A group of roughly two dozen housing providers across Maryland are challenging laws that are intended to protect tenants from rent increases during the coronavirus pandemic.
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.
They argue the trio of ordinances are unconstitutional and harm property managers “trying to navigate serious property management concerns during a pressing financial and public health crisis.”
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.
In Baltimore, the City Council passed legislation in May to prevent a landlord from raising a tenant’s rent during the current state of emergency and for three months after it’s lifted. If a rent increase was scheduled to take effect after March 5 — the date Republican Gov. Larry Hogan declared the state of emergency due to the coronavirus — landlords were to inform tenants to disregard that change.
“When you don’t know where your next check is coming from, you shouldn’t have to worry or stress about your landlord raising rent during the biggest health and economic emergency of our lifetime,” City Council President Brandon Scott, a Democrat, said at the time.
Howard County and Salisbury followed suit within weeks. Lawyers representing each jurisdiction declined to comment on the pending litigation.
From the landlords’ perspective, the legislation “unlawfully prohibits housing providers from exercising their renewal rights (which include the right to increase rent) in existing leases,” according to the lawsuit. Many of the companies behind the lawsuit operate several hundred units, though some own just a handful.
Attorney Michael Blumenfeld said the laws canceled out standard agreements made months before the state of emergency. Landlords described in court documents how they rely on anticipated rental increases when budgeting for payroll, maintenance, security and other expenses.
It’s unclear how long Hogan will keep the current state of emergency in place; he has renewed it six times, most recently on Thursday. COVID-19 cases are on the rise in Maryland.
U.S. District Judge Stephanie A. Gallagher denied the landlords’ request for a temporary restraining order last month. In her opinion, the judge said she did not intend to “minimize the significant harm” that the businesses are dealing with.
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“Housing providers are not immune from the economic havoc that COVID-19 has wreaked in this state, and across the country,” she wrote.
“The inability to increase rent, and to fully yield what the market might dictate for a particular property, must feel interminable, particularly where it prevents the entities from budgeting and making accurate financial projections,” the judge wrote.
“On the other hand, this court is understandably reluctant to disturb legislative enactments, intended to address the needs of Marylanders during a time of sincere desperation,” Gallagher wrote. She cited soaring numbers of unemployment claims. Invalidating the acts, she wrote, may have “far-reaching consequences” that include “pushing many closer to the brink of financial ruin.”
“These local governments have made a determination that, in the midst of an unprecedented pandemic, Marylanders should not have to absorb increases in their rent payments,” she wrote. “That point is critical. Plaintiffs are not deprived of the ability to generate any rental income from their properties, but rather may not increase the rents for the time being.”
Both sides have since engaged in “preliminary settlement discussions,” court documents state. Additional filings are expected this month.
Meanwhile, several Maryland jurisdictions have launched rental assistance programs.
Baltimore, for example, set aside about $13 million for such a fund. The one-time emergency aid will be paid directly to landlords. The property owners must agree to waive any late fees and accept from the city as full payment 80% of the rent due for April, May and June.