Multifamily Legislation

In recent years, the Biden administration has planned and pushed for greater regulation of the housing industry. For instance, in May 2022, the White House unveiled a Housing Supply Action Plan, with the goal of lowering costs for renters and closing the housing supply gap within five years. 

This was followed in January 2023 by a set of actions aimed at increasing renter protections, including the establishment of a blueprint for a Renters’ Bill of Rights. 

More recently, the Federal Trade Commission proposed a rule prohibiting junk fees, and HUD plans to impose a 10% cap on rent increases per year at some subsidized housing properties, according to The Washington Post. 

With so many pieces of legislation swirling around, the industry is going on the offense. For instance, the National Apartment Association is opposing expanded federal involvement in landlord-tenant affairs.

“We have been very actively engaged in federal regulatory advocacy in response to the White House blueprint for the Renters’ Bill of Rights,” Nicole Upano, assistant vice president of housing policy and regulatory affairs at the NAA, told Multifamily Dive.

There are also hundreds of state-level bills related to multifamily and rental housing in play across the country. The NAA’s State Legislative Tracker, which aggregates legislation related to particular topics at the state level, lists 213 active bills related to rent control across the country as of the beginning of the month, and hundreds more on a diverse range of housing-related topics. 

Of that number, 74 bills related to rent control were filed in the first quarter of 2024. Some of the most high-profile examples include:

• Washington HB 2114, which would implement a 7% rent increase cap statewide. The bill was passed in the House, but stalled in the Senate and has been returned to the House.
• Pennsylvania SB 1095, which would limit rent increases to 10% per year or the increase in a given area’s median income, whichever is greater. The bill is currently in committee.
• A California ballot measure that would remove exemptions from the state’s existing rent control laws for single-family homes and multifamily units built after Feb. 1, 1995. This question will be decided during the November election.
• Colorado HB24-1259, which would prevent rent increases above a certain percentage for two years after the declaration of a disaster in a given area. If passed, this law would bypass the state’s rent control preemption. The bill passed the House and is currently in the Senate.

The sponsors of Colorado HB24-1259 say the bill is a direct response to the aftermath of the Marshall Fire in 2021, in which local rents skyrocketed after a large number of residents lost their homes, according to the Colorado Sun.

“When a community suffers from a disaster, they shouldn't be faced with landlords seeking to profit off their devastation,” said Colorado Rep. Mike Weissman in a release from the Colorado House Democrats. “We’re extending Colorado’s consumer protection laws to prevent unscrupulous landlords from taking advantage of victims of disasters during their time of need."

However, the NAA sees rent price gouging laws as de facto permanent rent control in areas where disasters are frequent. 

“There are 35 states that prohibit price gouging during a natural disaster or a declared emergency,” Upano said about Colorado HB24-1259. “And especially in places where natural disasters are happening annually or multiple times throughout the year, it's now another way for proponents to get rent control policies passed … it keeps folks in a perpetual state of control.”

Other rent control-related bills in play include potential legislation related to preemptions, which are favored by the NAA and are on the rise. These laws, on the books in 33 states, limit or prohibit municipalities within the state from passing or enforcing rent control laws. The latest of these is House Bill 545 in Idaho, which was signed by Gov. Brad Little on March 29. A similar bill is in committee in West Virginia. 

“We’ve seen preemption laws double since last year,” Upano said. “[Idaho’s law] also did preempt other types of legislation that are damaging, like… Boise's source of income mandate that's intended to to require housing providers to take Section 8. That bill also targeted the application fee limitation in Boise, which is $30.”

A focus on fees

Fees have become a hot topic not only at the federal level with the FTC proposal, but in state legislation as well, where over 60 bills related to fees are in play.

Virginia has two fee-related bills currently on Gov. Glenn Youngkin’s desk — HB 996, which would require landlords to provide fee information upfront to potential tenants, and HB 1519, which would prohibit electronic transaction fees of any kind and processing fees for rent or other tenancy-related payments. Gov. Youngkin has until April 8 to sign or veto the bills, which will then become law with or without his signature.

“We, of course, are very much supportive of disclosure and transparency of rental housing costs and fees or any other charges that a renter may experience throughout their tenancy,” Upano said. “But some of these proposals… just don’t align with what is actually happening out in the market.”

Other issues

Beyond fees and rent control, the NAA is also watching a number of bills related to resident screening and sources of income, particularly housing vouchers. These include Connecticut HB 5242, which would prohibit owners from considering an applicant’s felony record after a certain period of time, and Missouri HB 2385, which would prohibit municipalities from passing laws requiring property owners to accept certain sources of income.

“Something that we're notably seeing is an increase in scrutiny, not just legislatively, but legally, on what governments are seeing as abusive, or predatory practices by housing providers,” Upano said. 

On top of this, the NAA is also still working on its top federal priorities, including the YIMBY Act, the Choice in Affordable Housing Act and the Respect State Housing Laws Act. 

“Those first two we think are the best ways to address housing affordability challenges that are being experienced all across the country,” Upano said. “And we do agree with President Biden on the pro housing solutions that are coming out of the administration. So we're hopeful that does move forward.”

Correction: The Virginia bill that would prohibit electronic transaction fees is HB 1519.

Dive Brief:

• Earlier this month, the Federal Trade Commission ended the comment period for its proposed trade regulation rule on unfair or deceptive fees, with over 60,000 comments received. 
• If implemented, the Trade Regulation Rule on Unfair or Deceptive Fees, announced in October, would prohibit businesses from charging hidden fees that are not disclosed upfront in a transaction.
• A coalition of 11 real estate organizations, including the National Apartment Association, the National Multifamily Housing Council and the National Association of Home Builders, provided comments in a letter dated Feb. 7. Chief among their concerns is that the rule’s broad nature causes it to “lack utility” as applied to the housing industry, the letter states.

Dive Insight:

The rule is designed to apply broadly to multiple industries, with booking hotels, buying concert tickets and renting apartments specifically cited in an FTC release announcing the rule. 

“The proposed rule would provide a level playing field for honest businesses by requiring all businesses to quote total prices at the start of the purchasing process and to remove false or misleading information about fees from the marketplace,” the FTC said in the release.

In the existing framework of the multifamily industry, fees on top of the cost of rent are used to cover conditional or concierge costs, according to the letter. State regulations govern the application of fees, as well as landlord-tenant relationships. 

“A one-size-fits-all requirement would interfere with the breadth and differences in states’ fee requirements that already cover limitations in amounts of specific types of rental housing fees, refundability, return and disclosure requirements,” the real estate coalition’s letter reads.

The letter goes on to state that additional regulations on the industry would disincentivize development of more rental housing. Other concerns include the lack of consideration in the new proposed rule of statistics related to fees in the housing industry, and the possibility that the new rule could be vulnerable to legal attacks.

Affordability issues

Consumer protection groups are of another mind. A coalition of 52 such organizations, including the Consumer Federation of America, submitted a letter endorsing the new rule and its potential impact on rental agreements.

“Junk fees, added on top of sky-high rent, put safe and decent rental housing further out of reach for low-income renters,” said Ariel Nelson, staff attorney at the National Consumer Law Center, in a press release from the CFA. “An FTC rule that requires landlords to be honest about the total price of an apartment and the purpose of the fees they charge will go a long way toward helping renters to effectively budget and stay in their homes.”

California recently banned junk fees at the state level with legislation set to take effect on July 1. The effort to bar them nationwide is one of a number of recent Biden administration actions that could impact the multifamily housing sector, including the creation of a blueprint for a Renters’ Bill of Rights.

Originally slated to end on Jan. 8, the FTC had extended the comment period until Feb. 7, according to the commission’s website. The FTC’s next step is to review the comments and decide whether to proceed with the rule, create a new or modified edition or withdraw the proposal.

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In the ever-evolving landscape of property management, staying informed about the regulations that impact your operations is crucial. Security deposit laws stand out as a significant area requiring attention.

Security deposit laws vary widely across states, presenting a complex challenge for property owners and operators. These regulations can influence financial planning, resident relationships and legal compliance. Understanding the nuances of these laws is not just about protecting your business—it is about fostering trust and transparency with your residents.

Key Takeaways for Property Managers:

• Understand your obligations: Learn about each state's maximum security deposit amounts, notice requirements, alternative offerings and permissible deductions.
• Mitigate legal risks: Stay informed about the latest changes in security deposit regulations to avoid costly legal disputes and fines.

Embracing Change: The Rise of Security Deposit Alternatives

A shift in the real estate industry is taking place in response to the escalating housing costs that challenge renters nationwide. Over the last few years, several states have enacted legislation that compels property owners to offer alternatives to traditional security deposits. This move aims to alleviate the financial burden on renters, offering them greater flexibility and facilitating a more inclusive housing market.

Introducing security deposit alternatives demonstrates a commitment to fairness and accessibility in housing but also requires updating existing management practices. Adapting to these changes means reevaluating leasing strategies and financial planning to incorporate these new options effectively for properties nationwide.

Implications for Operators:

• Financial flexibility for renters: By offering alternatives to traditional security deposits, properties can attract a broader range of applicants, including those without immediate funds for a large upfront deposit.
• Legislative compliance: As more states adopt these requirements, understanding and integrating these alternatives into your leasing processes becomes paramount to ensure legal compliance and avoid potential penalties.
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For property owners and operators looking to stay ahead, looking at the security deposit laws by state is the first step towards ensuring compliance and excellence in property management. You'll find detailed, state-specific information crucial for your operations in a user-friendly format.

Understanding and adhering to security deposit laws is crucial for any property owner. With Qira's comprehensive guide, you're not just staying compliant; you're enhancing your operations, reducing risks and improving resident satisfaction.

Dive Brief:

• The Arizona Senate has introduced a bill that would prohibit landlords and rental housing providers in the state from setting dog breed restrictions at their properties. 
• Restrictions often apply to breeds considered dangerous or aggressive, but also frequently cover dogs in the working and sporting breed groups, who are larger and have high energy levels, according to a Marketwatch report. The dog breeds most commonly restricted, whether imposed by law or by individual landlords, include pit bulls, bulldogs, Rottweilers and German shepherds.
• Landlords would still be permitted to restrict tenants from owning dogs under this law. Arizona Sen. J.D. Mesnard, in a statement to AZ Family, expressed concern that the bill could lead to more landlords banning dogs altogether in order to keep banning specific breeds.

Dive Insight:

The Arizona Multihousing Association is opposed to the bill as written. Courtney Gilstrap LeVinus, CEO of the AMA, told Multifamily Dive that property owners often must restrict certain breeds because of limits in the building’s insurance coverage. 

“This may leave a community uninsured or with insurance coverage that is extremely expensive,” Gilstrap LeVinus said.

The association is currently working with the bill’s sponsor, Arizona Sen. Brian Fernandez, on an amendment that would allow property owners to make decisions about dogs based on size or weight, rather than on breed.

“This mirrors previous legislation that passed a couple of years ago pertaining to homeowners’ and renters’ insurance coverage,” Gilstrap LeVinus said. “We believe this to be a better balance for current residents, prospective residents and property owners.”

As of April 2020, 21 states have laws banning breed-specific legislation, according to the American Society for the Prevention of Cruelty to Animals. Arizona passed its own breed-specific legislation ban in 2016. However, while these laws forbid states or localities from banning specific dog breeds within their borders, they do not necessarily apply to landlord-tenant relationships. 

In a survey of renters by Marketwatch, 40% of commonly restricted dog breed owners reported having trouble finding affordable housing because of their dogs. Of all respondents with restricted dog breeds, 13% reported they had had to surrender their dogs in order to secure housing. A small number of respondents had become temporarily homeless during a search for housing that would accept their dogs.

A similar piece of legislation was introduced in the California State Assembly on Feb. 20, which, if passed, would require property owners in California to accept renters’ common household pets. Landlords would be prohibited from asking about pets on applications, and limited in their capacity to charge fees or deposits for pets.

Amid an affordable housing shortage, record-high rent burdens and increasing homelessness, President Joe Biden used his election-year State of the Union address on March 7 to outline his proposals to make housing more accessible. The president said he wants to spur the construction and renovation of two million homes, facilitate home purchases for first-time buyers and bring rents down.

Lael Brainard, director of the National Economic Council, called it “the boldest housing plan in a generation” at a March 12 Urban Institute event. Biden’s proposed budget for fiscal year 2025 requests $72.6 billion for the Department of Housing and Urban Development as well as $185 billion in mandatory spending for affordable housing investments over 10 years.

Much of the president’s plan centers on tax credits, which Brainard said provide critical support for private construction in the affordable housing market and are a proven way to boost supply. The centerpiece of Biden’s housing proposals, Brainard said, is an expansion of the Low Income Housing Tax Credit that would result in the construction or preservation of approximately 1.2 million affordable housing units over the next 10 years.

Biden called for tax credits of up to $10,000 for first-time homebuyers or middle-class homeowners who sell their starter homes to first-time homebuyers. The president also proposed down payment assistance for first-generation homebuyers, defined as first-time homebuyers whose parents do not own a home. The proposed program would provide such households without intergenerational wealth with $25,000 on average toward a down payment, Brainard said.

Panelists at the Urban Institute event emphasized the need to lower costs for both homeowners and renters, though Michael Neal, senior fellow at the Urban Institute, pointed out that renters are more likely than homeowners to be cost-burdened, spending more than 30% of their income on housing. To increase rental affordability for some, the Biden administration proposed creating housing voucher guarantees for extremely low-income veterans and youth aging out of foster care.

“People's incomes just aren't at a level for them to be able to only use 30% of their income for their rent,” said Peggy Bailey, vice president for housing and income security at the Center on Budget and Policy Priorities. Truly addressing the rental affordability crisis will require “a lot of money” to subsidize rents, Bailey said.

Urban Institute nonresident fellow Jim Parrott said that the housing proposals “probably lean a little harder than maybe they needed to on the demand side … given that the nature of the problem right now is really a supply shortage, not a demand problem.” 

Still, Parrott said that housing supply challenges are often highly localized, highlighting the administration’s plan to spend $20 billion on competitive grants for states and localities to increase the supply of what he called “entry-level” housing, such as affordable rentals.

Though many of Biden’s housing proposals require Congress’ approval to proceed, the Biden administration approved a pilot program to “save households an average of $750 by no longer requiring them to purchase lender’s title insurance when they are refinancing their mortgage,” Brainard said.

Dive Brief:

• The Federal Communications Commission announced a proposed rule last week that, if approved, would prevent housing or other providers from entering “bulk billing” arrangements with internet, cable or satellite companies. 
• Under these arrangements, property owners offer internet access and other cable/broadband services to residents through a deal with a specific provider, rather than residents choosing a plan of their own accord.
• On top of banning bulk billing, the proposed rule would allow tenants to opt out of bulk billing agreements. The intention of the rule is to reduce costs for residents, allow for consumer choice in communication services and preserve competition between internet providers in a given building, according to the FCC.

Dive Insight:

A number of multifamily industry organizations are pushing back against the proposal. 

In a joint statement, the National Multifamily Housing Council and the National Apartment Association said that the FCC’s proposed rule, rather than boosting competition, would disincentivize providers’ investment in broadband services, especially for low-income and smaller properties. 

“[The proposed rule] runs in direct opposition to the historic federal investments and resources being poured into communities of all types to bridge the digital divide by eliminating a cost-effective, quick and reliable solution to improve broadband access and adoption,” the statement reads. 

The rule would also prevent multifamily companies from forming agreements with providers for lower broadband rates for their residents, according to the NAA and NMHC. 

“The administration and the FCC should be looking for ways to support and elevate bulk billing arrangements to leverage historic federal resources to boost broadband access,” the statement says, “not reduce options and in turn, potentially disconnect millions of American families.”

This proposed rule follows an earlier move from the Federal Trade Commission to ban junk fees in business transactions, including multifamily rental agreements. If implemented, the Trade Regulation Rule on Unfair or Deceptive Fees would prohibit businesses from charging hidden fees that are not disclosed upfront in a transaction.

A Notice of Proposed Rulemaking has not yet been issued. Once published on the Federal Register, the FCC will open a 30-day public comment period on the rule.

Dive Brief:

• Two U.S. Senators introduced a bill last week meant to prevent the use of algorithmic systems to raise the price of rental housing units. 
• If passed, the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act of 2024 would make it unlawful for rental companies to use services that coordinate rental housing prices and unit supply information. It would also prohibit price coordination between two or more owners.
• The bill, authored by Senators Ron Wyden, D-Ore., and Peter Welch, D-Vt., follows a series of lawsuits about whether property management software, including products by RealPage and Yardi, has allowed property owners to indirectly coordinate rent prices. The Department of Justice has also conducted an investigation into RealPage’s pricing algorithm.

Dive Insight:

RealPage and Yardi’s property management software uses pricing and leasing information in order to suggest rents to its clients. RealPage has stated that its software allows its clients to increase rents between 5% and 12%, according to the bill’s authors, who singled out the two companies by name in a press release.

“Setting prices with an algorithm is no different from doing it over cigars and whiskey in a private club,” Wyden said in the release. “Although it's my view that these cartels are already violating existing antitrust laws, I want the law to be painfully clear that algorithmic price fixing of rents is a crime.”

Under the bill, a rental owner coordinating rents or supply information with another landlord, such as through an algorithm or software, would be considered a violation of the Sherman Antitrust Act.

The legislation would also prevent two or more coordinating parties from merging if the union would lessen competition, and allow individual plaintiffs to invalidate any pre-dispute arbitration agreement or joint action waiver that would prevent them from filing suit under the act.

RealPage did not respond to a request for comment on this article. Yardi declined to comment, and referred Multifamily Dive to the National Multifamily Housing Council, which also declined to comment. 

The bill’s co-sponsors include Sens. Amy Klobuchar, D-Minn., Bernie Sanders, I-Vt., Mazie Hirono, D-Hawaii, Laphonza Butler, D-Calif., Jeff Merkley, D-Ore., and Richard Blumenthal, D-Conn. It is also endorsed by the American Economic Liberties Project, the National Low Income Housing Coalition and the National Alliance to End Homelessness.

A few days ago, Wyden and Klobuchar also introduced the Preventing Algorithmic Collusion Act, which would apply similar restrictions on using algorithms to collude on prices across all industries.