With renters squeezed by high prices, Maryland cities consider rent stabilization

Published on: November 14, 2022 6:00 AM EST|Updated on: November 14, 2022 8:30 AM EST

When Kia Jefferson received a renewed lease in June for her apartment in Laurel, she said it felt “like somebody punched me in the gut.” The monthly rent on her home of 17 years would be increasing from $1,311 to $2,050.

“It’s gotta be a typo,” Jefferson recalled thinking at first.

A new landlord had taken over the Patuxent Place Apartments and begun renovating some units so they could be rented at far higher rates. Even though Jefferson’s apartment hadn’t been renovated — or even, she said, received a new coat of paint since she’d moved in — she and other longtime tenants faced steep increases.

With rents at unprecedented highs throughout the Baltimore-Washington region, some local officials are exploring measures that would help protect renters like Jefferson. In Laurel, a City Council member has drafted a bill that would limit rent increases to 3% a year. In Montgomery County and the city of Bladensburg, local officials plan to offer bills when new council members are seated in January. In Hyattsville, council members are finalizing a proposal that would peg allowable rent increases to changes in consumer prices. Bladensburg and Hyattsville are located in Prince George’s County.

The rent stabilization proposals face an uphill battle, with landlord groups already vocally opposing the efforts. The Laurel draft bill received a cool reception from some council members and landlords in meetings last week but remained under discussion. Still, the wave of interest and activity represents a marked shift in housing policy debate in the state. Only one jurisdiction in Maryland currently has a rent stabilization measure in effect: Takoma Park, which passed its rent stabilization law in 1981.

Local Maryland officials are following the lead of a growing number of jurisdictions that have adopted rent stabilization measures in recent years, as local and state leaders seek to protect renters from rapidly rising rents amid an acute shortage of affordable housing.

Without city or countywide protections, Jefferson and other residents who stayed at the Patuxent Place Apartments fought the rent increase themselves. With the help of CASA, a regional advocacy and assistance organization, they persuaded their new landlord, Cameron Manesh, to keep rent increases to $200 a month.

Manesh, who said his real estate company has purchased around 150 units in Laurel since 2021, told The Banner that the initial increase was a “mistake.”

“I didn’t know any better — I set it to market [rate] not realizing that tenants had been there for a long time,” said Manesh, who said that this was the first large property he had managed himself.

Several months before Jefferson received her new lease, tenants at a senior building purchased by Manesh less than a mile away had successfully fought to reduce a monthly rent hike from $735 to $485, securing funding from the city to cover some of the increase. The reduced increases at both properties were justified by millions of dollars of investment, he said, adding that rents for longtime residents at Patuxent remain below market rate.

But even the smaller increase has made it more difficult for Jefferson, who works in marketing, to achieve her goal of saving up to buy a home. Most of all, she worries that the relief is only temporary.

“I’ve been packing like I’m moving,” said Jefferson. “This isn’t home anymore.”

Tenants rally in support of rent stabilization, face landlord opposition

The push for rent stabilization follows the implementation of temporary rent limits in several Maryland jurisdictions during the statewide COVID-19 state of emergency.

For many tenants, the expiration of those protections had stark consequences. Since Montgomery County’s temporary freeze expired in May, the county’s Office of Landlord and Tenant Affairs has seen a 200% increase in complaints about rent increases compared to 2019, the year before the pandemic, according to Will Jawando, a Montgomery County Council member. Some reported increases as high as 90%, said Jawando, who plans to introduce a rent stabilization bill in the coming months.

In Laurel, a city of nearly 30,000 that lies at the midway point between Baltimore and Washington, D.C., and at the intersection of several major highways, median rents have increased by nearly 17% since the start of the pandemic, according to Apartment List, an online listing site. The city’s historic Main Street is lined with aging storefronts, but new apartment complexes advertising luxury units have begun cropping up on the edges of its porch-filled neighborhoods.

Residents have come out in loud support of the draft bill. At a late October hearing on housing issues, they packed the council chambers, taking the podium one after another to share stories about steep rent increases threatening to price them out. Earlier, dozens had rallied outside the Laurel Municipal Center chanting “Fight, fight, fight — housing is a right” and “Sí se puede.”

Property owners and managers are also speaking out. In a November letter, Gabrielle Duvall, the executive vice president at Southern Management, which operates more than 1,000 apartment homes in Laurel, argued that the bill would lead to housing disinvestment.

“Even in the best of times, the rental housing sector operates on very low margins,” Duvall wrote to Laurel Councilman Martin Mitchell, who drafted the bill. “It becomes far more attractive to tear down the workforce housing and build brand-new, class-A apartments.” Further, these are eligible for various subsidies.

Duvall suggested instead an ordinance that would prohibit rent increases of more than 20% except in certain cases, which she argued would address increases by “rogue owner/operators.”

Alex Rossello, a spokesman for the Apartment and Office Building Association of Metropolitan Washington, argued that the current rent control proposals were “sparked by anecdotal concerns of sky-high rent increases” that he says “don’t reflect the reality of the market in Suburban Maryland.”

He noted that the market has already cooled in recent months: Median rents in Laurel decreased by 1% in October.

Economists have long been largely united in their opposition to rent stabilization, which they argue can drive up rents in non-stabilized units nearby, remove incentives for development and investment in maintenance and improvements, and hurt property values and tax revenues. Such measures also do not necessarily benefit the renters who need the protection most, they say.

An economic impact report commissioned by the Montgomery County Office of Legislative Oversight last year found that a rent control policy that reduced allowable rents in the county’s transit corridors by 1% would slash property tax revenues by $1.8 million per year.

Manesh, Jefferson’s landlord, argued that the Laurel bill would send real estate investors and developers packing.

“I would sell the assets and leave,” said Manesh. “And that’s going to hurt Laurel.”

He argued that the city should instead amend zoning restrictions and provide tax incentives to encourage developers to construct new affordable housing. Tenants who can’t afford their units are “in the wrong type of property,” said Manesh. “But they can’t go to the right type of property, because it doesn’t exist.”

However, advocates for rent stabilization say that that lack of affordable housing is exactly why the policies are desperately needed.

“If we start talking tax credits and affordable housing, that will take years to develop, where rent stabilization can help people tomorrow,” said Mitchell.

New research supports rent stabilization

Emerging research challenges traditional economic theories about the harms of rent stabilization. Recent reports from researchers at the University of Southern California and the University of Minnesota found that such measures are effective at maintaining housing stability for tenants in rent-stabilized units. And they found little evidence that rent regulation policies negatively affect new construction, especially because it is often excluded from stabilization measures. The policies can limit rental housing stock by encouraging landlords to convert apartment units into condos, the studies found, a challenge that could be addressed by other policies.

Others say that traditional economic analysis takes too narrow a view.

“Economic analysis is so heavily focused on market distortion and not focused on the social values of housing stability: keeping kids in the same schools, having a place to make your meals and feel safe,” said Jasmine Rangel, senior housing associate at PolicyLink, a national research and advocacy institute.

Local supporters also argue that landlords’ threats to leave the area ring hollow.

“We are within 25 miles of Baltimore and Washington, everything is expanding … and you tell me that this area is not one of the most vibrant areas that you could possibly pick?” asked Carl DeWalt, a third-term Laurel council member who is cosponsoring the bill. “It’s just a total lie, it’s a total fabricated thing that they’re not going to make money — they’re going to make a ton of money no matter what we put that percentage at.”

The local officials drafting such measures acknowledged that rent regulations can have some negative consequences, but say that those can be avoided through careful policymaking. “Rent stabilization has shown to be an effective tool to address costs that are growing at an unsustainable level for so many renters in our area, but you do have to be thoughtful about how you introduce it and what your particulars are,” said Hyattsville Council Vice President Danny Schaible, who’s working to finalize a proposed bill this month.

Tenants say that help can’t come soon enough.

Nuvia Martinez  heads up an organizer with a group called CASA that is organizing for the bill.

Nuvia Martinez had lived at Westgate at Laurel apartments for nearly 10 years when she learned in February 2021 that the rent on the two-bedroom apartment that she shares with her husband and three of her children would be increasing from $1320 to $1630, a 23% spike. Meanwhile, she claims water damage issues went unaddressed by her landlord, Schweb Partners LLC, which had taken over the complex in February 2020.

Westgate representatives did not respond to a request for comment last week.

The family struggled to keep up.

“My job is not raising me up, I’m still earning the same money,” said Martinez. Her husband started working seven days a week as a landscaper, and Martinez picked up extra cleaning jobs on top of her job cleaning office buildings.

By the beginning of this year, Martinez and many of her neighbors had had enough. In July, tenants from 40 units at the complex marched to the leasing office to deliver a petition declaring a rent strike. After two months of withholding their rent, the company scaled back the rent increases, by $100 a month in Martinez’s case.

Martinez’s building, which lies just outside the Laurel city limits, would not be covered under the city’s rent stabilization bill. She hopes elected officials all across the region will take up similar efforts.

“If we don’t pay rent, we’re in the street no matter what,” said Martinez, adding, “It’s a lot of people, it’s not only us.”