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Montgomery County rent stabilization law cools new multifamily development
The law took effect in July 2024 and caps allowable rent increases for covered buildings at CPI plus 3%, with this year’s maximum increase set at 5.2%.
Montgomery County’s rent stabilization law, which began in July 2024, is discouraging conventional ground-up multifamily construction, according to panelists speaking at Bisnow’s Montgomery County State of the Market. Developers said the slowdown has pushed some projects toward tax abatements or other alternative financing structures.
The county limits rent increases for buildings 23 years or older to the consumer price index plus 3%. Bisnow reported that for this year, the maximum allowable increase is 5.2%, and that between January and August 2023 only 54 multifamily building permits were issued in Montgomery County, with permits tied to two-over-two structures.
Panelists also pointed to how the rent-control framework affects dealmaking and investor sentiment. Cohn Property Group CEO Mychael Cohn said the stigma around rent control is complicating development, and that his firm has been selling high-profile deals across the river in Virginia.
While the law has not stopped large-scale projects entirely, Bisnow noted that major developments are still in the pipeline, including EYA’s March groundbreaking on a 413-unit mixed-income project near the Shady Grove Metro station and an approval earlier this month for EYA and partners to redevelop the former Geico headquarters in Friendship Heights into a more than 500-unit project that will reserve at least 17.5% of the units for qualifying residents.