Most rentals in Montgomery County, Maryland fall under a rent control law that caps annual rent increases at the lesser of the local Consumer Price Index plus 3% or 6%. For the year running July 1, 2025 through June 30, 2026, the allowable increase is 5.7%, based on a CPI-U reading of 2.7%. The Department of Housing and Community Affairs (DHCA) administers the program under Bill 15-23, the Rent Stabilization Act.
How the Annual Cap Is Calculated
Each year the DHCA director sets one number that governs almost every regulated rent increase in the county. The formula takes the annual Consumer Price Index for All Urban Consumers in the Washington-Arlington-Alexandria metro area, adds 3 percentage points, and compares that to a hard ceiling of 6%. Whichever figure is lower becomes the allowance.1American Legal Publishing. Montgomery County Code – Annual Rent Increase Allowance The allowance year runs July 1 through June 30, and the new figure is published on the county website.
Landlords apply the percentage in effect on the date they issue the rent increase notice, not the date the higher rent begins. If inflation ever pushes CPI plus 3% above 6%, the 6% ceiling holds.2Montgomery County, Maryland. Rent Stabilization
The percentage applies to what the law calls “base rent.” Base rent is the amount stated in the lease after stripping out any discounts, concessions, incentives, or credits the landlord offered and the tenant accepted.3Maryland General Assembly. Bill No. 15-23 – Landlord-Tenant Relations – Rent Stabilization So if your lease shows $2,000 in rent with a $200 monthly concession, the base is $2,000, and the cap applies to that figure.
Rentals That Are Exempt
Not every rental in the county is covered. Before you count on the cap, check whether your building falls into one of the exempt categories the DHCA lists:4Montgomery County, Maryland. Rent Stabilization Exemptions
- Units that have been offered for rent for less than 23 years, along with units that have undergone substantial renovation (which resets the 23-year window).
- Rentals owned by a natural person, trust, or estate of a deceased owner who owns two or fewer rental units in the county.
- Income-restricted housing governed by a regulatory agreement with a government agency (such as MPDUs). Tenant-based voucher programs like HCVP do not qualify.
- Licensed medical facilities, assisted living facilities, and nursing homes.
- Units owned or leased by a 501(c)(3) nonprofit providing temporary shelter to qualified clients.
- Religious facilities, including churches, mosques, synagogues, parsonages, and rectories.
- School dormitories and owner-occupied group houses.
- Transient lodging (hotels, motels, short-term rentals like Airbnb) and accessory dwelling units.
When an exempt unit eventually becomes regulated, such as a new building crossing the 23-year mark, the rent the landlord was charging at that point becomes the base rent for future increases.
The Notice Your Landlord Has To Give
A landlord can raise the rent on a given unit only once in any 12-month period.5Montgomery County, Maryland. Rent Stabilization Increases and Limitations Written notice has to reach the tenant at least 90 days before the increase takes effect, and it must include:6American Legal Publishing. Montgomery County Code – Rent Adjustments; Notice Requirements
- The current rent amount
- The proposed new rent amount
- The percentage of the increase
- The date the increase takes effect
- A statement that the tenant can ask the DHCA to review whether the increase is legal
- The DHCA’s phone number, email address, and website
A notice missing any of those elements is challengeable. The landlord then has to either void it and start a fresh 90-day clock, or amend it to reflect the correct allowable increase while keeping the original effective date.2Montgomery County, Maryland. Rent Stabilization
Banked Increases and Why Your First Renewal Might Be Higher
If a landlord raises rent by less than the full allowable percentage in a given year, the unused portion can be “banked” and applied later. The county code recognizes banked amounts as a component of a rent increase.7American Legal Publishing. Montgomery County Code – Rent Increases in General; Vacant Units A landlord who raised rent 2% in a year the allowance was 5.7% can save the remaining 3.7% for a later year. The combined single-year increase (current allowance plus any banked amount) is capped, so tenants don’t face a sudden spike from years of accumulated banking.
Banking most affects new tenants. Before a landlord can file a Fair Return Application, any banked increases must be fully applied.8Montgomery County, Maryland. Rent Stabilization Landlord Applications and Petitions If you move into a unit where the landlord has been banking unused increases, expect your first renewal to include more than just the current year’s percentage.
Capital Improvement Surcharges
Major upgrades like a new roof, a new HVAC system, or structural work that extends a building’s useful life can trigger a rent surcharge on top of the standard cap. The rules split by whether the work benefits the whole building or specific units:3Maryland General Assembly. Bill No. 15-23 – Landlord-Tenant Relations – Rent Stabilization
- Building-wide improvements: the cost is divided equally among all units, spread over at least 96 months (8 years), and the surcharge cannot exceed 20% of the base rent.
- Unit-specific improvements: the cost is divided among only the affected units, spread over at least 60 months (5 years), and the surcharge cannot exceed 15% of the base rent.
The surcharge cannot start until the work is finished, and ordinary repair and maintenance costs do not qualify. The DHCA director must approve the petition before any surcharge appears on a tenant’s bill.
When Landlords Can Go Above the Cap, and When They Are Held Below It
A landlord who claims the standard cap makes the property financially unviable can file a Fair Return Application with the DHCA. Grounds include shrinking net operating income or rising operating expenses.8Montgomery County, Maryland. Rent Stabilization Landlord Applications and Petitions All units must be properly licensed and registered on the county’s Rental Housing Portal, and any banked rent must have been applied. The application requires detailed financial records: operating expenses, gross income, and maintenance costs, compared against historical benchmarks. The DHCA schedules an administrative hearing, notifies affected tenants, and a hearing officer decides whether to approve an increase above the standard cap and specifies the percentage and the period it applies. Tenants can review and respond to the request.
The rules run the other direction when a property is flagged for habitability problems. If the DHCA designates a rental “troubled” or “at risk,” the landlord cannot raise rent beyond what the director determines is needed to cover the costs of improving livability.3Maryland General Assembly. Bill No. 15-23 – Landlord-Tenant Relations – Rent Stabilization Rents can be frozen until conditions improve and the designation is lifted, and banking is suspended during that period.
How To Challenge an Increase That Looks Wrong
If a rent increase notice exceeds the published allowance, arrives fewer than 90 days before the effective date, or is missing required information, you can file a complaint with the DHCA’s Rent Stabilization Office. The fastest way is to call MC311 at 240-777-0311.2Montgomery County, Maryland. Rent Stabilization
The DHCA’s Office of Landlord Tenant Affairs handles these disputes through mediation and administrative hearings, and the service is free for both sides.9Montgomery County, Maryland. Information for Landlords If the office finds the notice violated the law, the landlord has to either void it and restart the 90-day clock or amend it to the correct allowable increase.
A landlord who ignores a Commission order or summons in one of these disputes commits a Class A violation under the county code, and the county can also ask a court for injunctive relief to force compliance.10American Legal Publishing. Montgomery County Code – Penalty for Failure to Comply with Chapter Requirements, Commission Orders, or Summonses A landlord who chooses to exit the rental business rather than comply must give tenants at least 60 days’ written notice to vacate and surrender the rental license to the DHCA director.