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The majority of D.C. residents are renters, and the majority of D.C. rental units are subject to rent control. If you’re a member of this large chunk of the population, that means your rent can’t go up each year by more than the rate of inflation plus two percent.
Unless you get a letter in the mail saying your rent will go up by 31 percent. Or 45 percent. Or 98 percent.
Built into D.C.’s rent-control law is a series of exceptions that allow landlords to petition the city for larger-than-usual rent hikes if they can’t otherwise make a big enough profit. The most prevalent among these is the hardship petition: If landlords are earning less than a 12 percent annual return on their investment, a hardship petition allows them to increase the rent by whatever amount needed for them to hit the 12 percent mark.
But sometimes these petitions are simply a negotiating tactic to get tenants to agree to a different type of rent-control exception, called a voluntary agreement. These days, voluntary agreements are increasingly employed as follows: The landlord agrees to make repairs to the building, without increasing rents for current tenants. In exchange, the tenants agree to allow the landlord to impose large rent increases on future tenants. And the landlord offers current tenants a generous buyout if they leave the building.
It’s a win for the tenants, who can choose between keeping their rents or taking a payout. And it’s a win for the landlord, who clears out apartments and gets to start charging much higher rent. But those vacated units are permanently less affordable. It’s a classic tragedy-of-the-commons scenario, where what’s good for the individual actor (the current tenant) is bad for the overall class (D.C. renters who can’t afford to lose low-cost housing).
With market rents rising fast, D.C. property owners have a growing incentive to seek these exceptions for their rent-controlled buildings, particularly in neighborhoods that are suddenly much more desirable than they were five or 10 years ago. It’s a bounty for landlords, and for certain tenants. But it’s one of the greatest threats to affordable housing in the District.
It’s also the subject of my cover story in this week’s paper. You can read it here.
Photo by Darrow Montgomery