Washington’s cap on yearly rent increases is just over a month old, but implementing the law is already sowing confusion for both tenants and landlords.
The law caps increases at 7% of a person’s rent plus inflation – no more than 10% total. The Department of Commerce calculates the cap amount each June. The law passed the Legislature in April and went into effect immediately with Gov. Bob Ferguson’s signoff last month.
But as the law has taken effect, a delay in determining the statewide cap amount and the half-dozen exemptions included in the law have led to frustration and confusion.
Now, tenant advocates and property-owner organizations are encouraging renters and landlords to brush up on their legal responsibilities and reach out for assistance if they are unsure how to handle a rent increase.
“My biggest concern is making sure that the law is clear to tenants,” said Michele Thomas, director of policy and advocacy at the Washington Low Income Housing Alliance. “Landlords knowing what their legal obligations are is going to be really important as well so that they don't unintentionally issue illegal rent increases or claim exemptions that do not apply to them.”
Confusion for property owners
One of the most significant sources of confusion for property owners was the delay in finding out the yearly cap amount.
The Department of Commerce on May 30 announced that the cap for the rest of the year would be 10%, but because the law went into effect immediately in early May, by then more than three weeks had gone by without a set cap.
The lack of clarity on the amount made it difficult to educate property owners ahead of time, said Sean Flynn, president and executive director of the Rental Housing Association of Washington. It put many property owners “in an impossible situation.”
“It felt really fundamentally unfair,” Flynn said.
Some property owners who had leases end in the past month gave their tenants short-term leases until the cap was set. Others chose not to raise their rent past 7% in case that turned out to be the cap.
Some property owners weren’t aware of other new requirements in the law, like specific language that must now be included with any rent increase, he said.
Laurel Demkovich
Exemptions add up
Thousands of renters across Washington are likely exempt from the caps on yearly rent increases, but because Washington does not track the number of rental units across the state, it’s hard to know exactly how many fall into the exemption categories.
The one that is expected to include the most people is the exemption for recent construction – buildings that are 12 years old or newer.
The number of multifamily units being permitted has steadily increased in recent years, especially in the Puget Sound region. According to the state Office of Financial Management, the multifamily housing stock increased by about 8% each year from 2019 to 2024.
Seattle alone added more than 6,300 new multifamily units between 2019 and 2022, according to city permit data. More than 11,000 multifamily units have been built since 2016.
The Puget Sound area’s multifamily boom started in 2021, likely due to higher demand for apartments post-pandemic, said Steve Bourassa, director of the Washington Center for Real Estate Research at the University of Washington. That spike is now starting to stabilize, he added.
“There was that volatility for a couple of years,” he said. “Now we’re back in a more stable situation, and I think we’re going to see relative stability for the next couple of years.”
As Washington continues to increase its housing stock, Thomas said she worries that many more renters won’t be covered by the new cap. The 12-year exemption was “a necessary political compromise” to get the proposal across the finish line, she said.
Many opponents of the caps, including builders, property owners and businesses, argue that it will drive out new development in Washington. The 12-year exemption was an attempt to mitigate those concerns.
“This is the way of legislation,” Thomas said. “There’s always exemptions or contradictions that get in there, and it’s always politically based.”
But builders say the exemption won’t actually do much to keep new development here. Janelle Guthrie, spokesperson for the Building Industry Association of Washington, said many smaller rental units are funded through 30-year mortgages and larger multifamily units are financed with 20-year loans.
The problem with any arbitrary cap on rents is that property taxes and maintenance costs continue to increase and eviction laws continue to change, she said.
“All of that goes into the decisions investors make when it comes to providing financing for multifamily/rental properties,” Guthrie said.
Bourassa, on the other hand, said he does not anticipate that the new cap will have much effect on new rental housing construction. Many developers look only about 10 years ahead, he said, and with the statewide cap currently set to expire in 2040, many new buildings wouldn’t even have to follow it.
New construction isn’t the only category exempt from the law. Units owned by a public housing authority or a nonprofit organization; low-income housing developments; and projects that receive federal low-income housing tax credits are all off the hook.
In 2023, Washington had more than 155,000 subsidized housing units, financed by the state Housing Trust Fund, public housing authorities, federal housing dollars and other sources, according to the University of Washington Center for Real Estate Research.
Most of this housing is already under rent limits set in other laws or grant guidelines. Failing to follow those caps could result in losing federal or state funding assistance.
The new law also exempts housing where the owner lives on the property, as long as the owner is not a corporation or real estate investment trust.
Farah Eltohamy
‘Comply, comply, comply’
How exactly the new law and its exemptions play out will take time, but Thomas said it will be important for both tenants and property owners to know their legal responsibilities.
Many tenants might not know if they are in an exempt building because they might not know who owns their building, what financing tools their building uses and how old their building is, Thomas said.
“If they’re not sure if [an increase] is legal, tenants should contact a legal services attorney to try to get some legal advice right away,” Thomas said.
Flynn encouraged small or midsize housing providers to reach out to the Rental Housing Association of Washington for assistance on making sure they follow the law. He said the organization has hosted webinars and in-person trainings to help providers make sense of the new requirements.
“What we’re telling people is ‘Comply, comply, comply,’” Flynn said. Over time, he added, it will get easier.
Resources aimed at helping landlords and tenants understand the policy are already taking shape.
The Department of Commerce has a landlord resource center website with information about the yearly cap and how to receive legal help for resolving tenant-landlord disputes.
Organizations like the Northwest Justice Project are compiling a resource for tenants who need legal assistance. It includes information about who qualifies under the cap, what to do if a tenant thinks they’ve received an illegal rent increase and the responsibilities of landlords to notify tenants of a rent increase ahead of time.
