Landlords warn rent-stabilization and building-energy rules could chill investment and raise operating costs

Representatives of the Maryland Multi-Housing Association and the Apartment and Office Building Association (AOBA) told the committee that regulatory changes—particularly Montgomery and Prince George's counties' rent‑stabilization laws with vacancy control—and proposed building-energy performance standards (BEPS) may be reducing multifamily investment and could raise operating costs for older buildings.

"Vacancy control is indeed a very real thing," an AOBA speaker said, explaining that vacancy control caps rents even between tenancies and, industry witnesses argued, reduces the ability to reset rents to market as units turn over.

Industry presenters summarized market data from CoStar: statewide inventory of about 566,473 multifamily units, a vacancy rate of roughly 7.3% (above a five‑year average of about 5.7%), recent deliveries above the five‑year average (about 12,300 units) but a decline in units under construction (roughly 9,074). They reported a lower year‑over‑year multifamily sales volume in Maryland (about $1.89 billion reported for the year compared with a five‑year average of roughly $4.47 billion) and a lower sale price per unit (about $161,834).

The industry witnesses tied some local market effects to county rent‑stabilization rules. They said Prince George's County multifamily transactions fell to three in 2023 and five in 2024 and said those declines reduced recordation and property‑tax revenue. The industry also presented an internal monthly survey designed to track effects of the elimination of a two‑month security-deposit option; in an initial sample covering 18,769 units they reported 395 denials and said 176 of those denials (44.56% of denials in the sample) would have been approved if a two‑month security deposit had been permitted to qualify the applicant.

On climate and building rules, AOBA presented case-study estimates that complying with BEPS could raise marginal capital costs for some mid‑century multifamily buildings far above standard replacements, once work such as electrical “heavy-up,” building retrofits and financing costs are included. AOBA estimated alternative‑compliance fees and retrofit costs could translate into annual rent increases in some portfolios of roughly 3–6% unless offset by rebates, incentives or other funding. Industry witnesses urged lawmakers to align climate goals with funding and to assess how BEPS and local rent caps interact.

Committee members pressed industry witnesses for the underlying data and noted national trends—particularly interest rates—that also affect sales and construction. Industry representatives said they would supply detailed case studies and follow-up numbers to the committee.

The presenters requested policy attention to balance tenant protections with preserving capital flows for rehabilitation and new supply, and urged clearer rebate and financing pathways for electrification and BEPS compliance.