The Biden Administration Unveils Rent Cap Plan to Lower Housing Costs
As part of its plan to reduce housing costs, The Biden Administration is urging Congress to pass legislation penalizing corporate landlords for increasing rents above certain levels.
The administration is proposing a rent cap for corporate landlords, limiting rent increases to no more than 5%. In a July 16, 2024, announcement, President Biden called on Congress to pass legislation requiring corporate landlords to cap their rent increases on existing units at 5% or risk losing federal tax breaks.
Under this plan, starting this year and continuing for the next two years, corporate landlords would only benefit from faster depreciation write-offs available to rental property owners if they keep annual rent increases at or below 5%. If approved by Congress, this legislation would apply to landlords who own more than 50 units, potentially affecting over 20 million units nationwide, according to the White House.
President Biden’s proposal presents corporate landlords with a choice: cap rent increases on existing units at no more than 5% or lose valuable federal tax breaks.
Supporters’ Views
National Housing Law Project director Shamus Roller called the move “historic.”
“Tenants across the country fought for years to get the federal government to care about rent. We applaud the organizing that led President Biden to get real about what the federal government can do to increase housing stability for tenants,” Roller said. “The President knows that fixing the housing crisis will require a whole-of-government approach, including directing Congress to pass major policies that put people over profit. While this is a short-term fix, we commend this proposal and the President’s focus on getting us to a long-term solution for the 114 million people who rent. Biden’s proposal exemplifies how the federal government can shape housing policy that protects and empowers tenants. NHLP is committed to additional federal action that protects tenants from corporate landlord exploitation.”
Opponents’ Views
National Association of Realtors President Kevin Sears responded:
“NAR opposes misguided attempts to cap or control rental rates. Price controls may seem appealing, but 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. We can protect the most vulnerable by supporting targeted assistance to renters and housing providers when there is a gap between rising wages and rising rent. But the long-term solution remains increasing supply. We need more than 328,000 new apartment units each year just to keep up with demand — that’s 4.3 million units by 2035.”
“Rent control is a rare instance where the research is fairly conclusive: It doesn’t work. These measures fail to improve most renters’ financial situations and shift the burden of economic difficulties, inflation, and other costs onto housing providers with no counterbalance. NAR has advocated for federal legislation and policies such as YIMBY and the Neighborhood Homes Investment Act to help eliminate discriminatory land use policies and remove barriers that weaken housing production in the United States. The only way to keep cities affordable for working-class families is to ensure that the supply of housing keeps pace with the growing demand.”
