How to Determine Whether Your Rental Property is Subject to Rent Regulation - dummies

How to Determine Whether Your Rental Property is Subject to Rent Regulation

By Robert S. Griswold, Laurence Harmon

As a landlord, you may be able to save yourself a lot of time getting up to speed on rent regulation statutes by first determining whether your property is subject to such regulation. The following information identifies areas in the United States where rents for certain properties are regulated and, if you’re operating in a regulated area, whether your property is exempt from such regulation.

Finding out whether you’re operating in a rent-regulated area

Rent regulation currently applies only to residential rental properties in Washington, DC, and specific cities or counties in California, Maryland, New Jersey, and New York. Most states preempt rent control, meaning they prohibit municipalities from enacting rent-control statutes. The remaining states have no rent-control statutes and no preemption.

However, regardless of where you operate, you need to check with your state or local housing authority or rental association to determine whether your area is subject to rent regulation, because laws change.

Determining whether your property is exempt

Even if your rental property is in a rent-regulated area, it may not be subject to regulation. Common exemptions include the following:

  • The building was built after a specific year. For example, in San Francisco, buildings constructed after June of 1979 are exempt from rent control.

  • The building has been substantially renovated. What qualifies as substantial is usually tied to the cost of renovations; for example, in Oakland, California, the amount spent on renovating the property must be at least 50 percent of the cost of constructing a similar building that’s new.

  • You’re providing subsidized housing.

  • You own the property as a natural person (personally, not through a corporation), and it has no more than a certain number of units (for example, four rental units in Washington, DC).

  • You own the property and live in one of the units, and the property has no more than a certain number of units.

  • The property was vacant when the statute took effect or for a specific period of time after the statute took effect.

In rent-regulated areas, a regulation board (often referred to as a rent control board or rent stabilization board) is usually in charge of enforcing regulations. Contact the board to find out what the exemptions are. You may also find exemptions online. Search for your state and municipality followed by “rent control” or “rent stabilization.”

Even if your property qualifies as exempt, you may need to file paperwork to obtain an exemption number before you can increase the rent.

Registering your property

If your property is subject to rent regulation of any kind, you probably need to register the property with the agency in charge of regulating the rent. This may be the local housing authority or rent control board. Failure to register your property could lead to hefty fines.