(a) In general. Except as provided under subsection (b), upon a lease renewal or new lease agreement, a landlord must not increase the rent of a regulated rental unit to an amount greater than:
(1) the base rent; plus
(2) the rent increase allowance under Section 29-57; plus
(3) any banked amount; and
(4) does not exceed 10 percent of the base rent.
(b) Troubled or at-risk properties. Subject to Method (2) regulations adopted by the Director, a regulated unit located in a property designated by the Department as “troubled” or “at risk” under Section 29-22(b) must not increase rent in excess of an amount the Director determines necessary to cover costs required to improve habitability.
(c) Rent increase – vacant unit. Subject to Method (2) regulations, the Director must issue regulations to determine the allowable annual rent increase for a regulated unit previously vacant:
(1) for more than 12 months;
(2) with no active lease, either by a written or oral agreement; and
(3) the unit returns to the market for rent.
(d) Limited surcharge for capital improvements. Subject to subsection (e), the Director must grant a landlord’s petition to add a surcharge to the amount permitted under subsection (a) if, in accordance with Method (2) regulations, the Director determines:
(1) the surcharge is limited to an amount necessary to cover the costs of capital improvements to the regulated unit, excluding the costs of ordinary repair and maintenance;
(2) the surcharge does not take effect until after the capital improvements are completed;
(3) if the capital improvements are for all rental units within the building, the surcharge:
(A) is divided equally among the units;
(B) is prorated over at least 96 months; and
(C) does not exceed 20 percent of the base rent;
(4) if the capital improvements apply only to certain regulated rental units within the building, the surcharge:
(A) is divided equally among the affected units;
(B) is prorated over at least 60 months; and
(C) does not exceed 15 percent of the base rent;
(5) the surcharge for each unit ends once the costs of the capital improvements, including any interest and service charges, have been recovered by the landlord;
(6) the capital improvements would protect or enhance the health, safety, and security of the tenants or the habitability of the rental housing;
(7) if the capital improvements would result in energy cost savings:
(A) the savings would be passed on to the tenant; and
(B) either:
(i) the improvements would result in a net savings in the use of energy in the building; or
(ii) the improvements are intended to comply with applicable law;
(8) the capital improvements are depreciable under the federal Internal Revenue Code;
(9) the applicant has certified to the Director the costs of the capital improvements, including any interest and service charge; and
(10) the applicant has certified to the Director that required governmental permits and approvals have been granted.
(e) Surcharge – additional requirements.
(1) A landlord must maintain, and must make available to a tenant upon request, all plans, contracts, specifications, and permits related to any capital improvements for which a surcharge has been granted.
(2) Immediately upon the completion of capital improvements under this Section, a landlord must permit the return to affected rental units of any tenants displaced due to the improvements. (2023 L.M.C., ch. 22. § 1.)