In an effort to directly tackle soaring housing costs, President Joe Biden has proposed a set of measures to potentially stymie the recent spike in rent prices. Key among these measures is a cap on rent increases, limited to no more than 5% per year for large corporate landlords. This initiative, revealed today, specifically targets property owners with more than 50 units and is accompanied by a caveat: any exceedance of this proposed cap could lead landlords to forfeit valuable tax credits. As reported by CNN, the plan is meant to soften the blow of housing expenses for American families amid broader economic concerns, especially inflation.
The policy is designed to serve as a bridge until more rental units become available in the market, ideally bringing down rents. "While the prior administration gave special tax breaks to corporate landlords, I’m working to lower housing costs for families," President Biden noted, urging bipartisan support for the approach. However, gaining traction for such a proposal in a Congress currently controlled by Republicans may prove to be difficult, especially in a presidential election year. Critics are quick to point out that such measures are often seen as controversial and could struggle to find widespread legislative backing, as detailed by CBS News Miami.
Additional details of the proposal clarify that the rent cap would only apply to landlords owning more than 50 units, potentially impacting over 20 million rental units across the U.S. According to National Economic Advisor Lael Brainard, in a call with reporters cited by CBS News Miami, this covers "roughly half of the rental market" in the nation. Nonetheless, exceptions have been carved out for new constructions and significantly renovated buildings to encourage the growth of the rental property market.
The Biden administration has not solely focused on the capping of rent increases to combat housing affordability issues. Other initiatives include leveraging surplus federally owned land for affordable housing developments and earmarking grant funding to facilitate home building and neighborhood revitalizations in several cities. However, despite the urgent need to address the housing affordability crisis as shown in Federal Reserve data, some industry groups, like the Housing Solutions Coalition, warn of the detriments of rent control. "Decades of academic research from across the United States and around the world clearly show that rent caps — more commonly known as rent control — reduce the supply of available housing and fail to target those renters who need help the most while simultaneously harming other residents and the communities they reside in," the coalition said in a statement obtained by CNN.
