What Happens When Your “Section 8” Tenant Moves Out

In Legislation, Real Estate by Richard Bianco

On November 7, 2017, Council members Bonds and Nadeau introduced legislation to limit the rent that a landlord may charge for a unit after termination of a Federal or District subsidy. The Rental Housing Affordability Re-establishment Act of 2017 essentially provides, that upon termination of a tenant subsidy, a landlord may only charge a tenant the rent charged for that unit prior to the subsidy, plus, an increase of “general applicability” for each year that the subsidy based exemption was in place.

If you think that is a lot to get your head around, read the Act and try to follow the cross-references through the statutory framework. The way the Council attacked this issue is by glomming onto an existing section of the rent control that was written for cooperative units. That section, designated 42-3502.09(c) provides that a unit exempt from rent control because it is co-op unit owned by less than four (4) natural persons, once it again becomes subject to rent control, has its rent level set at the amount charged prior to the exemption, plus increases of “general applicability” for each year the exemption was in place.

In case you were wondering, an increase of “general applicability” is the standard rent increase that landlords are entitled to take once per year, in an amount equal to the consumer price index increase (CPI-W) plus two percent (2%).

If the proposed legislation is ultimately adopted, the section of the rent control law that governed rent level for exempt co-op units re-entering rent control would likewise apply to rental units exempt from rent control because of rental (or mortgage) subsidies.

It is not clear, to me at least, what effect this will have on rental units citywide, but, if you are a landlord receiving rental subsidy payments for your tenants, it is not difficult to calculate how this might affect you if the subsidy is terminated. For more information about how this proposed legislation, if passed, might impact you, contact us for an evaluation.

*** UPDATE*** At the legislative meeting on November 7, 2017, the Council voted on and adopted this Temporary Act. It has been transmitted to the Mayor, who can either sign or veto the measure by November 30, 2017