Washington’s statewide cap on annual residential rent increases will be just shy of 10% next year, down slightly from its current level.

The limit, which takes effect Jan. 1, will be set at 9.683%, the state’s Department of Commerce said Friday.

House Bill 1217, signed into law in May by Gov. Bob Ferguson, restricts annual residential rent increases to 7% plus inflation, or 10%, whichever is lower. 

The law went into effect immediately, with the rate for the rest of 2025 set at the 10% maximum, as 7% plus inflation equaled 10.8%. 

Going forward, the Department of Commerce will announce the annual rent limit each July. The timing is based on the release of inflation data from the U.S. Bureau of Labor Statistics.

Rent hikes of any degree aren’t allowed in the first year of a tenancy under Washington’s landmark law. But landlords can set rent however they please when the tenant moves in.

The cap doesn’t apply to all homes. For example, new construction is not covered for its first 12 years. Public housing authorities, low-income developments, and duplexes, triplexes and fourplexes in which the owner lives in one of the units are also exempt.

For manufactured homes, increases are capped at 5%.

If a landlord raises rent above the caps without an exemption, the renter must give the landlord a chance to fix the error or can terminate their lease with 20 days’ notice. A tenant or the state attorney general can bring litigation to enforce compliance. The attorney general can recover up to $7,500 per violation.

The legislation was one of the most divisive this session in Olympia. Progressives had initially pushed for a hard 7% limit, but ran into opposition from moderate Democrats. 

Democrats hope the compromise provides a modicum of predictability to renters. Republicans fear it’ll chill development and price out small landlords who won’t be able to keep up with maintenance costs without the flexibility to raise rents as they wish.

Under the law, the limit on rent increases will remain in effect until 2040.

This story is republished from the Washington State Standard, a nonprofit, nonpartisan news outlet that provides original reporting, analysis and commentary on Washington state government and politics.