Washington’s Rent Increase Limit and What It Means for Your Projections

Since May 7, 2025, Washington has limited how much most residential rents can rise in a year. For anyone buying an apartment building in Seattle, this is not a side note: it sets the ceiling on rent growth for existing tenants, and rent growth is one of the main drivers of a building’s future value. This guide summarizes the state rule and Seattle’s notice requirements as published by state and city agencies, and shows how to reflect them in underwriting. Always check the current text and figures before relying on them.

The state rule in brief

• Under RCW 59.18.700, a landlord may not raise rent by more than 7% plus the change in the consumer price index, or 10%, whichever is lower, over any 12-month period.
• The Washington State Department of Commerce publishes the maximum allowed increase for each calendar year.
• Rent may not be increased during the first 12 months of a tenancy, whether the lease is fixed-term or month-to-month.
• Exemptions listed in RCW 59.18.710 include units whose first certificate of occupancy was issued 12 or fewer years before the notice, certain public and nonprofit housing, qualified low-income housing, and some owner-occupied small buildings.

Seattle’s added requirements

Seattle requires 180 days of advance written notice before any housing cost increase takes effect. When an increase reaches or exceeds 10% within a 12-month period, the landlord must attach a notice about the city’s Economic Displacement Relocation Assistance program; eligible tenants who move out after such an increase can receive relocation assistance, which the landlord may have to reimburse. The city also says an increase cannot take effect while a unit fails to meet minimum housing standards after the tenant has notified the landlord in writing.

What this means for underwriting

For a building that is not exempt, the gap between current rents and market rents, the loss to lease described in Vacancy, Concessions and Loss to Lease: The Gap Between Rent and Income, can only close at a limited pace for existing tenants. When a unit turns over, the new tenancy can generally start at market rent, so turnover is how most of the gap is closed. That makes the pace of turnover an important assumption.

A projection with made-up numbers

Suppose a unit rents for $1,600 and similar units rent for $1,900. With the tenant staying, and assuming the allowed increase were 7% in each of the next few years, the rent could reach about $1,712 in year one and about $1,832 in year two, and would reach the $1,900 market level in year three, if the market stays where it is and the landlord chooses to raise by the full amount each time. In practice, many owners raise by less to keep good tenants. The gap closes over several years, not at closing.

Two more timing details matter. The 180-day Seattle notice means an increase planned for right after closing may not take effect until months later, and a notice already served by the seller may or may not match your plans. And an increase of 10% or more can create relocation-assistance costs, so projections that assume large one-time increases need to account for them.

Checking the exemptions

The new-construction exemption applies to units whose first certificate of occupancy was issued 12 or fewer years before the date of the rent increase notice. For a newer building, find the certificate of occupancy date and work out when the exemption ends; after that date the building falls under the limit. The owner-occupied exemptions do not apply when the owner is a corporation, a real estate investment trust or certain LLCs, so they rarely help an investor buying a building.

Questions to ask before you buy

• When did each tenant’s last increase take effect, and by how much?
• Are there any increase notices already served that take effect after closing?
• When was the building’s first certificate of occupancy issued?
• Have any tenants received relocation-assistance notices, and what happened?
• Are there any open complaints about housing standards in any unit?

Rent increases and value

Because value is usually estimated from NOI, the pace of rent growth feeds directly into what the building will be worth later. A projection that assumes existing tenants move to market rents quickly will show a higher future value than one that follows the allowed increases. Use the slower path in your base case.

Build rent growth into the model year by year, unit by unit where practical, and test a slower path as described in Stress-Testing an Apartment Deal: Rates, Rents, Expenses and Exit. Other Seattle rules that affect owners are covered in Seattle Landlord Rules to Price In Before You Buy.