One of the benefits of homeownership is the potential to generate additional income by converting a home into an investment property. In our area, some investors purchase multiple properties with no intention of occupying them. These experienced landlords and property-management companies generally understand the many laws and regulations that govern rental housing.
The property owners most likely to encounter problems are those becoming landlords for the first time. Perhaps they are moving out of the area temporarily and do not want to sell their home. Others may be in a financial position to retain their current home as a rental property while purchasing their next one.
Whatever the circumstances, becoming a landlord involves much more than finding a tenant and signing a lease. Licensing, inspections, lead-based paint requirements, security deposits, required disclosures, tenant protections, and property-maintenance standards can all come into play.
Below is a general overview for property owners considering becoming landlords in Maryland, Washington, D.C., or Virginia. Because requirements vary by jurisdiction, property type, and year built, owners should carefully review all applicable state, county, and municipal regulations before advertising the property or entering into a lease.
Maryland
Maryland landlords may be subject to both state and local requirements. Montgomery County, Prince George’s County, and many incorporated municipalities have additional rules that do not necessarily apply elsewhere in the state.
Depending on the property, an owner may need to:
- Register a residential rental property built before 1978 with the Maryland Department of the Environment.
- Obtain the required lead inspection or risk-reduction certificate before a new tenant takes possession.
- Provide tenants with federal and Maryland lead-related disclosures and educational materials.
- Obtain a county or municipal rental license. Montgomery County and Prince George’s County generally require rental licenses, although municipal requirements and certain exemptions may apply.
- Complete radon testing and provide the required radon addendum for certain Montgomery County rental properties, including applicable basement and ground-contact units.
- Comply with local requirements involving window guards, occupancy, property inspections, and housing-code standards.
- Install and maintain legally compliant smoke alarms and carbon monoxide detectors.
- Follow Maryland and local rules governing security deposits, lease provisions, rent increases, late fees, tenant notices, and the handling of rental payments.
Maryland requires qualifying rental properties built before 1978 to be registered and comply with applicable lead-risk-reduction standards. A passing inspection is generally required whenever occupancy changes unless the property has an eligible lead-free certification. Property owners can review the full requirements through the Maryland Department of the Environment’s rental property guidance.
Prince George’s County also generally requires single-family rental properties to maintain a valid rental license. However, some incorporated municipalities oversee their own licensing programs, so requirements may vary by location. Additional information is available on the county’s Single-Family Rental Licensing page.
Washington, D.C.
The District of Columbia has extensive licensing, registration, inspection, and tenant-protection requirements. Depending on the property, a landlord may need to:
- Obtain the appropriate Basic Business License for the rental property.
- Pass a housing inspection as part of the licensing process.
- Register the property with the Rental Accommodations Division, commonly referred to as RAD.
- Determine whether the property is subject to rent stabilization or qualifies for an exemption. An exemption is not automatic and must generally be properly claimed and registered.
- Provide applicants and tenants with the current D.C. Tenant Bill of Rights and other required disclosures.
- For properties built before 1978, provide the federal and D.C. lead disclosures, the EPA lead-safety pamphlet, and any available lead reports.
- Comply with additional D.C. lead-safety requirements when a child under six or a pregnant person lives in or regularly visits the property.
- Understand the District’s rules regarding security deposits, interest, rent increases, notices, lease provisions, housing conditions, and eviction procedures.
- Understand how tenant protections, including the Tenant Opportunity to Purchase Act, commonly known as TOPA, could affect a future sale of the property.
A single-family home offered for rent in Washington, D.C., generally requires a One Family Rental Basic Business License. Rental units must also be registered with the Rental Accommodations Division (RAD) as either subject to or exempt from rent stabilization. Property owners can review the D.C. rental licensing requirements and complete the necessary registration through the D.C. Rent Registry.
In addition to federal disclosure requirements, the District has its own lead-related forms and regulations for properties built before 1978. More information is available through the D.C. Department of Energy and Environment’s lead-law guidance.
Virginia
Virginia generally has fewer pre-rental licensing and registration requirements than Maryland or Washington, D.C. However, landlords must still comply with the Virginia Residential Landlord and Tenant Act, applicable building and housing codes, and any local requirements.
Depending on the location and property type, an owner may need to:
- Determine whether the city or county has established a rental inspection or licensing program for the property’s location.
- For properties built before 1978, provide the federal Lead-Based Paint Disclosure, the EPA lead-safety pamphlet, and any available lead reports.
- Provide the current Virginia Statement of Tenant Rights and Responsibilities to prospective tenants.
- Have both the landlord and tenant sign the acknowledgment associated with that statement.
- Follow Virginia requirements concerning security deposits, lease terms, property condition, maintenance obligations, notices, late fees, and eviction procedures.
- Install and maintain legally compliant smoke alarms and carbon monoxide detectors.
- Confirm whether a local business license, inspection, occupancy approval, or other municipal requirement applies.
Virginia landlords must provide prospective tenants with the Statement of Tenant Rights and Responsibilities. Both the landlord and tenant must also sign an acknowledgment confirming that the statement was provided. The statement and additional guidance are available through the Virginia Department of Housing and Community Development.
Additional Considerations for Every Landlord
Regardless of where the property is located, prospective landlords should also:
- Review their mortgage documents and determine whether the lender must be notified.
- Notify their homeowners insurance carrier and obtain appropriate landlord coverage.
- Review condominium or homeowners association rules for rental restrictions.
- Consider the tax consequences of converting a primary residence into an investment property.
- Establish a process for rent collection, maintenance requests, emergency repairs, inspections, and required notices.
- Use a lease and addenda that comply with the laws of the applicable jurisdiction.
- Carefully document the property’s condition and the handling of the tenant’s security deposit.
The Importance of Professional Guidance
As you can see, becoming a landlord is rarely as simple as finding a tenant and signing a lease. The items above represent only some of the many requirements that may apply when renting a home.
An experienced Corcoran McEnearney real estate agent can guide an owner through the leasing process, including pricing, marketing, tenant screening, required disclosures, and preparation of the appropriate lease documents. Owners who prefer ongoing assistance may also choose to place their property with McEnearney Property Management.
Either option can help ensure that the owner and property are properly prepared, applicable requirements are addressed, and the tenancy begins on the strongest possible footing.
This article provides general information and is not intended as legal or tax advice. Rental laws and local requirements change frequently. Property owners should consult the appropriate government agencies and qualified legal or tax professionals regarding their particular circumstances.
About the Author
Andy Hill, EVP and Managing Broker DC + MD, is a trusted real estate leader with deep roots in the Washington, D.C. area. Beyond his brokerage role, Andy serves on several leadership committees and is an active member of multiple committees at the Greater Capital Area Association of REALTORS® (GCAAR), contributing to the growth and professionalism of the real estate industry.
