Department of Housing and Community Development 1800 Martin Luther King Jr. Avenue, SE Washington, DC 20020 (202)442-7200
exceptions and objections are submitted, a hearing will be held with OAH to resolve the disputed
matters. OAH then issues an order setting the rent increase.
Capital Improvements
A housing provider can petition to raise rents by an amount enough to cover the cost of capital
improvements. A capital improvement is an improvement or renovation other than ordinary
repair, repair or maintenance if the improvement or renovation is deemed depreciable under the
Internal Revenue Code. A housing provider files a petition, serves copies to the tenants, and
presents the case to the Office of Administrative Hearings (OAH). The capital improvement
petition must be filed no later than 10 calendar days after the installation of the capital
improvements. Tenants may support or oppose the petition. If OAH approves the surcharge, the
housing provider performs the work and may then raise rents.
OAH makes a ruling on the petition, based on:
Whether the improvement will protect or enhance the health, safety and security of the
tenants or the habitability of the housing accommodation;
Whether the improvement will be depreciable under the Internal Revenue Code;
Whether required governmental permits and approvals have been secured; and
Whether the design and cost of the work are sufficiently documented.
In addition to the work’s cost, the housing provider can include financing costs, including interest
and service charges. The housing provider must spread the costs of a building-wide
improvement project for 96 months. For an improvement to one or more but not all rental units,
the costs must be spread over for 64 months. Only units affected by the capital improvements are
subject to rent increases.
The surcharge may be no more than 20% of the prior rent charged for a building-wide capital
improvement and no more than 15% for an improvement that does not affect all rental units.
The Act allows a housing provider to continue the surcharge until the housing provider has
recovered all costs, including interest and service charges, of the capital improvement. Certain
low-income elderly and disabled tenants can be exempted from a capital improvement surcharge.
The increase is terminated once the housing provider recovers all costs of the capital
improvements. This type of increase in rent is called a surcharge.
Services & Facilities
The Act allows an adjustment in rents when related services or facilities supplied by a housing
provider or a housing accommodation or for any rental unit in the housing accommodation are
increased or decreased.
A housing provider files a petition, serves copies to the tenants, and presents the case for the
change at an OAH hearing. Tenants may support or oppose the petition. The OAH makes a
ruling on the petition, based on:
The cost to the tenant of buying alternate related services or facilities comparable;
The operating cost to the housing provider of the related services or facilities; or
The fair market value of comparable related services or facilities.
Substantial Rehabilitation
The housing provider may submit a petition to raise rents for a substantial rehabilitation of the
housing accommodation. A substantial rehabilitation petition is filed only when proposed
rehabilitation cost equals or is more than 50% of the real property tax assessment of the rental
unit or housing accommodation. The petition must include detailed plans, specifications and