Snohomish County has the highest rent in the state. Could this bill help?

OLYMPIA — Kraig Peck took an unusual stance Thursday.

Many landlords fervently oppose a hot-button measure pushed by Democrats in Olympia to put a 7% annual cap on rent increases. But Peck, a landlord from Bothell, thinks the cap works.

“A 7% limit when occupied is more than enough,” Peck said in a contentious public hearing Thursday. “Our biggest expense is mortgage, it does not go up.”

House Bill 2114, a proposal to limit how much landlords can increase their tenants’ rents every year, comes as rents across the state skyrocket. To afford a two-bedroom apartment at fair market rent in Snohomish County, you would need to work three full-time minimum wage jobs.

That price in Snohomish County is $2,455 per month, according to the National Low Income Housing Coalition. It ties King County for the most expensive fair market rent in the state, based on a 2023 report.

In 2022, the average fair market rent for a two-bedroom apartment in Snohomish County was $2,044 per month, according to the housing coalition. In just a year, that rent increased by 20%.

If the rent stabilization bill passed, a $2,455 per month rent couldn’t rise more than $171 in a year.

This isn’t the first time lawmakers have tried to get rent stabilization in the state.

Last year, Rep. Alex Ramel, D-Bellingham, introduced a bill to cap rent increases between 3% to 7% per year, depending on the annual rate of inflation. His bill failed to make it to the House floor for a vote.

This year’s bill would prohibit any rent increases in the first year of tenancy and would allow a tenant to break a lease if a landlord increases rent above 7%. It would also limit monthly late fees to 1.5% of a tenant’s monthly rent.

On Thursday, a packed Senate hearing allowed residents one last chance to give legislators a piece of their mind before the bill moves any further.

Peck’s comments ran contrary to what many other landlords have said about the bill.

Audrey Riddle, representing Goodman Real Estate, said the bill would discourage future investment in real estate. The Seattle-based real estate investment company has projects in Everett, Edmonds, Lynnwood and Mukilteo.

“In the past five years, our taxes, insurance and utilities have increased 65%,” Riddle said. “This bill does not account for the increases of required expenses to maintain housing.”

Costs like property taxes and maintenance typically make up between 20% to 40% of rental income, Peck said. He thinks a 7% cap would be enough to cover “catastrophic” increases in those costs.

Rent isn’t the only avenue for landlords to make money, Peck added, noting rising property values and “very generous tax benefits.”

“The federal tax depreciation allowance generally saves us more than we actually put down to buy our properties,” he said.

The bill passed the House last week and is now in the Senate’s hands.

Supporters of the legislation say it will give renters predictability as they budget.

Duane Leonard, the executive director of the Housing Authority of Snohomish County, said the measure would provide much-needed relief to renters.

“Households with modest incomes are under tremendous pressure financially and sudden large rent increases can have severe impacts,” he wrote in an email. “There are thousands of families in the county that would benefit from this bill.”

The Ways and Means committee has until Monday to vote on the bill. If it passes through Ways and Means, it would then face the scrutiny of the Senate floor.

If the bill makes it to the Senate floor, it could have a hard time making it through.

A vote on the House floor last week saw five Democrats voting against the bill, ending in a 54-43 vote.

A similar bill in the Senate failed last month after Sen. Annette Cleveland, D-Vancouver, voted against the bill, denying the votes it needed to pass out of the Senate Housing Committee. It died despite giving landlords more wiggle room than HB 2114.

The Senate version would have limited annual rent increases to 15% per year and allowed local governments to lower the cap.

If passed, the House version would go into effect immediately.

Jenelle Baumbach: 360-352-8623; jenelle.baumbach@heraldnet.com; Twitter: @jenelleclar.