President Joe Biden could cap rent increases across the country at 5 percent as part of the current administration’s efforts to combat ballooning housing costs.
The White House confirmed on July 16 that the latest housing policy initiative would limit the ability of landlords to raise tenants’ rents.
Officials say that the rent control law, if approved by Congress, would be in effect for two years. Newly built rental properties wouldn’t be affected by the proposal.
Additionally, it would apply only to landlords who own more than 50 units and affect about 20 million units, representing roughly half of all rental units.
There’s reason to believe that “landlords would comply with this proposal,” particularly because otherwise they would “lose valuable tax breaks,” a senior administration official told reporters in a call with news media outlets.
The depreciation deduction would be denied if landlords increase rents by more than the 5 percent limit.
“If landlords are faced with this choice in this next two-year period, many and hopefully, most landlords would be compliant here,” the senior administration official said, adding that the supply of rental units is set to increase.
President Biden believes that this measure would help to reduce rents at a time when tenants are paying the highest costs in nearly two years.
“Families deserve housing that’s affordable—it’s part of the American Dream,” President Biden said in a statement.
“Rent is too high and buying a home is out of reach for too many working families and young Americans, after decades of failure to build enough homes. I’m determined to turn that around.”
This was the largest gain in more than a year. In addition, officials announced new grants to construct thousands of homes nationwide and efforts to repurpose public lands to build more affordable homes.
The president also urged Congress to approve his initiative to construct 2 million new homes.
“We need to build, build, build,” President Biden said.
In a July 11 speech, the president said that the federal government was “going to make sure that rents are kept at 5 percent increase“ and ”apartments and the like, and homes are limited to 5 percent.”
“My administration is cracking down on big corporations who break antitrust laws by price fixing to keep the rents up,” the president said.
“Landlords should be competing to give folks the best deal, not conspiring to charge them more.”
Industry expert Carl Harris, chairman of the National Association of Home Builders, opposes the rent-capping proposal. He said the plan would “worsen the housing affordability crisis” by discouraging companies from constructing new rental housing and would harm tenants.
“Leading economists and numerous studies over the years agree that rent control would aggravate affordability problems by exacerbating the housing shortage in America.”
Kevin Sears, the president of the National Association of Realtors, called the action “misguided” because “they have backfired on local governments and harmed the people we need to help the most.”
“Developers are reluctant to build in areas where the government imposes rent controls on new buildings, and these policies actually decrease the supply of low- to mid-range housing units,” Mr. Sears said.
Housing advocate Diane Yentel, president and CEO of the National Low Income Housing Coalition, supports the plan. She said it’s a necessary endeavor at a time when rents are surging and called the temporary rent control measure “historic.”
“Had such protections against rent gouging been in place then many families could have avoided homelessness and stayed stably housed.”
Rather than wait for congressional approval, Ms. Yentel encouraged the president to take action now.
