On May 7, 2025, Governor Bob Ferguson signed House Bill 1217, making Washington the third U.S. state to pass statewide rent control, following Oregon and California. The law took effect immediately and will shape how leases, pricing, and new development are handled across the state.
Fundamental details of the law:
- Rent Caps: Annual increases limited to 7% + CPI or 10%, whichever is lower
- Manufactured Housing: Capped at 5% rent increases annually
- Initial Tenancy Freeze: No rent increases allowed in the first 12 months of tenancy
- Notice Requirement: 90 days’ written notice required for any rent increase
- Security Deposits: Capped at one month’s rent, or two months if the tenant has a pet
- Late Fees: Capped at 2% for the first late month, 3% for the second, and 5% for the third and beyond
- Exemptions: New construction (<12 years), affordable housing, owner-occupied 2–4 unit homes
- Enforcement: The Attorney General can impose fines up to $7,500 per violation
- Tenant Rights: Tenants may terminate their lease if rents are unlawfully increased
- Expiration Date: Law expires July 1, 2040, except for manufactured housing which has no expiration date
This law signals a major shift for investors and developers. Rent caps will require conservative underwriting, and reduce future value-add upside, especially as properties approach the 12-year exemption limit. Developers may pause or relocate projects to avoid future regulation. Exempt new construction, owner-occupied 2-4 unit properties and affordable housing may become more attractive investment options.
In the long term, Washington’s rental market will likely see tightened margins, slowed development, and increased regulatory scrutiny.
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Jordan Lester, CCIM, MBA specializes in advising clients with the acquisition and disposition of multifamily investment properties. With a primary focus in Spokane County and an expert understanding of the latest market trends, Jordan is committed to maximizing his client’s financial goals to achieve their real estate objectives. Jordan began his real estate career as a broker’s assistant for three years with SVN Cornerstone, which gave him valuable knowledge and experience to jumpstart his career as a broker. To get in touch with Jordan, email jordan.lester@svn.com or call 509.496.6922