Washington Statewide Rent Cap: 7% Plus CPI, Capped at 10%, After a Tenant's First Year

The rent cap restricts increases after a tenant's first year of tenancy; it doesn't restrict what a landlord can set as the initial rent or how that rent might change during the first 12 months.

[Cite: H.B. 1217, 2025 Wash. Sess. Laws, c. 209, amending RCW 59.18]

That timing distinction matters for new tenancies specifically; a landlord setting an initial rent for a brand-new tenant isn't bound by this percentage formula at the outset, but once that tenant passes the 1-year mark, any further increase has to stay within the statutory cap.

While most covered rentals follow the 7%-plus-CPI-or-10% formula, manufactured and mobile homes are capped at a flat 5% regardless of inflation.

[Cite: H.B. 1217, c. 209]

That separate, simpler cap reflects the different economics of manufactured home communities, where a tenant often owns the home itself but rents the underlying lot; a landlord operating this kind of community needs to apply the flat 5% figure rather than running the general CPI-based formula used for standard rental housing.

A building remains exempt from this rent cap for 12 years following its initial certificate of occupancy.

[Cite: H.B. 1217, c. 209]

That exemption window gives developers a defined period of pricing flexibility to help finance new construction, reflecting a policy trade-off between encouraging new housing supply and extending rent-stability protections; a landlord operating a newer building needs to track the certificate-of-occupancy date carefully, since the exemption expires on a fixed timeline rather than applying indefinitely.

An owner-occupied triplex or fourplex is exempt from this cap, but only when the property isn't owned by a corporate entity.

[Cite: H.B. 1217, c. 209]

That corporate-ownership exclusion targets the exemption toward an individual owner who actually lives on the property alongside their tenants, rather than extending the same flexibility to a corporately structured small-multifamily investment; a landlord operating through an LLC or similar entity should confirm whether that structure disqualifies the property from this particular exemption.

A landlord can't charge more than a 5% rent difference between a month-to-month tenancy and a fixed-term lease for otherwise comparable terms.

[Cite: H.B. 1217, c. 209]

That provision prevents a landlord from effectively avoiding the rent cap by pushing tenants toward month-to-month arrangements priced well above an equivalent fixed-term lease; the 5% ceiling on that specific pricing gap keeps the cap's protection meaningful regardless of which lease structure a tenant ends up in.

A landlord who violates the cap faces damages for the excess rent actually collected, up to 3 months of additional damages on top of that, attorney's fees, and a separate civil penalty of up to $7,500 per violation.

[Cite: H.B. 1217, c. 209]

That layered structure means the real financial exposure for a cap violation goes well beyond simply refunding the overcharge; a landlord weighing whether a borderline rent increase might exceed the cap should factor in this full combination of remedies, not just the excess rent amount itself.

A property's exemption status depends on which specific category it falls into, new-construction age, owner-occupied small-multifamily, LIHTC regulatory agreement, or nonprofit affordable housing, and each category has its own distinct qualifying conditions.

[Cite: H.B. 1217, c. 209]

A landlord assuming a property is exempt based on a general sense that it's "newer" or "affordable" should verify the actual qualifying detail, the exact certificate-of-occupancy date, the specific regulatory agreement, the nonprofit's operating status, since an approximate match to an exemption category doesn't necessarily mean the exemption actually applies.

This rent-cap provision and HB 1217's separate 90-day notice requirement work together as parts of the same law; staying within the percentage cap doesn't substitute for also meeting the required notice timing and form.

[Cite: H.B. 1217, c. 209; RCW 59.18.700]

A landlord planning a rent increase within the applicable cap still needs to separately confirm the notice has been delivered at least 90 days in advance, using the statute's required language, since a compliant percentage increase delivered through a noncompliant notice process still creates legal exposure.

The specific percentage figure applicable in any given year, 9.683% for 2026, 10% for 2027, comes from the Department of Commerce's annual calculation under this same statutory formula, not from a separate law each year.

[Cite: RCW 59.18.700, as established by H.B. 1217, c. 209]

A landlord should understand this statute as the permanent legal framework, with the Department of Commerce's yearly announcement simply applying that same 7%-plus-CPI-or-10% formula to that year's actual inflation data; the underlying law itself doesn't change annually, even though the resulting percentage does.

Since exemption status turns on specific, verifiable facts, certificate-of-occupancy date, ownership structure, regulatory agreement terms, a landlord relying on an exemption benefits from keeping clear documentation supporting that claim.

[Cite: H.B. 1217, c. 209]

A landlord who can produce the certificate-of-occupancy date or the relevant regulatory agreement on request is in a much stronger position if a tenant or regulator later questions whether a specific rent increase should have complied with the general cap.

The practical starting point is classifying every property in a portfolio against the 4 exemption categories, confirming which units are genuinely exempt and which fall under the general cap or the manufactured-home flat 5% rate.

Building a standing review process tied to each property's certificate-of-occupancy date ensures a landlord catches the moment a new-construction exemption is set to expire, rather than continuing to apply pre-cap pricing practices past the 12-year window without realizing the general cap has started to apply.