President Joe Biden called on Congress to pass a new law incentivizing corporate landlords to abide by a rent increase cap for existing units on Tuesday.
Biden’s plan would restrict corporate landlords from increasing rents by any more than 5% unless those landowners are willing to lose eligibility for lucrative federal tax credits, the White House announced Tuesday. The president called on a divided Congress to pass his plan less than four months before Election Day, rather than pursuing the policy via executive action.
“Under President Biden’s plan, corporate landlords, beginning this year and for the next two years, would only be able to take advantage of faster depreciation write-offs available to owners of rental housing if they keep annual rent increases to no more than 5% each year,” the White House said. “This would apply to landlords with over 50 units in their portfolio, covering more than 20 million units across the country. It would include an exception for new construction and substantial renovation or rehabilitation. The policy is a bridge to rents stabilizing as President Biden’s plan to build more takes hold.”
The Federal Housing Financing Administration (FHFA) also recently announced that it is introducing new measures “cracking down” on landlords with tenants in multifamily properties financed by loans acquired by Fannie Mae and Freddie Mac. Those measures include mandating 30-day notice ahead of a rent increase, 30-day notice on lease expiration and a 5-day “grace period” for late rent payments before additional fees are charged.
Additionally, the Bureau of Land Management (BLM) intends to sell dozens of acres of federal land in Nevada’s Las Vegas Valley at below-market prices to developers who will build affordable units for households that take home less than 80% of the area median income, according to the White House.
While the White House is touting its plan as a step to address America’s housing shortage and alleviate pressure on renters, critics say that the plan would further distort the U.S. housing market if passed by Congress and enacted as law.
“Just when you thought Biden’s economic policies couldn’t get any more destructive, he announces plans for nationwide rent control. You don’t need to be an economist to understand that rent control exacerbates the problem it’s trying to solve by disincentivizing building and reducing housing supply and quality,” Elaine Parker, president of the Job Creators Network Foundation, said in a statement addressing the announced plan. “The plan is also another example of the Biden administration’s extreme executive overreach, placing another federal mandate on small businesses in the housing sector that are already facing high interest rate, insurance, and other costs. The affordable housing solution is simple: build, baby, build. Unfortunately, overregulation makes it very costly – if not impossible – to achieve this goal.”
