Landlords are now suing over bans on rent increases

Back in May, the Baltimore City Council passed a new law forbidding landlords from increasing the rent on their properties for the duration of the declared state of emergency caused by the pandemic and for three months after it was lifted. Two surrounding counties quickly passed almost identical laws. While there was some grumbling about it at the time, that was when we were still being told that the worst of the plague might be gone by the summer and things could be returning to normal. Well, that didn’t happen, obviously. The state of emergency in Maryland has been extended six times by the Governor and it’s not expected to end until next year at the rate things are going.

This has left Baltimore’s landlords in an untenable position. Too many tenants aren’t paying rent at all, and those who are can’t have their rent increased as had been previously anticipated and planned for by the landlords. But the bills still keep coming due, maintenance has to be done and taxes must be paid. A group of landlords owning a total of thousands of rental units in the city and surrounding counties have gone to court, suing for the right to raise the rent as previously scheduled. (Baltimore Sun)

The companies — which together own more than 2,000 residential rental units in Baltimore City, Howard County and Salisbury — are suing their local governments over three similar, recently enacted laws that bar landlords from raising rent or charging late fees during the state of emergency.

At the same time, housing advocates have been sounding the alarm about a looming eviction crisis as hundreds of thousands of people in Maryland grapple with unemployment and financial insecurity. Families fear they may lose their homes if they are unable to pay rent while weathering the economic turmoil spurred by the pandemic.

This lawsuit is focused on the landlords’ ability to institute rent increases, rather than challenging any of the state’s orders regulating eviction. The plaintiffs are seeking to have the laws overturned, as well as an unspecified payment from the municipalities to make up for rent increases the landlords weren’t able to put in place.

These same companies previously went before U.S. District Judge Stephanie A. Gallagher to ask for an injunction on the ban on raising rental rates. While the judge agreed that the landlords were suffering “significant harm” from the order, she also said that allowing the rent increases under current conditions could push even more people toward the brink of financial ruin. Unaddressed in her ruling was what would happen to the landlords (and the Baltimore housing market) if they were the ones pushed into financial ruin.

Meanwhile, a new wave of evictions is expected this month when the ban on evictions expires. But the landlords are obviously aware that the eviction ban could be extended as well, and most likely will. The state and local government politicians are far more worried about the optics of tens of thousands of renters winding up out on the streets than the electoral impact of a few hundred landlords being driven out of business.

As we have been discussing for the past two months, the eviction crisis isn’t just “on the way.” It’s already upon us. The only question now is whether it will be the renters who are facing immediate ruin or the landlords. And even if the landlords fall first, that back rent is going to come due sooner or later when the state of emergency ends and the renters will be following them into the poor house. This has thus far been a problem without an obvious solution outside of more taxpayer bailouts. But the leaves on the money tree are growing thinner by the week.

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David Strom 6:40 PM | April 18, 2024