The majority of Montgomery County's landlords have moderated rent increases, keeping them "well within" a 10 percent a year voluntary guideline started in January 1981 when rent controls expired, according to a new report by the county's Office of Landlord-Tenant Affairs.
Despite fears by some that an end to controls would lead to huge annual increases in rent, the trend is actually to smaller increases, said Richard J. Ferrara, executive director of landlord-tenant affairs.
"We are even seeing some 4 and 5 percent rent increases now," Ferrara said. "They were higher than that when we had rent controls."
The landlord-tenant office found that in the past three months--normally the peak time of the year for rent increases--between 70 and 77 1/2 percent of all landlords raised rents by less than 10 percent. Between 19.8 and 26.3 percent had increases of 10 to 15 percent, and only 2.6 to 3.6 raised rents by more than 15 percent.
These increases were more moderate than in the same three months in 1981, the first year when voluntary rent guidelines replaced rent controls, but even then a majority of landlords were keeping the rises below 10 percent, the office noted.
Ferrara attributed the lower rent increases mainly to a large number of apartments going from condominium status to rentals because of the poor housing market. While the rental vacancy rate in 1979 was 3.1 percent, it now is around 5 to 7 percent, he said.
In addition, inflation has moderated, and energy costs have declined, Ferrara pointed out.
The landlord-tenant office also has done some jawboning to keep the increases down, writing letters and generally "bothering" landlords who announce large rent increases, he added. At the Rollingwood Apartments in Silver Spring, for example, the landlords had proposed increases of about 50 percent but finally negotiated down to 20 percent, Ferrara said.
Under the expired rent control law, landlords could not raise rents by more than 10 percent a year unless they could demonstrate that costs had risen above certain levels. Starting at the end of January 1981, voluntary guidelines went into effect by which apartments that had been under controls for a number of years could rise 15 percent annually and those that had started renting more recently could have 10 percent rises.
The rent increase statistics were part of a report the landlord-tenant affairs office has prepared for the Montgomery County Council on six rental housing assistance programs in the county. The county programs described in the report are to be continued at least through the end of the fiscal year, which just started in July, but County Executive Charles W. Gilchrist and the County Council will be reassessing them as part of the review of next year's budget, Ferrara explained.
While higher vacancies have helped keep rents in the county down generally, they have done little to ameliorate a lack of low-income rental housing, Ferrara said. This is because most of those multi-family units coming onto the market were designed for sale and therefore are in the middle and upper rental ranges; low-income rental apartments are not being built, he said.
The county is struggling with an end to federal funding of low-income housing construction and is developing its own building program by which it hopes to add 500 new low-income rental units, he said.
All of the county's rental assistance programs together in fiscal 1982 aided about 5,000 renting households, about half of them elderly, at a cost of $1.5 million, the report said.
Hardship Rental Assistance is a program directly related to the end of rent controls. Under this program, the county pays for increases above the 10 percent level for lower-income tenants. The cost in fiscal year 1982 was $307,654, and 1,579 persons now receive the assistance.
If rent increases continue to moderate, the cost of that program will decline, Gilchrist noted in a memo accompanying the report to the council.
"I am convinced that this assistance has helped to avoid panic among the relatively low number of tenants who received large rent increases following the expiration of rent controls," Gilchrist said. He added, however, that it would be inappropriate to discuss the continuation of the program beyond fiscal 1983, and that it would have to be weighed against other budget priorities.
The Rent Supplement program, the largest and broadest that the county administers, is due to expire at the end of June 1983. This cost $945,494 in fiscal 1982 and served about 3,000 persons with incomes of up to $14,892. The average grant was $30 to $40 a month.
Gilchrist said the program "has certainly been a great benefit for low- and moderate-income tenants" but said he did not want to commit to extension of the program now.
Other programs are more narrowly targeted, for the handicapped, the elderly and for tenants displaced by condominium conversions.
The new construction program being implemented works basically the same way as the federal government's Section 8 program, which the administration plans to end completely soon. Eligible low-income tenants would have their rents subsidized so they would pay no more than 30 percent of their income in rent at designated projects.
Developers interested in building rental housing under the new program are to submit proposals by July 31, and Ferrara said the county expects to get four or six good proposals.