Rental Housing Business

Rent Control and Rent Stabilization
The shared goal of DC rent control and rent stabilization is to keep tenants in affordable housing. Rent stabilization refers to rent increases in qualified units, which are subject to a set percentage rate determined by several factors, including market rates, location, and local economy.

Rent control refers to the rental rate becoming capped at a certain value.

Housing Categories

  • Apartment
  • One Family Rental
  • Two Family Rental

One-Family Rental
One-family rental, which shall include the rental of single-family homes, townhouses, duplexes, individual condominium units, or individual rooms (including individual rooms in a residential building that the licensee also occupies);

Two-Family Rentals
Two-family rental, which shall include the rental of an English basement apartment, converted basement apartment, or carriage house in a single-family home where the main residence is occupied by the property owner or another tenant; and

Apartment Houses
Apartment houses, which shall include the rental of buildings with three (3) or more dwelling units.

Requirements

Fee Schedule

Rental Housing Businesses & FeesApartment

  • 3 Units: $453.20
  • 4 Units: $508.20
  • 5 Units: $563.20
  • 6 Units: $663.30
  • 7 Units: $718.30
  • 8 Units: $773.30
  • 9 Units: $828.30
  • 10 Units: $883.30

Family Rentals

  • One Family Rental – $198.00
  • Two Family Rental – $283.80

Lindner Law Article: “If I own four or fewer DC rentals, do I need a DC Business License?”

“Small housing providers should note that if they do not register with the RAD by filing a Claim of Exemption, the housing provider is not entitled to increase the rents charged nor to any of the benefits which accrue to the housing providers that are exempt from rent control. (14 DCMR 4101.9(b)&(c)).

An additional hurdle in obtaining the “small landlord exemption” is that the small housing provider may not have an economic interest in four or fewer rental units and the housing accommodation must be owned by four or fewer “natural” persons. (DC Code §§ 42-3502.05(a)(3)). The qualification of “natural” person under the Act limits who can actually claim the small landlord exemption from rent control. Business entities, such as limited liability companies and corporations, are not considered to be a “natural” person and if the housing accommodation is titled in the name of one of these entities, the owner will not be entitled to an Exemption from rent control. (See 14 DCMR 4106.13). Furthermore, the District of Columbia Court of Appeals held in Price v. District of Columbia Rental Housing Commission that partnerships are not entitled to the “small landlord exemption”. (512 A.2d 263 (D.C. 1986)). Therefore, only natural persons who have an interest in four or fewer rental units in the District of Columbia are eligible to receive the “small landlord exemption” from rent control.

Trusts are another entity that generally do not fall within the “small landlord exemption”. However, one exception to this rule is if the housing accommodation is owned or controlled by a decedent’s estate or testamentary trust AND if the housing accommodation was, at the time of the decedent’s death, already exempt under the small landlord exemption, then the housing accommodation will continue to be exempt under the “small landlord exemption”.  (See DC Code § 42-3502.05(a)(3)(D)).”

 

Resources and Information

Being or Becoming a Landlord in the District | A Handy Resource

If you are a current or aspiring landlord in the District, we have complied this new resource to help you with your business. This eBooklet is available in a desktop or mobile version so that you can keep it handy and accessible.

Apply Online

“Skip the Trip” and Use the DC Business Portal to conduct business wherever and whenever you choose.

APPLY FOR A BUSINESS LICENSE


Definitions

“Rental unit” or “unit” means only that part of a housing accommodation which is rented or offered for rent for residential occupancy and includes an apartment, efficiency apartment, room, suite of rooms, and single-family home or duplex, and the appurtenant land to such rental unit.

(14) “Housing accommodation” means any structure or building in the District containing 1 or more rental units and the land appurtenant thereto. The term “housing accommodation” does not include any hotel or inn with a valid certificate of occupancy or any structure, including any room in the structure, used primarily for transient occupancy and in which at least 60% of the rooms devoted to living quarters for tenants or guests were used for transient occupancy as of May 20, 1980. For the purposes of this chapter, a rental unit shall be deemed to be used for transient occupancy only if the landlord of the rental unit is subject to and pays the sales tax imposed by § 47-2001(n)(1)(C).

§ 42–3401.03. Definitions. | D.C. Law Library

(15) “Housing provider” means a landlord, an owner, lessor, sublessor, assignee, or their agent, or any other person receiving or entitled to receive rents or benefits for the use or occupancy of any rental unit within a housing accommodation within the District.

§ 42–3401.03. Definitions. | D.C. Law Library


Rent Control

History Of DC Rent Control

To clarify, because DHCD and RHC do not make it clear and publishes language that varies, the rent control exemption: is for buildings containing 4 or fewer units, or an aggregate of 4 or fewer rental units owned by an individual. any rental unit in any housing accommodation of 4 or fewer rental units, including any aggregate of 4 rental units whether within the same structure or not, provided:

(A) The housing accommodation is owned by not more than 4 natural persons;

(B) None of the housing providers has an interest, either directly or indirectly, in any other rental unit in the District of Columbia;

(C) The housing provider of the housing accommodation files with the Rent Administrator a claim of exemption statement which consists of an oath or affirmation by the housing provider of the valid claim to the exemption. The claim of exemption statement shall also contain the signatures of each person having an interest, direct or indirect, in the housing accommodation. Any change in the ownership of the exempted housing accommodation or change in the housing provider’s interest in any other housing accommodation which would invalidate the exemption claim must be reported in writing to the Rent Administrator within 30 days of the change;

So: if you own various rental properties, each with less than for units, you are still capped at 4 regardless of whether or not they are in the same building. Also, you are only exempt if you file the exemption. Those who do not are automatically rent-controlled!

Here are the statutes, details and other exemptions: https://law.justia.com/codes/district-of-columbia/2018/title-42/chapter-35/subchapter-ii/section-42-3502.05/.


The Rental Housing Act

The rent control law is the Rental Housing Act of 1985 (DC Law 6-10) as amended (the Act), which is codified at DC Official Code § 42-3501.01 et seq. Under the Act, an apartment building or apartment complex is called a housing accommodation, and a single apartment or house is called a rental unit. A renter is simply called the tenant, but the landlord is called the housing provider.

The Rental Accommodations Division (RAD) administers the Act.
  • The Act applies to all rental housing accommodations in the District of Columbia
  • Certain parts of the Act, such as eviction protections, apply to all District tenants
  • Title II of the Act is rent stabilization, which applies to any non-exempt rental unit.  All rental units must be registered with the RAD either as subject to rent control or exempt from rent control.  For any unit that is not registered with RAD, rent control automatically applies.

The most common exemptions from rent control are for rental units that are:

  • Federally or District-subsidized
  • Built after 1975
  • Owned by a natural person (i.e., not a corporation) who owns no more than four rental units in the District
  • Vacant when the Act took effect

Important Rental Accommodations Division Update

The Rental Housing Commission finalized Rent Stabilization Program regulations for the Rental Housing Act of 1985 (Act) (D.C. Official Code 2001 ed., as amended, sect. 42-3501.01 et seq.). The rules were published in volume 68, number 49 of the District of Columbia Register on December 3, 2021 and may be viewed at Search – DCRegs. The new rules will go into effect on December 31, 2021. The rulemaking implements rules under the Act in Title 14 (Housing) of the District of Columbia Municipal Regulations, Chapters 38-41.

Please see the Rental Housing Commission’s website for further information and a public memorandum from the Commission’s general counsel for guidance on critical changes at Two Major Changes Coming to the District’s Rental Housing Laws | rhc (dc.gov).

The rent increase and other moratoria in effect during the declared public health emergency (pandemic) expired on January 1, 2022.

 

“Perfecting” Your Exemption

All rental units must be registered with the RAD either as subject to rent control or exempt from rent control. Any unit that is not registered with RAD as “Exempt” is automatically rent controlled.

You must give your tenant written notice of the exemption at the beginning of the lease, or simultaneous with the filing of the Claim of Exemption. Without it, your exemption is invalid.

When a landlord perfects the exemption, rent increases are not regulated, and rent increases don’t require prior filings or fulfillment of formal notice requirements.

If the exemption is not perfected, the exemption is void, rent control limits the amount and frequency of rent increases, and landlords must comply with rigorous filing and notice requirements.

This can not be overstated: Consequences for failure to file and perfect your exemption are ridiculously severe. The Rental Housing Commission demands landlords strictly comply with technical filing requirements, even where noncompliance does not hurt the tenant.

Rental Accommodations Forms

Form 1 – RAD Registration Claim of Exemption Form (English) (Spanish)

Form 2 – Housing Provider’s Amended Registration Form (English) (Spanish)

Form 3 – Housing Provider’s Disclosure to Applicant (English) (Spanish)

Form 4 – Housing Provider’s Rent History Disclosure to New and Existing Tenants (English) (Spanish)

Form 5 – Notice of Access to Records

Form 6 – Tenant’s Notice to Housing Provider of Elderly or Disabled Status (English) (Spanish)

Form 7 – Revised form forthcoming; contact RAD at (202) 442-7200 for form updates

Form 8 – Housing Provider’s Notice to Tenant of Adjustment in Rent Charged (English) (Spanish)

Form 9 – Certificate of Notice to RAD of Adjustment in Rent Charged (English) (Spanish)

Form 10 – 30 Day Notice to Correct or Vacate: Contact RAD at (202) 442-7200 for details on this form.

Form 11 – 30 Day Notice to Vacate for Illegal Act Performed (English(Spanish)

Form 12 – 90 Day Notice to Vacate for Personal Use and Occupancy (English) (Spanish)

Form 13 – 90 Day Notice to Vacate for Personal Use and Occupancy of Contract Purchaser (English) (Spanish)

Form 14 – 120 Day Notice to Vacate for Renovations or Alterations (English) (Spanish)

Form 15 – 180 Day Notice to Vacate for Demolition (English) (Spanish)

Form 16 – 120 Day Notice to Vacate for Substantial Rehabilitation (English) (Spanish)

Form 17 – 180 Day Notice to Vacate for Discontinuance of Occupancy (English) (Spanish)

Form 22 – 70% Voluntary Agreement Petition (English) (Spanish)

Form 23 – Tenant Petition Complaint (English) (Spanish)

Form 24 – Tenant Payment Plan Complaint (English) (Amharic) (Chinese) (French) (Korean) (Spanish) (Vietnamese)

Other Rental Accommodations Information

Housing Affordability Protections for Elderly Tenants and Tenants with a Disability

As of April 7, 2017, elderly tenants and tenants with disabilities who live in rent-controlled units have new housing affordability protections. DC Law 21-239, the “Elderly Tenant and Tenant with a Disability Protection Amendment Act of 2016,” caps the annual standard rent increase for qualified tenants, without regard to the tenant’s income, at the least of the following three amounts:

  1. The Social Security Cost-of-Living Adjustment (COLA);
  2. The Consumer Price Index (CPI); or
  3. Five (5) percent of the current rent charged.

The new law also permits a tenant to register elderly or disability status by mail, fax, email, or in person at DHCD’s Rental Accommodations Division (RAD). This makes it easier for the elderly tenant or tenant with a disability to take advantage of the new protection.

View the OTA’s information sheet “What you need to know about The Elderly Tenant and Tenant with a Disability Protection Amendment Act of 2016.”

 

Tenant Payment Plan Complaint Fact Sheet [PDF]

Tenant Payment Plan FAQ

Rent Registration Process Fact Sheet [PDF]

Rent Control Fact Sheet 

Pamphlet – What You Need to Know About Rent Control [PDF]

A Rent Control Report for the District of Columbia [PDF]

Certification and Notice of Annual Rent Adjustment

DC Code For Rental HousingDC Register Dec 3 2021

Rent Control Rules

The Rental Housing Commission writes regulations under the Act.

Rent Control Terms Under the Act:

An apartment building or apartment complex is called a housing accommodation

  • A single apartment or house is called a rental unit
  • A tenant is a tenant
  • A landlord is referred to as a housing provider.

Applicability

The Act applies to all housing accommodations in the District of Columbia, unless they are specifically exempted by the Act, as described at the top of this page. Rental units that were vacant when the Act took effect, and housing accommodations under a building improvement plan and receiving rehabilitation assistance through DCHD.

Registration

Every housing accommodation or rental unit must be registered with RAD by filing a RAD Registration and Claim of Exemption form. Once registered, the housing accommodation or rental unit is assigned a registration number if it is subject to rent control. If it is exempt, it is assigned an exemption number. If a housing accommodation was initially exempt from the Act but later becomes subject to the Act, the housing provider must amend the RAD Registration and Claim of Exemption form at that time. Changes in ownership or management must be filed with RAD within 30 days of the event.

Increases in Rent Under the Act

Any increase in rent must meet these conditions:

1. The new rent charged may not be more than the prior rent plus an allowable increase, as described below. What You Should Know About Rent Control in the District of Columbia Department of Housing and Community Development 1800 Martin Luther King Jr. Avenue, SE Washington, DC 20020 (202)442-7200

2. The increase in rent charged cannot be more than the increase allowed under any single section of the Act.

3. The last increase in rent must have been at least 12 months ago (unless the unit is vacant).

4. The increase must not violate the terms of the lease.

5. The housing accommodation must be properly registered with the RAD.

6. The rental unit and the housing accommodation’s common elements must be in substantial compliance with housing regulations.

7. The housing provider must give a 30-day notice of any increase in rent.

Allowable Rent Increases

The most common allowable increase in rent is an annual adjustment, based on the increase in the Consumer Price Index (CPI-W). The most that rent can increase is the CPI-W percentage plus 2%, but not more than 10%.

For tenants who are elderly or disabled, the maximum increase in rent charged is the CPI percentage only, but not more than 5%.

Allowable increases based on CPI are sometimes called automatic — because no petition or other special steps are required.

Rent Increases When a Unit Becomes Vacant or “Vacancy Increase”

The only exception to the limit of one rent increase per year is when a rental unit becomes vacant. The housing provider can raise the rent charged upon a vacancy to 10% more than was charged to the former tenant, or rent for a comparable rental unit, but not more than 30%. Comparable rental units have essentially the same square footage and floor plan; comparable amenities and equipment; comparable locations with respect to exposure and height (if exposure and height have previously been factors in the amount of rent charged) and comparable physical condition. Once there has been a vacancy increase in rent, the housing provider cannot make another increase in rent for 12 months, even if another vacancy occurs.

Other Allowable Rent Increases

A housing provider may choose to seek larger allowable increases under other provisions of the Act, including hardship, capital improvements, services and facilities or substantial rehabilitation, or agreement with 70% of the tenants. The other allowable increases, described in more detail below, are not automatic. The housing provider must petition or otherwise seek the consent of the Rent Administrator, and tenants may choose to participate in the process, often at hearings before an administrative hearing judge. Hardship Under the Act, housing providers are allowed to raise rents enough to earn a 12% rate of return on the housing provider’s rental property investment. To apply for this increase, the housing provider must document operating expenses for 12 of the last 15 months preceding the filing of the hardship petition. RAD will notify the tenants that a hardship petition has been filed and allow the tenants to designate a representative to support or oppose it. RAD performs an audit of the hardship petition and supporting documents. The Rent Administrator issues an order granting or denying the hardship petition. The housing provider and tenants may each submit exceptions and objections to the Rent Administrator’s order. If DHCD exceptions and objections are submitted, a hearing will be held with OAH to resolve the disputed matters. OAH then issues an order setting the rent increase.

Capital Improvements

A housing provider can petition to raise rents by an amount enough to cover the cost of capital improvements. A capital improvement is an improvement or renovation other than ordinary repair, repair or maintenance if the improvement or renovation is deemed depreciable under the Internal Revenue Code. A housing provider files a petition, serves copies to the tenants, and presents the case to the Office of Administrative Hearings (OAH). The capital improvement petition must be filed no later than 10 calendar days after the installation of the capital improvements. Tenants may support or oppose the petition. If OAH approves the surcharge, the housing provider performs the work and may then raise rents. OAH makes a ruling on the petition, based on:

  • Whether the improvement will protect or enhance the health, safety and security of the tenants or the habitability of the housing accommodation;
  • Whether the improvement will be depreciable under the Internal Revenue Code;
  • Whether required governmental permits and approvals have been secured; and  Whether the design and cost of the work are sufficiently documented. In addition to the work’s cost, the housing provider can include financing costs, including interest and service charges.

The housing provider must spread the costs of a building-wide improvement project for 96 months. For an improvement to one or more but not all rental units, the costs must be spread over for 64 months. Only units affected by the capital improvements are subject to rent increases. The surcharge may be no more than 20% of the prior rent charged for a building-wide capital improvement and no more than 15% for an improvement that does not affect all rental units. The Act allows a housing provider to continue the surcharge until the housing provider has recovered all costs, including interest and service charges, of the capital improvement. Certain low-income elderly and disabled tenants can be exempted from a capital improvement surcharge. The increase is terminated once the housing provider recovers all costs of the capital improvements. This type of increase in rent is called a surcharge.

Services & Facilities

The Act allows an adjustment in rents when related services or facilities supplied by a housing provider or a housing accommodation or for any rental unit in the housing accommodation are increased or decreased. A housing provider files a petition, serves copies to the tenants, and presents the case for the change at an OAH hearing. Tenants may support or oppose the petition. The OAH makes a ruling on the petition, based on:

  • The cost to the tenant of buying alternate related services or facilities comparable;
  • The operating cost to the housing provider of the related services or facilities;
  • The fair market value of comparable related services or facilities.

Substantial Rehabilitation

The housing provider may submit a petition to raise rents for a substantial rehabilitation of the housing accommodation. A substantial rehabilitation petition is filed only when proposed rehabilitation cost equals or is more than 50% of the real property tax assessment of the rental unit or housing accommodation. The petition must include detailed plans, specifications and projected costs. The tenants are notified, a hearing is conducted, and the OAH issues a decision before the work starts. The maximum allowed rent increase is 125%. This rent increase is not a temporary surcharge, but a permanent increase. When determining if a substantial rehabilitation is warranted, OAH considers:

  • Whether the substantial rehabilitation is in the interest of the tenants;
  • The existing physical condition of the rental unit or housing accommodation as shown by reports or testimony of DC housing inspectors, licensed engineers, architects and contractors, or other qualified experts;
  • Whether the existing physical condition impairs or tends to impair the health, safety or welfare of any tenant;
  • Whether the existing physical conditions can be corrected by improved maintenance, repair or capital improvement;
  • The impact of the proposed rehabilitation on the tenant or tenants in terms of proposed financial cost, inconvenience, or relocation.

70% Voluntary Agreement

The Act allows tenants of a housing accommodation to enter into a Voluntary Agreement with the housing provider to establish the rent, capital improvements, services and facilities, or repairs and maintenance. If the housing provider initiates the Voluntary Agreement, the tenants must be given at least 14 days to review it following the filing of the Voluntary Agreement with RAD and service on the tenants. The Rent Administrator must approve the Voluntary Agreement and any conditions in the Voluntary Agreement must be met, before rents can be raised. If approved, the Voluntary Agreement will affect all tenants, including those tenants who did not sign the Voluntary Agreement. Tenant Petition A tenant who believes that a rent adjustment is incorrect may file a tenant petition with RAD. When a petition is filed:

1. RAD accepts the Petition,

2. RAD sends the Petition to OAH for a hearing,

3. OAH conducts a hearing,

4. The tenant and the housing provider each present arguments

5. OAH issues a decision and order.

A tenant petition may address any perceived violation(s) of the Act. Protections for Elderly and Disabled People A tenant who believes he or she fits the definitions of elderly or disabled under the Act must file an application with the Rent Administrator and give a copy of the application to the housing provider. To qualify:  As elderly — a tenant must be at least 62.  As disabled — a tenant must have a disability as defined by the Americans with Disabilities Act of 1990 (title 42, section 12102(2)(A) of the United States Code). Act and Regulations This pamphlet is intended to outline the Act, but does not include every detail. Interested parties are encouraged to review the Act and its regulations, or to ask a lawyer or housing professional for more help.

More Detail

Resources

  • Rent Increase Information – Contact the Rental Housing Commission at (202) 442-8949 to determine how much you can raise rent
  • Hardship Petitions for Landlords – Contact the Rental Accommodation Division at (202) 442-9505
  • Capital Improvements – Contact the Rental Accommodation Division at (202) 442-9505

Rental Housing Conversion & Sale

Information

Rental Property DC Taxation

Landlords in DC are considered unincorporated businesses. Unincorporated businesses with gross income in DC of over $12,000 from any of (but not limited to) the activities listed below, must file a D-30 return:
• Rental of real or tangible personal property; or
• Leasing of real or tangible personal property; or
• Any other similar arrangement.

The minimum tax is $250 if DC gross receipts are $1M or less. Minimum tax is $1,000 if DC gross receipts are greater than $1M. DC Gross receipts for purposes of minimum tax includes District gross receipts that are derived from any activity such as sales, rents, services, commissions, etc., from any source within the District. Gross receipts
are determined without deduction of any expenses.

For questions and updates, please consult your tax advisor, or contact the DC Department of Tax and Revenue at 202-727-4TAX

More Information

Property Depreciation Write-Off

Article

Rental Property Tax Loopholes

Article

DC Landlord-Tenant Law Highlights

Article

Does The Federal Fair Housing Act Apply To Your Property?

Article

Rental Cap For The Elderly & Disabled

Protections for Elderly and Disabled People

A tenant who is elderly or has a disability as defined by the Act is entitled to a lower rent increase cap (CPI instead of CPI + 2%). A tenant who believes he or she qualifies under either category must file an application with RAD and give a copy of the application to the housing provider. To qualify:

As elderly, a tenant must be at least 62 years of age;
As a person with a disability, a tenant must have a medically-determinable physical impairment, including blindness, which prohibits and incapacitates 75 percent of the tenant’s ability to move about, to assist him- or herself, or to engage in an occupation.
Under the Act, a tenant is not qualified as elderly or disabled until RAD determines his or her status.