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Tenant lobbyists have been asking the General Assembly to pass enabling legislation allowing counties to enact good cause legislation for years. These groups argue that housing providers are abusing their right to non-renew lease agreements and unjustly pursue evictions.
Housing providers have fought this effort because it lengthens the time it takes to evict nuisance tenants, raises legal costs and requires housing providers to screen tenants more rigorously.
This year, we engaged in good-faith negotiations to find a workable compromise. While our organizations and members recognize the need for protecting renters, this must be balanced with the challenges of operating rental housing in Maryland. That is why we came to the table with two asks.
First, the bill must include clear language encompassing a range of behaviors that allow a housing provider to not renew a lease. This clarity will enable courts to easily determine what constitutes a legal cause for non-renewing a lease while allowing housing providers to effectively enforce their lease agreements when specific violations occur. Examples include repeated nonpayment of rent, violation of housing safety codes, illegal activities on the leased premise and repeated disorderly conduct.
Second, the bill must prevent localities from adopting both good cause and vacancy control simultaneously. Vacancy control limits how much rent a housing provider can charge at the end of a tenancy. It does not impact rent controls for existing tenants. These two issues are tied together because advocates claim that the absence of good cause gives the housing provider a perverse incentive to not renew a lease to raise rents. Over time, however, vacancy control prevents housing providers from recovering high turnover costs.
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For example, a tenant rents a rent stabilized unit that is limited to below market rents for 10 years. The tenant then decides to move for work, to buy a house, or for any other reason. After the tenant moves out, the housing provider must spend thousands of dollars to turn over the unit.
A basic turnover includes cleaning, painting, marketing and at least two months of foregone revenue while the unit is vacant. A more extensive turnover can include new flooring, appliances, drywall replacement, and any other repair that is needed to bring it to market standards.
Under vacancy control, none of these costs can be recouped by resetting to market rents. If vacancy control were imposed on homeowners, they could not sell their home for market value. Instead, homeowners would only be able to sell for what the county government dictates is a fair increase in value.
At their core, both vacancy control and rent control are about preventing tenant displacement, not housing affordability. The only solution to housing affordability is building more housing. In fact, vacancy control alone has been found to cause a decline in the number of rental units. Our solution is to give local governments that choice between good cause eviction and vacancy control.
This caused the tenant advocates to move the goalposts. They now claim that vacancy control is not just an anti-displacement tool, but also necessary to maintain housing affordability. This claim ignores the extensive research demonstrating the impact of rent control on housing supply.
Take Montgomery County, which implemented a rent control law that includes vacancy control last year. Institutional real estate investors have responded by redlining the county, rightly assessing that the regulatory risk, heightened by the rent control law and other regulations, is far too high. As a result, developers cannot attract investment, severely suppressing new housing construction.
This same dynamic has happened in other jurisdictions. St. Paul, Minnesota, passed a rent control law with vacancy control in 2021. Three years later, the city continues to experience a steep decline in housing production as investors choose to take their capital elsewhere.
Which brings us back to Good Cause. There’s an agreement on the table that would provide these eviction protections to renters in the state. Tenant lobbyists that have supported this policy for decades are now poised to oppose it at the last moment on a flimsy affordability argument that doesn’t hold up to scrutiny. The General Assembly should not deprive Marylanders of these protections because a few dogmatic groups want to use renters as pawns to score political points.