Affordability is making it difficult for people to live in Maryland. A contributing factor is a shortage of houses. There was a 96,000-housing unit shortage in 2024. State legislators responded by enacting new legislation. Turning the Key: Unlocking Maryland’s Potential.
The Renters’ Rights and Stabilization Act in Maryland is legislation designed to protect tenants and renters by regulating rent increases. It ensures fair housing practices and offers tenants legal recourse against unfair or discriminatory treatment by landlords. It aims to balance the rights of tenants with the rights of property owners. While laws can vary across jurisdictions, there are a few key elements that apply statewide or in specific local areas.
1. Security Deposits:
Maryland has specific regulations around security deposits.
- Landlords can’t require security deposits that are more than one month’s rent, with limited exceptions.
- Landlords can’t require more than two month’s rent (security deposit + first month) to be paid at lease signing and before move-in.
- Security deposits are to be returned promptly after a lease ends, as long as no damages or unpaid rent exist.
2. Rent Stabilization:
Some areas of Maryland have laws that limit how much a landlord can increase rent over a given period. The laws prevent sudden, large rent hikes that force tenants to leave their homes due to financial strain.
- Rent Increase Limits: Rent increases must be reasonable, with caps on how much landlords can raise rent within a year.
- Notice Requirements: Landlords should give tenants ample notice before raising rent (e.g., 60 days or more).
3. Tenant Protections:
The act includes provisions to prevent unjust evictions.
- Eviction Protections: Landlords can not evict tenants without cause and must follow legal processes. Evictions can not be conducted during extreme weather conditions.
- Notice of Lease Changes: Tenants must receive proper notice if a landlord plans to end their lease or make significant changes to the lease terms.
- Right to Repair: Tenants have the right to request repairs if the property falls below a certain standard of habitability.
4. Fair Housing:
Maryland’s laws also prohibit discrimination based on race, color, national origin, religion, gender, disability, and family status. This ensures tenants can’t be denied housing or treated unfairly based on these characteristics.
5. Right of First Offer/Refusal:
HB 693 – Renters’ Rights and Stabilization Act of 2024 allows three scenarios for tenants to offer to purchase a property before a landlord lists it for sale. Landlords must go to the Right of First Refusal Portal.
Why Should Investors Care?
Investors in rental properties and homeowners should be aware of these laws for several reasons:
- Regulation Compliance: Investors must comply with rent stabilization and tenant protection laws. Failing to do so could result in fines, lawsuits, or having to return rent increases.
- Predictable Income: Rent stabilization can limit the potential for large rent increases. This means investors may not raise rents as quickly as they would like.
- Tenant Retention: By respecting tenant rights and providing a habitable, fair environment, investors can reduce turnover and maintain stable rental income. Happy tenants tend to stay longer, reducing vacancy costs.
- Reputation and Legal Risks: Landlords who violate tenants’ rights may face legal challenges, damage to their reputation, and potential lose property if lawsuits result in significant settlements. Investors need to ensure they have proper procedures in place to handle evictions, rent increases, and tenant complaints.
- Market Conditions: Rent stabilization laws affect property value and rental market dynamics, especially in areas with stringent rent control measures. Investors should understand local regulations to gauge potential returns on investment.
- Affordable Housing Incentives: Landlords may have tax break incentives or other benefits to maintain affordable rental rates. Investors should understand how these incentives work if they own properties in areas with rent stabilization programs.
In summary, renters’ rights and stabilization laws ensure fairness and affordability for tenants, while providing landlords and investors with guidelines to protect both their property rights and financial interests. For investors, understanding these laws is crucial for managing rental properties legally, ensuring tenant satisfaction, and making informed financial decisions.
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