent landlords from keeping up with rising costs like property taxes, insurance, utilities, and maintenance. Landlords rely on rental income to cover these expenses and earn a return on their investment. With rent control, revenues may not keep pace with costs.

Reduced Incentives to Maintain Properties 

Facing reduced revenues, some landlords may be incentivized to cut back on maintenance and repairs for their buildings. They may delay or avoid upgrades and renovations if they cannot recoup the costs with higher rents. This could lead to a decline in the overall quality and condition of rental housing stock over time under rent control.

Workarounds

Given the new rent control laws, some landlords may utilize certain workarounds to try to maximize rents:

• Banking allowed rent increases - Landlords could choose to not impose the full 10% rent increase every year, banking the unused portion to impose a larger increase in future years.
• Passing tax and utility costs to tenants - While base rent is capped, landlords could pass higher property taxes, utilities, and other costs directly to tenants.
• Upgrading units upon vacancy - Landlords may upgrade units upon vacancy to justify higher rents for new tenants.
• Converting units to condos - Landlords could explore converting apartments to condos and selling them individually to tenants or investors to exit rent control.

However, there are also laws in place to limit some of these workarounds, so landlords should ensure they follow all regulations. Overall, rent control presents challenges to landlords and will impact profitability, quality, and business models.

Impact on Tenants

Rent control aims to provide increased housing stability and affordability for tenants. By limiting how much rents can be raised each year, proponents argue rent control protects tenants from sudden rent hikes that could force them to move. 

With rent control, tenants may spend a lower percentage of their income on housing costs. Research shows rental cost burdens, defined as spending over 30% of income on rent, have increased dramatically in recent decades. Rent control seeks to ease this burden.

Supporters point to data showing tenants in cities with rent control experience smaller rent increases than comparable cities without it. Tenants have more financial predictability and are less likely to be displaced from their homes.

However, critics argue rent control can reduce supply of rental housing over the long-term. By capping rent increases, landlords may be less inclined to build or invest in maintaining properties. If supply is restricted, it can become harder for new tenants to find affordable housing.

Overall, rent control aims to promote housing stability for existing tenants at the possible expense of availability and choice for new renters. Proponents see it as an urgent policy to curb rapid rent hikes, while critics contend it will be counterproductive. The true impact likely depends on how laws are structured to balance tenant protections with encouraging adequate supply.

Arguments For Rent Control

Supporters argue rent control is needed to protect tenants and stabilize communities. 

Prevents displacement

Rent control provides housing security, allowing tenants to stay in their homes long term. Sudden large rent increases can force people of modest means out of their neighborhoods, disrupting lives and destroying communities. Rent control gives tenants, especially seniors, families, and the disabled on fixed incomes, the stability to remain in place. It limits the incentive for landlords to evict good tenants just to charge more.

Keeps housing affordable

Rent control ensures units remain affordable over time, even as surrounding rents rise. Unregulated rent increases can quickly price out middle and lower income tenants. Rent control provides a guardrail against runaway rents that exceed real housing costs. It helps maintain economic diversity in neighborhoods. With limits on rent increases, tenants have more money to spend in the local economy.

Stabilizes communities

When people can stay in their homes, they can also stay connected to schools, services, jobs, and social networks. Their children avoid disruptive school changes. Rent control promotes social cohesion and prevents the unraveling of neighborhoods and communities from turnover and gentrification. It protects the most vulnerable like the elderly, sick, and low-income from displacement.

Rent control offers these key benefits for tenants and communities, proponents argue. It helps ensure housing remains affordable and prevents uprooting the lives of tenants.

Arguments Against Rent Control

Rent control laws are controversial, with critics arguing they can do more harm than good if poorly structured. Here are some of the main arguments against rent control:

Discourages New Construction

Rent control reduces incentives for developers to build new rental housing. If rents are capped, developers can't charge enough to recoup construction costs and turn a profit. This slows the construction of new units.

Over time, the rental housing supply shrinks relative to demand, leading to housing shortages. Shortages drive up rents for non-controlled units, making housing less affordable overall. 

Places with rent control need to couple it with policies spurring new construction, like expedited permitting and zoning reforms. Otherwise, critics argue rent control will discourage building and exacerbate shortages.

Decreases Supply 

By deterring new construction, rent control can gradually erode the supply of rental units. Landlords may convert units to condos to avoid rent caps. As controlled units disappear from the market, the remaining supply gets smaller.

With lower supply, non-controlled units become more scarce and valuable. Basic economics dictates landlords can charge higher rents when supply is tight. So while rent control protects some tenants, others end up paying more in the long run due to the supply effects.

Less Incentive to Maintain Properties

When rents are limited, landlords have less money to reinvest in maintaining and improving their buildings. They are less likely to upgrade appliances, fix issues, or invest in renovations when profits are capped.

Over time, critics argue rent control leads to a gradual decline in housing quality. Landlords only invest in basic upkeep and try to minimize expenses. The housing deteriorates faster than it would in a free market.

Some rent control laws try to address this by allowing larger rent increases for renovated units. But in general, critics say rent caps reduce landlord incentives to properly maintain properties.

Rent Control in Other States

Rent control laws vary widely in other parts of the U.S. Here's how the rent control laws in a few key states compare to Washington's:

California

California has some of the strongest rent control laws in the country. Many cities in CA have rent control, including Los Angeles, San Francisco, Oakland, Berkeley, and San Jose. 

• Rent increases in CA controlled units are capped between 3-8% annually.
• Just cause eviction protections require landlords to have valid reasons for ending tenancies.
• Vacancy control limits rent increases between tenants. Landlords can't raise rents exorbitantly when units turnover.

The strict policies in CA have limited rent increases, but have also decreased construction of new affordable housing units. 

Oregon 

Oregon passed rent control legislation in 2019 capping annual increases at 7% plus inflation. This currently allows maximum increases around 10%.

• Local jurisdictions can implement additional rent regulations.
• Portland has mandated relocation fees for no-cause evictions.
• There are no vacancy control provisions limiting rents between tenants.

While Oregon's law shares similarities with WA, it does not have vacancy control or just cause eviction like CA. The weaker provisions have led to criticism that OR's law doesn't provide meaningful protections.

New York

New York City has long had rent regulation for many units. 

• Rent increases are set by the Rent Guidelines Board. 
• Increases have ranged from 1.5-4.5% in recent years.
• Strong eviction protections and vacancy control limit abuses.

However, NYC's tight housing market and extremely high rents mean many tenants feel rent regulations don't go far enough. There are frequent calls to strengthen state law.

Takeaways

WA's new 10% cap is more restrictive than OR's rent control law but is considered moderate compared to CA or even NYC's long-standing regulations. The national experience highlights the nuances in designing rent control policy.

The Future of Rent Control in WA

Washington's new rent control laws face an uncertain future as legal challenges and legislative changes loom on the horizon. Here's what to expect next:

Legal Challenges Expected

The passage of stringent statewide rent control is likely to face lawsuits from landlord groups and real estate associations. They argue rent control amounts to an unconstitutional "taking" of private property without just compensation. 

However, supporters of rent control counter that landlords must abide by reasonable regulations in the public interest. Courts will likely have to resolve the issue. Legal experts predict challenges could go all the way to the state Supreme Court.

Potential Legislative Changes 

As more cities adopt local rent regulations, the state legislature may revisit the statewide policy. Some lawmakers want to repeal or weaken the 10% cap on rent increases. Others are pushing to strengthen tenant protections even further.

Much depends on the political balance of power after upcoming elections. Housing affordability will likely remain a hot-button issue at the state capitol.

Forecasts for the Rental Housing Market

The long-term impacts of rent control remain uncertain. Proponents believe it will slow excessive rent hikes and stabilize the market. Critics argue it could discourage new housing construction and reduce supply.

Private analysts forecast rents rising 5-7% annually over the next 5 years in WA - below the 10% cap. However, availability of units could tighten in cities with more restrictive policies. Investors may shift focus to other states with looser regulations.

It's still early, but rent control promises major changes for Washington's landlords, tenants, and housing market. Expect vigorous debate as the new laws are implemented and evaluated over time.