OLYMPIA, Wash. — House Bill 1217 and its companion Senate Bill 5222 would cap annual rent increases at 7% per year and prohibit any rent increases in the first 12 months of a lease. The bill would also place new limitations on security deposits and fees and increase notice requirements for landlords.
HB 1217 also includes a private cause of action for tenants to sue landlords and makes the rent and fee restrictions subject to enforcement by the Washington State Attorney General. The lease restrictions apply to apartments, houses, and mobile home parks.
There are exemptions to the 7% rent increase cap for some properties including: apartments under 11 years old, new apartments for the first ten years, and owner-occupied units. The legislation cleared its first hurdle by passing out of the House Housing Committee earlier this month.
It’s a controversial proposal to a complex issue with high stakes for renters, landlords, and the housing market in Washington. Everyone seems to agree that the housing market is unacceptable, but opinions vary widely about how to respond.
During testimony on the legislation, lawmakers heard from tenants who said their rent practically doubled over three years and at least one rental property owner who supports the 7% cap.
They also heard from a number of business organizations, small scale landlords, and property brokers who say the bill is already scaring off desperately needed investments in new housing construction.
The rent stabilization bill was the focus of a panel discussion on The Impact.
“Rent control will eviscerate our housing market. If you just look back at some of the examples, the economic data is very clear and the research is all one-sided showing that rent control has never fixed a problem in this country. There’s no city you can point to and say, ‘look rent control fixed housing there’, it doesn’t exist,” said Chester Baldwin, a lobbyist representing the Rental Housing Association of Washington.
HB 1217 supporter and rental property investor Kraig Peck disagreed.
“First of all, this is not rent control. This is rent stabilization. What the bill does is, it limits rent increases to seven percent when a unit is occupied. It permits the property investor to set the rent before the unit is occupied, a home is occupied, and after. And I can tell you, as a landlord, renting property currently is very profitable,” said Peck.
Baldwin said the underlying cause of the cost of housing and shortage of affordable housing is the lack of supply.
“We are not building new housing units. So that crisis gets worse, you know, every day as we go along. We at the Rental Housing Association, we support Governor Ferguson’s plan to build 200,000 new housing units that he’s put forward. That is impossible if this rent control bill passes, because this bill would eviscerate that plan, because capital will not come to the state of Washington in order to build anywhere near the number of units we need,” said Baldwin. “If you talk to Commerce, we’re short or about to be short about a million housing units. If you use a very conservative number for that at $500,000 a unit —which, they can’t build at $500,000 a unit in King, Pierce, Snohomish— but even if you use that number, the state of Washington needs a half a trillion in economic investment in housing. And this rent control bill will make sure that that investment in housing doesn’t come, just as we’ve seen in other states.”
“I have a rent controlled apartment in California where my daughter goes to school, and I guarantee you, I was never the target income you were trying to help with the rent control policy. But rent control affects everyone the same. And in fact, there’s more and more data that shows the people with the highest income are the people that rent control helps most,” said Baldwin.
Peck disputed the concerns about losing out on housing development by regulating rent increases and the comparisons between the current bill and rent control policies in other states.
“This bill is not like New York City or San Francisco’s ordinances. It also exempts new construction for ten years from the date of occupancy. And if lack of regulation drove investment, we would see stateless nations in the Third World probably as economic powerhouses. Or we would see the housing getting built in Iowa or South Dakota. Washington state is a great place to invest. I mean, we’ve got the aerospace industry. We have the high tech industry. It’s… we have high incomes here. That affords high rent, high occupancy, and, the studies that Chester is referring to are not applicable to this ordinance,” said Peck.
“This is good politics. This is good policy. This is going to address the affordability crisis that was the main issue in the last election. It’s supported by sixty eight percent of the public because people want action now,” said Peck. “It’s supported by 68% of the public, according to the most recent L.A. poll. We’re facing an affordability crisis. That was really, what the last election in many ways was about,” he continued.