DC Real Estate Investing in 2026: How TOPA Reform Is Changing the Market
Washington, DC entered 2026 with a fundamentally different investment landscape than the one investors navigated for years. The catalyst is the District’s Rebalancing Expectations for Neighbors, Tenants, and Landlords (RENTAL) Amendment Act of 2025, which includes major updates to DC’s Tenant Opportunity to Purchase Act (TOPA)—a law that historically shaped pricing, timelines, and execution risk across many multifamily transactions.
For investors, the point is not politics or headlines. The point is deal math: certainty, timelines, friction, and exit options. TOPA has long been a material variable in underwriting and a practical constraint on liquidity. The RENTAL Act’s TOPA changes are designed to reduce that uncertainty in specific circumstances—particularly for small multifamily and newer construction—while still preserving tenant protections in many other scenarios.
What follows is the investor-focused breakdown: what changed, why it matters in 2026, and how to translate the new rules into better acquisition strategy.
Quick TOPA refresher (why investors cared so much)
TOPA gives tenants in many DC rental buildings a right of first refusal (or the ability to assign that right) when a property is being sold. In practice, that historically created three consistent investor pain points:
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Timeline risk: transactions could become longer and less predictable.
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Execution risk: deals could be disrupted late in the process or require additional steps.
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Pricing impact: uncertainty tends to widen bid-ask spreads, reduce competitive bidding, or force concessions.
Those factors didn’t just affect sellers. They affected how investors underwrote opportunities and how lenders assessed risk and timing.
The core 2026 change is that TOPA is now more defined and limited for two categories of assets that matter to investors: small multifamily and newer construction.
The two TOPA changes that matter most for investors
1) 2–4 unit buildings: a major exemption (with important guardrails)
The RENTAL Act creates a TOPA exemption for many “2–4 unit” buildings—an asset class that represents a large share of DC’s multifamily stock and is often owned by small operators.
Investor implication: This directly reduces the friction that historically made small multifamily deals harder to execute and harder to underwrite, particularly for buyers who want a more traditional sale process.
The caveat (do not ignore this): commentary and guidance around the law makes clear that the 2–4 unit exemption is not meant to be a blanket “TOPA disappears” rule in every scenario. Ownership structure and investor profile can matter (for example, whether the property is owned primarily by a business corporation and/or whether the owner owns multiple DC properties has been discussed in analyses).
How to use this in 2026 underwriting
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Treat eligible 2–4 unit acquisitions as more executable, with fewer deal-killing surprises.
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Expect the market to price in that increased certainty over time (early 2026 can still present inefficiencies).
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Confirm eligibility early during diligence—this is not a “wait until the end” item.
2) New construction: 15-year TOPA exemption from Certificate of Occupancy
The most investment-significant change is the 15-year TOPA exemption for newly built housing accommodations, measured from the issuance of a Certificate of Occupancy.
Put plainly: a qualifying new building can be bought and sold during that 15-year period without triggering TOPA offer-of-sale rights in the same way that older assets do.
Investor implication: This changes DC’s profile for:
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developers evaluating whether to build in the District,
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institutional capital that previously avoided TOPA-heavy deal risk,
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and value-focused buyers who want newer assets with a clearer path to a future exit.
Industry summaries highlight that the intent is to reduce uncertainty and encourage investment and development—particularly by improving predictability around transfers and deal execution.
How to use this in 2026 underwriting
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If you are considering newer buildings, underwrite the exemption as part of the business plan:
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“How many years of exemption remain?”
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“How does that affect refinancing and exit timing?”
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For acquisitions of buildings that are not brand-new but still within the window, the remaining exemption period can be a meaningful part of valuation.
A third change investors should understand: capital can move without automatically triggering TOPA
Beyond exemptions, the RENTAL Act also addresses certain ownership-entity and investor-entry/exit issues—aimed at letting non-controlling investors enter or exit ownership structures without automatically triggering TOPA sale processes in the same way a traditional sale would.
Investor implication: This can matter for:
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partnership recapitalizations,
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changes in membership interests,
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capital stack adjustments,
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and certain “money in / money out” transactions that are common in sophisticated investment structures.
The practical result is that DC becomes easier to treat like a modern investment market where capital can be structured with less fear that routine financial transactions will unintentionally trigger a complicated statutory process.
Why this matters specifically in 2026
1) Deal timelines and ambiguity are part of the pricing
When uncertainty drops, two things often happen:
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more buyers compete (because risk is more measurable), and
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deals close more reliably.
This doesn’t mean pricing instantly jumps. It means the market often becomes more liquid, with a healthier volume of transactions and more confidence in underwriting.
2) Developers reconsider DC when exit paths improve
Multiple analyses describe the law’s goal as encouraging development and investment by removing barriers that discouraged new supply.
In practice, clearer rules and defined exemptions can make DC a more workable place to build and to sell.
3) The small multifamily segment becomes more approachable
The 2–4 unit space is where many investors start: house-hackers, small operators, long-term holders, and buyers building a portfolio one asset at a time. If TOPA is less likely to interfere (where the exemption applies), the segment becomes more financeable and more predictable.
What hasn’t changed: TOPA is still a factor in many DC deals
It would be a mistake to interpret reform as elimination.
TOPA remains relevant for many properties and many transaction types, and the RENTAL Act includes a broader package of housing and eviction procedure changes alongside TOPA reforms.
For investors, the practical takeaway is simple: TOPA analysis is no longer “one-size-fits-all.” It’s now more asset-specific:
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building size (especially 2–4 units),
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age of construction (15-year window),
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ownership structure and transaction structure.
Investor playbook: how to act on this in 2026
1) Update your acquisition criteria
If you previously avoided DC because of TOPA uncertainty, 2026 is the year to revisit:
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2–4 unit properties that qualify for exemption,
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newer construction with meaningful remaining exemption years,
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and opportunities where improved execution risk changes the return profile.
2) Underwrite timelines with more discipline
Even in a friendlier regime, you still need to build realistic time assumptions into:
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contract-to-close,
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financing milestones,
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renovation schedules,
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tenant communication planning (where applicable).
The upside is that assumptions may now be tighter and more predictable for certain assets.
3) Treat “years remaining” like a feature, not trivia
For newer buildings within the 15-year window, the number of years remaining is not a footnote. It can impact:
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resale liquidity,
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buyer pool depth,
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refinance appetite,
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and overall exit strategy.
4) Structure matters
The reforms around ownership entities and investor participation reinforce a broader point: transaction structure can change legal outcomes. In DC, it has always mattered, and it matters even more now because exemptions and definitions are more specific.
(Practical note: this is where good counsel and experienced representation pay for themselves.)
The Synergy Group perspective: where we think the opportunity is
In 2026, the interesting question is not “Did TOPA change?” It’s:
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Which assets became easier to buy and sell?
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Which strategies became more executable?
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Where will pricing lag reality long enough to create opportunity?
For investors, the reform is best viewed as a shift in DC’s “friction profile.” Less friction doesn’t guarantee returns. But it does change the playing field—especially for small multifamily and newer construction strategies that depend on predictable execution.
Bottom line
TOPA reform is not background noise. It is a structural change that affects:
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transaction timing,
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legal exposure,
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exit optionality,
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and the investor profile DC can now attract.
If you invest in DC—or you’re considering stepping in—2026 is the right time to reassess your criteria with the new rules in mind.
