State rent increase cap beneficial, but concerns remain

Published 1:30 am Wednesday, June 10, 2026

One year into Washington’s cap on rent increases, it is too soon to draw conclusions. But it is worth taking a look at a policy that impacts renters, landlords, builders and, ultimately, the housing supply.

Such an examination suggests that the law passed in 2025 has provided some benefits, but long-term concerns remain.

In May 2025, Gov. Bob Ferguson signed House Bill 1217, following months of often-contentious debate in the Legislature. The law, which took effect immediately, caps residential rent hikes at 7 percent plus inflation during a 12-month period — or 10 percent, whichever is lower. It restricts rent increases on manufactured homes to 5 percent and prohibits increases during the first year of a tenancy.

“I’m confident that this legislation is going to work for everybody in our state,” Ferguson said at the time. “Too many folks are getting priced out, and we can’t have that, right? That’s not an option.”

Indeed, that should not be viewed as an option. But the issue is whether limiting rent increases will drive landlords and builders out of the market. Making it more difficult for small landlords to thrive could lead to an increase is corporate ownership of rental properties, which can have deleterious effects on the market; so can disincentivizing the construction of affordable housing.

The issue represents age-old arguments weighing government intervention vs. market forces — arguments that were reflected in the final vote on the bill. No Republican legislators voted in favor; five Democrats between the House and Senate were opposed.

Sen. Annette Cleveland, D-Vancouver, was one of those who bucked her party’s conventional wisdom. And throughout the process, she was transparent and deliberate in her thinking.

“While well-intentioned, this bill won’t stop runaway housing costs for families in Southwest Washington — it will make them worse,” Cleveland said after the bill was passed. She also noted: “Just across the river in Oregon, housing construction has slowed as shifting policies and rising costs have made the market less certain due to rent cap policies. We risk repeating those same mistakes.”

Indeed, Stanford University economist Rebecca Diamond has written: “Rent control appears to help affordability in the short run for current tenants, but in the long run decreases affordability, fuels gentrification and creates negative externalities on the surrounding neighborhood.”

One year into Washington’s experiment, media outlet Washington State Standard has found that the state has not collected any fines from landlords who have violated the law. The state attorney general’s office has settled approximately four dozen cases of alleged breaches, imposing fines of more than $800,000; landlords have avoided payment by canceling planned rent increases or issuing refunds.

This is reasonable. The law should not be viewed as punitive, but rather an effort to provide a balance between protecting renters and allowing landlords to remain in business.

There are larger issues, however. Sean Flynn, executive director of the Rental Housing Association of Washington said: “As property taxes, insurance and operational costs rise … the state will continue to see small rental housing providers invest outside of Washington state. While it is starting as a trickle of providers leaving the state, the outflow will continue to accelerate and those who passed this policy will have no one to blame but themselves.”

How that plays out will bear watching from policymakers in our state.