Subject
title
Adoption of an Ordinance to Amend Chapter 18 of the Rockville City Code, entitled “Rental Facilities and Landlord-Tenant Relations”
end
Department
Housing and Community Development
Recommendation
Staff recommends that the Mayor and Council introduce and adopt the proposed Ordinance amending Chapter 18 of the Rockville City Code, entitled “Rental Facilities and Landlord-Tenant Relations” (Attachment A). As such the following actions should be taken: the Ordinance should first be introduced, and then a motion to waive the layover period should be made. If the motion to waive the layover period is approved by six affirmative votes, a motion to adopt the Ordinance may then proceed. The proposed effective date is January 1, 2027.
Change in Law or Policy
Upon its effective date of January 1, 2027, the draft City Code Chapter 18, Rental Facilities and Landlord-Tenant Relations will significantly modify the laws that govern landlord obligations and tenant rights for residential rental facilities.
Discussion
BACKGROUND
In Fall 2024, a comprehensive rewrite of City Code Chapter 18, Rental Facilities and Landlord-Tenant Relations was identified as a key action in the city’s Housing Strategies Work Plan as a way to further housing stability. While supply and subsidy strategies can help to improve housing affordability, only stability strategies will ensure fair and equal treatment of tenants. As the city experiences a growing number of tenants, stability strategies will help to reduce displacement and ensure that everyone in the community can reap the benefits of the city’s growth and investments.
Research and engagement for the Chapter 18 rewrite commenced in Spring 2025. The goals for the rewrite were established as follows:
• Provide clarity on existing code elements.
• Consider alignment with surrounding jurisdictions’ codes.
• Improve housing stability and opportunities for tenancy agency.
• Require greater transparency for tenants.
• Ensure alignment with the state of Maryland law.
• Review local and national best practices.
• Better connect data collection and city goals.
COMMUNITY ENGAGEMENT
Below is a summary of what was learned through the Chapter 18 rewrite’s community engagement process, including the challenges faced by landlords and tenants, general feedback, and responses to proposed code changes. Common themes significantly differed depending on whether the individual was representing the perspective of a tenant or landlord, and so have been organized as such. For more details about the community engagement activities, see Attachment B. Public comments and correspondence can be found in Attachment C.
Takeaways from Tenant Engagement
Challenges and General Feedback
• Consistent, strong desire for a rent stabilization policy borne from high rent prices and uncertainty around or experiences with large rent increases.
• Maintenance response times.
• Fees (particularly technology, amenity, and hold fees).
• Lack of air conditioning requirements.
• Discrepancies between city and county protections, such as a temporary relocation assistance policy in cases where a rental unit is not safe to occupy.
• Interest in an online map of rental properties to display information about rental license status and history, code enforcement history, rental rates, rent increase history, landlord contact information, and complaints made by tenants.
• Incorrect rent ledgers.
• Lack of protection against retaliation.
• Accurate utility billing.
• Other residents smoking.
• Desire to be able to more easily terminate leases early.
Responses to Proposed Code
• Excitement around banning algorithmic rent pricing and restricting junk fees.
• Disappointment regarding the exclusion of a rent stabilization policy.
• Questions about how rent increase information will be collected and displayed.
• Concerns around the six-month cut off for a unit being unsafe to occupy before permanent relocation assistance triggers.
Takeaways from Landlord Engagement
Challenges and General Feedback
• Increasing costs (e.g., taxes, insurance, fees, HOA/condo payments).
• Length and difficulty of eviction proceedings.
• Difficulty and cost of rental license application process, particularly challenges with passing inspections.
• Responsiveness of city staff and lack of clear points of contact.
• Keeping up with and adhering to code requirements.
• Tenant behavior.
• Squatters.
• Responsibility of paying water bill when a tenant moves out.
• Frequent confusion about the city’s Voluntary Rent Guidelines, usually due to confusion with Montgomery County’s rent stabilization requirements.
• Challenges working with Rockville Housing Enterprises.
• Difficulty adhering to the state’s requirements to put the security deposit in a certain type of bank account.
• Strong desire for a lease template and educational resources, such as webinars and handbooks, to better understand all city and state requirements. Suggestion for resources to be provided when receiving or renewing rental license.
Responses to Proposed Code
• General feeling of bias towards tenants in city code, including in the proposed changes, and administration of landlord-tenant affairs program.
• Concern at proposed requirement to offer tenants a two-year lease term. If having to offer a two-year lease term, many landlords wanted to reserve the ability to increase the rent during the two-year term, which they would be allowed to do under the current proposal, but would have to provide a 90-day increase notice.
• Concern around proposed restriction on asking about prospective tenants’ eviction history. Several landlords suggested a policy to not allow asking about eviction history from more than a certain number of years ago.
• Concern around proposed repair and deduct policy to allow tenants to make repairs without landlord approval.
• Question and concern around relocation assistance requirements. Concerns were particularly focused on the cost of the permanent relocation payment and determination of responsibility.
• Desire to allow a fee for returned checks and to allow an increased lock out fee for repeated occurrences.
NOTABLE CODE CHANGES
The following section describes notable changes to Chapter 18. All recommended changes and additions to the current code and complete draft code language can be found in Attachment A.
Algorithmic Rent Pricing Ban: Ban the practice of algorithmic rent pricing generally, following best practices of other jurisdictions, as a means of ensuring that rents are set competitively and fairly.
Court Costs and Legal Fees: Prohibit rental leases from requiring a tenant to pay legal costs or attorney fees other than those awarded in court. Any lease that requires a tenant to pay legal fees must specify that attorney fees are not a part of rent and obligate the landlord to pay the tenant’s attorney fees if the tenant is the prevailing legal party. This policy ensures tenants are not saddled with additional legal costs, including in cases where the tenant needs to pay a certain amount to stop their eviction.
Criminal Background Check Restrictions: In a previous work session, staff recommended adopting Montgomery County’s restrictions on criminal background checks for prospective tenants. Staff has since learned that city code already incorporates the entirety of Montgomery County Code Chapter 27, Human Rights and Civil Liberties, which includes the provisions around criminal background check restrictions.
Data Reporting: Require all rental properties to submit certain data to the city through the rental licensing process. Smaller apartment complexes and properties owned by non-profits would no longer be exempt from data reporting. In addition, data would be reported at the time of rental license renewal instead of monthly. This streamlines data collection as well as brings data collection into alignment with city goals for data analysis.
Early Lease Termination: Allow tenants to terminate a lease with 30 days’ written notice in certain situations, listed below. This change specifies the reasons outside of a tenant’s control why a tenant may want to terminate a lease early, allowing tenants to more easily understand in which situations they may be able to take advantage of this right. The lease may provide that in the event of termination for such cause, the tenant is liable for a reasonable termination charge not to exceed one month’s rent.
• Involuntary changes in employment from the D.C. area (currently included);
• The unit is deemed not fit for occupancy for 60 days due to the landlord’s failure to correct a violation affecting the immediate health and safety of the tenant within 30 days after being ordered to do so by the city;
• The landlord’s rental license has been revoked within the previous 60 days for reasons related to the tenant’s unit;
• The landlord has failures to make certain repairs required to correct a violation that affects the health and safety of the tenant;
• Domestic violence against the tenant or tenant’s dependent;
• Death of a primary wage earner;
• Change in disability status;
• Entry into an inpatient substance abuse or mental health treatment program; or
• For other reasonable cause beyond the tenant’s control (currently included).
Eviction History: Ban landlords from asking about past eviction history on rental applications. Landlords would still be able to look up a prospective tenant’s eviction history through other means of publicly available records. This would keep landlords’ evaluation of prospective tenants focused on their ability to pay at the time of application, rather than on past financial challenges.
Fee Transparency: Require landlords to disclose fees to tenants when advertising rental units, prior to lease signing and at lease renewal, and in the lease agreement itself.
• In Advertising: Require landlords to disclose all mandatory fees whenever a price is advertised or displayed, including online, as well as whether utilities are included in the monthly rental payment. Monthly mandatory fees may be included in or stated with the monthly rental rate. If mandatory fees are due at a different time from the rent, the amount of the fee and the time at which it is due must be separately stated.
• Prior to Lease Signing and At Lease Renewal: Require landlords to fully disclose all fees prior to the lease agreement being certified by both parties and at the time of lease renewal. This may include disclosure at the time of lease signing. The disclosure should include whether the fee is mandatory or optional, the basis for the fee, the amount, and the frequency at which the fee must be paid. Additionally, the landlord should disclose estimated utility costs.
• In Lease Agreement: Require residential lease agreements, including lease renewals, to define mandatory fees and note the total monthly charge including rent and any mandatory fees. Landlord must also clearly state which utilities the tenant is responsible for, if utility payments are not included in the monthly rent payment.
Fee Restrictions: Restrict the types of fees that tenants may be charged to the following:
• Application fee (cost restricted by state law to $25 and can only retain actual cost for credit check and other expenses arising out of the application)
• Bicycle parking fee (1/6 of any motor parking fee for bike lockers and 1/10 of motor parking fee for any other bicycle parking space)
• Common ownership community penalties
• Internet, technology, cable television (cannot be mandatory)
• Lost key fee (actual cost plus $25)
• Lock out fee (actual cost)
• Motor vehicle or motorcycle parking fee
• Optional fees (when consented to by tenant)
• Pet fee (refundable deposit and non-refundable monthly fee)
• Secure storage fee (unless within, attached to, or associated with unit)
This creates clear parameters for what fees can and cannot be charged. It would also bring Rockville into alignment with Montgomery County’s fee restrictions, without some of the caps placed on certain fees, such as for motor vehicle or motorcycle parking.
Guarantor Requirements: Allow landlords to require a guarantor, but if a guarantor is required, the landlord must provide the reason in writing, creating greater transparency.
Lease Collection: Require landlords to submit standard leases to the city at the time of rental license application or renewal. Currently, a copy of “any type of lease used by any landlord” is supposed to be filed with the city. This change brings the code into alignment with current practice and staff capacity.
Lease Receipt: Reduce the amount of time the landlord must provide the tenant with an executed copy of the lease from 10 days to three business days after its execution so that tenants may be assured of their upcoming living situation as soon as reasonably possible.
Lease Review: Require landlords to provide prospective tenants with a copy of their proposed lease at least two (2) days prior to the day of its execution, unless the prospective tenant requests a shorter time. This will allow tenants time to review the lease and its contents before committing to its terms.
Non-Electronic Payments: Require landlords to offer a method for tenants to make payments via nonelectronic or web-based methods without being charged any additional fees. Some residents may not have access to the internet and should not be penalized as such.
Meaningful fines: Increase certain fines for violations via a fine resolution to allow for a range of fines up to $5,000, depending on the violation. Currently, all violations incur a $100 fine.
Relocation Assistance: Establish a requirement for landlords to provide tenants with relocation assistance wen rental units become unfit to occupy or when tenants are displaced due to other qualifying circumstances.
Temporary Relocation Assistance:
• Required when the city deems a rental unit cannot be safely occupied or when a landlord must temporarily recover possession to comply with housing, health, building, fire, or safety laws.
• Does not apply in situations where the displacement is caused by a natural disaster or other incident beyond control of the landlord.
• Depending on the amount of time the displacement is expected to be, the tenant may be placed in a hotel, provided with alternate comparable housing (including a unit transfer), or given per diem money for temporary housing and expenses.
Permanent Relocation Assistance:
• Required when:
o The unit will be demolished, redeveloped, substantially renovated, or changed in use, requiring a tenant household earning less than 50% of the area median income to move prior to the end of their lease term.
o A rental license is suspended or revoked and the landlord chooses to cease renting the facility.
o The tenant decides to end their tenancy following a temporary relocation that has lasted/will last more than six months.
o The city issues an order for permanent relocation because the unit will not be able to be safely occupied for at least six months.
• Not required when the tenant agrees to a lease transfer to a different unit at the same property or when a tenant is legally evicted.
• Relocation payment would include:
o Security deposit returned in full;
o Pro rata rent for remainder of month;
o Cash equivalent of three months’ fair market rent for a unit of comparable size;
o All actual reasonable moving and storage costs; and
o An additional sum for households where at least one tenant is over 62 years of age, handicapped, disabled, or a legally dependent child.
Rent Increase Notice: Remove the requirement for landlords to provide the Director of the Department of Housing and Community Development (DHCD) with rent increase information for individual units. The department would be able to receive the information necessary to monitor general rent increase trends by collecting other data. Landlords would still be required to provide rent increase notice and information to the applicable tenant.
Repair and Deduct: Allow tenants to make repairs at their own cost and then deduct the cost of repairs from the rent, up to a maximum of two months’ rent. This would only be allowed in situations where the landlord has failed to make repairs within a reasonable amount of time (typically 24-28 hours for emergencies and 15-30 days for other repairs).
Tenant Organizing: Prohibit landlords from charging tenant organizations fees for the use of meeting rooms or common areas. This is to support tenant organizations that may not have the funds to rent meeting spaces.
Two-Year Lease Terms: Require a landlord to offer tenants a two-year lease term at initial lease signing and renewal. The option of a two-year lease term would provide additional security for tenants because they would potentially be able to lock-in rental rates and lease terms for a longer time period, and landlords would have lower risk of vacancy and tenant turnover. Landlords would still be able to increase rents during a multi-year lease term, as long as there is a provision regarding the option in the lease and a 90-day notice is provided.
Impact Statements
Impact statements for Montgomery County Bill 8-26, Landlord-Tenant Relations - Prohibition Against Price Coordination and Rent-Setting Algorithms, which is largely similar to the proposed language for City Code Chapter 18, Rental Facilities and Landlord-Tenant Relations, can be found in Attachment D.
Equity
Staff anticipate the action would have a positive impact on racial equity and social justice due to the general expansion of tenant rights and impact on housing stability.
Research has shown a myriad of benefits associated with housing stability, including better mental and physical health due to less stress and the traumatic experience of being evicted, economic security because households are more likely to be able to keep living in the community where they are already working, educational outcomes since children do not have to move schools and disrupt their learning environment, social connections due to households staying in one place for longer, and community diversity because the families that are first to be displaced are too often disproportionately Black and Hispanic. Conversely, the costs of housing insecurity can be significant. Specifically among young children, housing insecurity is associated with poor health, lower weight, and developmental risk.
In Rockville, tenants are disproportionately of historically marginalized racial or ethnic groups. Most significantly, only 11.4% of total housing units in the city are occupied by Black or African American households, but nearly 20% of renter housing units are occupied by Black or African American households.
Table 1. Percent of All Households and Renter-Occupied Households by Race and Ethnicity, City of Rockville (2024)
|
Race or Ethnicity |
All Households |
Renter-Occupied Households |
|
Total |
100% |
45.1% |
|
Asian |
24.7% |
27.8% |
|
Black or African American |
11.4% |
19.8% |
|
Hispanic or Latino |
9.0% |
12.0% |
|
White |
52.9% |
39.4% |
|
Some Other Race |
3.5% |
5.3% |
|
Two or More Races |
7.2% |
6.9% |
Source: U.S. Census, 2024 ACS 5-Year Estimates S2502
Additionally, the median income of renters is about $100,000 less than homeowners: $86,690 versus $186,717.3 As of 2024, 53% of Rockville renters were considered housing cost-burdened, paying more than 30% of their income for housing, and over 20% are considered severely housing cost-burdened, paying more than 50% of their income for housing.4 Hispanic or Latino, “Some Other Race,” mixed-race, and Black households are disproportionately housing cost burdened (Figure 1), so would stand to benefit the most from policies like banning algorithmic rent pricing and restricting fees that would potentially lessen financial burden.
Figure 1. Gross Rent as a Percentage of Household Income, By Race (2021)
Source: U.S. Census, 2021 ACS 5-Year Estimates B25070
The city does not collect data on landlord demographics, so whether or not changes to city code may disproportionately impact certain racial or ethnic groups of landlords cannot be fully analyzed.
Environment
There are no significant environmental impacts anticipated.
Economy
The action item is expected to have a neutral impact on the economy.
The additional requirements placed on landlords may result in fewer landlords, particularly small landlords, choosing to rent in Rockville, which would have a negative impact on the city’s economy. On the other hand, existing landlords with many or large properties may need additional staff capacity to comply with the new code, especially when first implementing the changes into regular operations and protocols. This would create economic activity, although it could also put upward pressure on rents. Additionally, if the code is seen as too arduous for prospective landlords to uphold, developers may target investments elsewhere, resulting in foregone economic growth.
For tenants, the additional protections afforded to them in the proposed code may positively impact the local economy by improving housing stability. Individuals and households could focus more energy on non-housing related matters, such as education or job training, and divert funds from junk fees to other household needs, improving overall quality of life and economic stability. Transparency measures may also create a more competitive rental marketplace, resulting in slight downward pressure on rents or more favorable lease terms to tenants.
Mayor and Council History
Housing is one of the Mayor and Council’s five focus areas. In June 2024, a high-level briefing was presented outlining the city’s housing crisis and policy landscape. Later in 2024, there were three work sessions on the city’s housing strategies, during which updating City Code Chapter 18, Rental Facilities and Landlord-Tenant Relations was approved by the Mayor and Council as one of the strategies.
The following work sessions related to Chapter 18 were held previously:
• June 16, 2025 - An initial work session specifically related to transparency. During that work session, staff presented preliminary recommendations on data collection and reporting requirements, lease requirements, and other posting requirements.
• November 10, 2025 - During a work session on rental licensing inspections, staff recommended an enhanced inspections program that does not require codification in the updated chapter.
• December 8, 2025 - Staff presented proposed changes to current code as well as new policies related to algorithmic rent pricing, court costs and legal fees, fee transparency and restrictions, guarantor requirements, and repair and deduct.
• February 23, 2026 - Staff provided follow-up research to questions raised at the December 8 work session and proposed new policies related to background check restrictions, relocation assistance, and penalties.
Feedback from previous work sessions is reflected in staff’s proposed draft of Chapter 18, in addition to stakeholder input.
Public Notification and Engagement
See Attachment B for the Community Engagement Report and Attachment C for Public Comments and Correspondence.
Next Steps
Following the adoption of the proposed Ordnance, staff will work with the City Attorney’s Office to develop and promulgate pertinent regulations. In addition, staff will create a Landlord-Tenant Handbook and other educational materials that will allow both landlords and tenants to clearly understand their rights and responsibilities as well as city resources.