Landlord Applications and Petitions

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Landlords of regulated properties may apply for rent increases above the rent increase allowance or for an exemption through the following processes. All applications and required documentation must be submitted via the Rental Housing Portal. Samples of all application forms can be found on the Applications and Forms page.

Capital Improvement Petition (CIP)

Overview

A Capital Improvement Petition (CIP) allows landlords to request a temporary rent surcharge to recover the cost of major improvements made to a property. These improvements must be permanent structural alterations that enhance or rehabilitate the housing unit. Routine maintenance and repairs do not qualify.
To understand what qualifies as a capital improvement, refer to the Capital Improvement vs. Ordinary Maintenance Info Sheet.
Landlords cannot recover the cost of capital improvements completed before a CIP is approved, unless the improvement was necessary for the health and safety of the tenants. In these cases, the landlord must file a CIP within 30 days of the completion of the work. 

Capital Improvement Implementation

After all renovations are completed and a CIP is approved, a landlord may implement a surcharge to the monthly rent of affected units. This surcharge:

  • Is separate from the base rent and annual rent increase
  • Does not change over time
  • Cannot be applied mid-lease

Surcharge Limits and Duration

  • Building-wide improvements:
    • Surcharge is equally divided among all units
    • Prorated over at least 96 months
    • Cannot exceed 20% of the base rent
  • Unit-specific improvements:
    • Surcharge is shared only among affected units
    • Prorated over at least 60 months
    • Cannot exceed 15% of the base rent
Landlords may request an extension of the surcharge by submitting a Certificate of Continuation at least 90 days before the surcharge is set to expire.

Related Law and Regulation

Please review the relevant law and executive regulation for more information on the application process, calculations, and requirements for a Capital Improvement Petition.

Fair Return Application

Overview

Landlords have the right to earn a fair return on their rental properties. If a landlord is experiencing financial hardship—such as reduced net operating income or increased operating expenses—they may apply for a rent increase above the annual allowable limit through a Fair Return Application.
Before applying, landlords must ensure:
  • All units are licensed and properly registered on the Rental Housing Portal
  • Any banked rent has been fully applied to the regulated units

Fair Return Implementation

If the application is approved, DHCA will determine the Fair Return Increase amount, which will remain in effect for 12 months.
During this 12-month period:
  • No additional annual rent increase is permitted
  • However, landlords may apply a capital improvement surcharge concurrently, if applicable

Implementation Guidelines

  • If the approved increase is 15% or less, it may be implemented:
    • Within 12 months of the approval date, or
    • At lease renewal, whichever is later
  • If the approved increase is greater than 15%, it must be phased in over consecutive years.
  • For vacant units, landlords may implement the full increase (even if over 15%) in one year or upon re-rental, provided the vacancy resulted from:
    • A voluntary move-out by the tenant, or
    • A just cause termination by the landlord

Related Law and Regulation

Please review the relevant law and executive regulation for more information on the application process, calculations, and requirements for a Fair Return Application.

Substantial Renovation Exemption

Overview

A landlord may apply for a 23-year exemption from rent stabilization for an existing building if they complete substantial, permanent renovations that enhance the building and cost at least 40% of the building’s assessed value.

Substantial Renovation Exemption Implementation

Once the Substantial Renovation application is approved and all renovations are completed, a landlord may implement the exemption.
The implementation is subject to the following conditions:
  • If the landlord has violations under Chapters 8, 26, or 29 of the Montgomery County Code, the exemption cannot begin until the Department confirms that all violations have been resolved.
  • The exemption must be implemented within 12 months of approval.
  • If there are existing tenants in the rental unit, the exemption cannot be applied until the current lease term ends.

Related Law and Regulation

Please review the relevant law and executive regulation for more information on the application process, calculations, and requirements for a Substantial Renovation Application.