Dear PoPville – Rent Control Question

Photo by PoPville flickr user Mr. T in DC

“Dear PoPville,

I own a grouphouse in Columbia Heights and am in the market for a 4 unit property in the Capitol Hill. If I acquire the four unit in Cap Hill, is my grouphouse considered a 5th unit whereby forcing me to abide by rent control laws? Or, would I simply own two rental homes, one of which has four separate apartments.”

15 Comment

  • justinbc

    It’s not entirely clear from the fact sheet, but they specify “rental units”. I would guess your four unit place in CH would all be counted individually.

  • It’s an interesting question. I’ve never really understood how apartment buildings, which have like 40 to 50 units, can escape rent control but someone who owns 5 tiny houses, like say the ones on Lamont Street, would have to abide by it?


    This seems to say that you would now own 5 units and be subject to the laws.

  • This cannot be real question.

    • Right? Who can afford a 4-until property on Capitol Hill without high six figures on hand? This is very big money. Get a lawyer.

  • There’s a key piece of information missing here: When were both properties built?
    Numerically, owning five units (and each unit on the Hill counts individually) puts you into rent control. However, buildings built after 1975 (not likely here, but possible) are exempt. Here’s the full exemption text:
    1. “Small” Landlords: Apartments that are owned by landlords who own four or fewer apartments, whether or not in the same building. (Cooperatives and other corporate owners that own four or fewer apartments are not eligible for the small landlord exemption.)
    2. Publicly Owned or Subsidized Housing
    3. New Apartments: Apartments in buildings for which the building permit was issued after 12/31/75 or for which the certificate of occupancy was issued after 1/1/80.
    4. Vacant Housing: Apartments continuously vacant and not subject to a rent agreement since 1/1/85.
    5. Apartments Under a Building Improvement Plan: Apartments under the Apartment Improvement Program or
    Rehabilitation with D.C. Department of Housing and Community Development (DHCD) and approved by 70% of the tenants.
    6. Diplomatic Residences, Dormitories, Hospitals, Nursing Homes, and Similar Facilities.
    7. Housing for low income individuals or families that is owned by a nonprofit corporation which offers a comprehensive social services program to residents (very few properties qualify for this exemption).
    8. Hotels, Motels, and Guest Quarters: Buildings with at least 60% transient occupancy.
    However, there may be one solution. Depending on the financials and the architecture of the building on the Hill, it may be feasible to combine two units into a larger unit, therefore keeping you at or below four units total. I know someone who combined a studio and a one bedroom in their building into a two bedroom with a kick-ass wet bar to take a five unit building down to four to avoid rent control and ended up renting the bigger apartment for a lot more than the two units separately.

    • justinbc

      ^ That’s actually not a bad idea, because I can’t imagine the population of Capitol Hill buildings built after 1975 being very high.

    • When you purchase the new building, you will have to get new / updated certificate of occupancy, which will be issues after 1/1/80 – so wouldn’t give you an exemption?

  • I think it should be added to the conversation that, even from a landlord’s perspective, DC rent control laws are not onerous at all and should cause no problems for you. Speaking as a landlord, if you find that you would be subject to its limits it means you are raising rents way too fast and that’s going to cause problems. You are allowed to raise at the rate of rent inflation for the city but you can get an exception by showing that your rent was priced below market. If you are raising rents more than the citywide rate of rent inflation you are going to have unhappy tenants and get high turnover which is a recipe for problems and income loss (due to turnover and other problems associated with tenants who feel you are trying to cheat them). I almost never raise rents as long as my tenants are good and this is why I have low turnover and happy tenants who cause me few problems. It is easy enough to make money as a landlord and if I get greedy I will create headaches and financial losses for myself.
    So basically, if you just operate your properties wisely you won’t even notice the rent control law. Think of the law as something that helps you from being really stupid.

    • Are your properties subject to rent control? Are all properties bound by this “rent inflation” index? Must all property owners get an exemption from the city – regardless of when the property was built – if they want to go higher than than the average rent inflation?

      I was very surprised when the rent on my $3K apartment only went up by $50 this last year. It’s a newer building on U Street and the area had become much more expensive in the last year. So that small of an increase seemed odd (it was only my first renewal in the apartment and I’m accustomed to NYC increase, which can be 5-15% annually)

    • Yes, rent control is not the main problem in DC. The main problem is that smart tenants who don’t care about their credit can stay in your property for months or years without paying rent. They can even damage your property and force you to fix it. In DC legal recourse to solve these problems is incredibly slow, very biased against landlords, and often ultimately fails even in the clearest situations. Oh, and tenants have the right to essentially prevent any sale of your property – which they generally use to extort large payments from you or your buyer simply to leave (even after their lease has expired).

      DC – driving good landlords out of the business, while encouraging illegal behavior by bad landlords (due to the disincentives to follow the law). And at the same time rewarding deadbeat tenants and making good tenants pay more (by disincentivizing potential landlords from offering their apartments for rent).

      • All that anonymous said up there about the bad tenants and the D.C. tenant laws. I rented my home out and got one of those shady tenants (a large well-known property management company that shall remain nameless screened applicants for me, and I still end up with deadbeats) who knew the law and it took almost a year to get them out, and I got no rent during that period. When they finally abandoned the house it had to be gutted they had so much damage to it (piles of feces on every surface, in every corner).

        I had heard these stories before deciding to become a landlord and went through the process of getting a BBL and all that just so I could be on the right side of the law and compliant and still, it didn’t matter at the end of the day, I was treated like a slumlord for wanting my rent every month on time and my property to not be destroyed.

        With the lists for housing voucher folks in the tens of thousands and the rental market as tight as it is you’d think someone somewhere (I’m looking at YOU Muriel and Jim!!!) would reassess whether the tenant laws as they currently stand are imbalanced and, as such, scaring off potential landlords.

      • Exactly. We have a fully renovated basement apartment in our bloomingdale row house but would never rent it out thanks to DC’s ridiculous laws.

  • Yeah, but when you don’t keep your rents at market rate for a long time you have a problem when you try to sell, assuming you are interested in getting current market value for your building, which will be greatly appreciated compared to what you paid for it. But if the property is not producing as much revenue as the new buyer needs in order to cover the new mortgage, you are going to have a real problem selling it.

    Complicating this is the difficulty DC property owners face in moving tenants out of a property. Your only hope, really, is to sell to someone who plans to use it as a personal residence, in which case the tenants are required to leave.

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