We start our August Alert with some potentially very good news. The RENTAL Act, a bill to reform TOPA, passed its first vote by the DC Council on July 28, 2025. The RENTAL Act includes, among other things, a blanket exemption from TOPA for the first 15 years after a property's initial construction. More details on the RENTAL Act are below.
We wish we had similar good news in Maryland regarding rent control. Although Rockville once again voted 7-2 against a proposal to subject Rockville properties to rent control (like Gaithersburg, Rockville continues to be exempt from rent control), there are no efforts underway to revoke or reform rent control in Montgomery or Prince George's Counties. Indeed, Montgomery County Executive Marc Elrich recently suggested that he was hopeful the Montgomery County Council will revisit the rent cap stating, "We initially proposed a three percent cap unless inflation or necessary repairs necessitated a higher rate of increase." (Marc Elrich's full media briefing linkeda href="https://www.youtube.com/live/AMHOt4TcQDg" rel="noopener noreferrer" target="_blank">here). Montgomery County also recently reported a massive drop in multifamily housing starts (linked here and see chart below) and an increase in homelessness (linked here). In the last four quarters, there were 351 permits issueD, compared with 2,670 in the prior year. Notwithstanding the overwhelming evidence that rent control makes housing less affordable and deters investment in housing (including this August 1 report by the DC Policy Center), it appears that the 2026 Council and Executive elections may be the only viable means to revoke or reform rent control. Consequently, supporting candidates who favor rent control reform/repeal is of utmost importance. One such candidate appears to be Andrew Friedson, who voted against rent control in Montgomery County. Here is a link to an event that he is having September 25, 2025. Future Alerts will include information on other candidates who oppose rent control and favor housing and economic development.
RENTAL Act. The Rebalancing Expectations for Neighbors, Tenants, and Landlords (RENTAL) Act, which is intended to reform the Tenant Opportunity to Purchase Act (TOPA), passed its first vote by the DC Council on July 28, 2025, by a favorable margin of 10-2. As passed, it included amendments proposed by Councilmember Robert White (bill linked here). The current version of the RENTAL Act includes:
- A 15-year blanket exemption for Offers of Sale. The 15-year exemption begins on the date the permanent Certificate of Occupancy was or is issued after initial construction. Note that a Notice of Transfer is still required.
- A codification of the Williams v. Kennedy ruling, which held that transfers among existing owners of membership interests are not a Sale under TOPA. Such transfers of membership interests require a Notice of Transfer, not an Offer of Sale.
- An exemption for capital investors to enter and exit a property without requiring an Offer of Sale, only a Notice of Transfer.
- For properties older than 15 years, an Offer of Sale exemption if a buyer agrees to record an affordability covenant to maintain rents for at least 51 percent of the units at 80 percent area median income or less levels for a period of at least 20 years from the date of transfer. A Notice of Transfer with a copy of the affordability covenant would be required.
- A cap on relocation assistance payments and other forms of payments, which appears designed to avoid costly and time-consuming tenant payouts. Note that the current version of the RENTAL Act allows for compensation for "building affordability," which is an ambiguous term and should be clarified to ensure that payouts or rent concessions are not deemed to be in furtherance of building affordability.
The DC Council will have another opportunity to amend or approve the second and final reading of the RENTAL Act when it returns from summer recess in September. After passing the second reading, the Mayor has 14 days to sign the bill, followed by a 30-day Congressional review period, before it becomes law. We continue to work with DCBIA on its effortswith the DC Council on the issues such as of streamlining the 400+ day TOPA timeline and an "optional TOPA waiver" amendment, which would allow longer exemptions five plus years in exchange for contributions to the Housing Production Trust Fund.
Prince George's County Rent Control: Substantial Renovation Regulations. When Prince George's County enacted rent control, it made rent control effective without regulations. One issue with the lack of regulations is that properties that would otherwise be exempt from rent control as a substantial renovation had to wait until the County had regulations in place to seek an exemption. The regulations are not expected to be finalized until early 2026. As part of the process of implementing regulations, the Prince George's County Department of Housing and Community Development (DHCD) recently posted a draft of the proposed Substantial Renovation Exemption Provision regulations, which are open for public comment until August 22, 2025. The draft, which can be found on the DHCD website here, includes the requirements to apply for a substantial renovation application for all buildings substantially renovated since January 1, 2000. A substantial renovation is defined as a permanent alteration to the building that is (i) intended to enhance the value of the buildings; and (ii) cost an amount equal to at least 40 percent of the value of the building, as assessed by the Maryland State Department of Assessments and Taxation (SDAT). The application includes providing the Department of Permitting, Inspections and Enforcement (DPIE) with (1) a complete Substantial Renovation Workbook and Application, (2) documentation of the SDAT valuation of the improvements, and (3) submission of the required application fee. If DPIE approves the Substantial Renovation Exemption, the property is no longer subject to rent control. If DPIE does not approve the Substantial Renovation Exemption Application, then the owner of the property cannot apply for a substantial renovation for a period of six months from the date of disapproval.
Montgomery County More Housing N.O.W. On July 22, 2025, the Montgomery County Council passed Zoning Text Amendment 25-02 (ZTA 25-02), which was part of the More Housing N.O.W. package. ZTA 25-02 takes effect on November 1, 2025, and allows duplexes, townhomes, and small apartment buildings in certain areas along major roads. The developments would still be required to abide by the same height, lot coverage, and parking as single-family homes. Further, ZTA 25-02 requires that developments with two or more units set aside at least 15 percent of any new homes for middle-income households.
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