Today, I testified before the D.C. Council in support of Bill 20-311, the Rent Control Hardship Petition Limitation Amendment Act of 2013. The legislation, if passed, would limit landlords’ ability to displace tenants based on the filing of a “hardship petition.”
As background: The Rental Housing Act, D.C.’s rent stabilization law, generally permits landlords to take yearly rent increases that are slightly above the rate of inflation. But the Act, which was last revised in 1985, also guarantees landlords a twelve percent rate of return on their equity in the property. If landlords are not making twelve percent on the investment, they can increase rent – often by more than 50 or even 100 percent – to get to the guaranteed level of profitability. This is called a claim of hardship.
One of the biggest problems with this setup is that although tenants have a right to challenge a landlord’s hardship claim, they typically cannot do so until long after the increase takes effect. This means that tenants may have to pay large rent increases, or be evicted for not paying them, even if the D.C. government ultimately rejects the landlord’s claim.
Another significant problem with the hardship law is that it permits landlords to impose hardship increases based on motives unrelated to the desire for more profit. In many cases, the hardship petition is simply designed to empty the building of its tenants, so that the landlord can sell it, convert it to condominiums, or take other action without regard for the tenants’ rights.
The legislation includes provisions to address both of these defects. First, it would limit any rent increase to five percent until the tenants have had a full opportunity to challenge the landlord’s hardship claim. Second, it would penalize a landlord for filing a hardship petition in bad faith.
In the oral and written testimony we submitted at the hearing today, Legal Aid expressed support for the legislation and made suggestions about how to strengthen it even more. We look forward to working with the Council as it crafts a solution to this important issue of affordable housing.