Biden to propose capping national rent increases at 5%
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President Biden hinted at this plan last week speaking at a NATO news conference. Photo: Kevin Dietsch/Getty Images
In Las Vegas Tuesday, President Biden is expected to call for legislative action to curb landlords' ability to raise rents, administration officials told reporters Monday afternoon.
Why it matters: Rents have skyrocketed over the past few years, contributing to high inflation and putting enormous strain on renters.
- "Families deserve housing that's affordable — it's part of the American Dream," Biden said in a statement Tuesday. "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."
How it works: Under the proposal, landlords that raise annual rents more than 5% would no longer be able to take a key tax write-off on property depreciation over the next two years.
- The policy would only affect landlords with more than 50 units in their portfolio over the next two years.
- And so as not to discourage new building, the rule wouldn't apply to new construction or units that have recently be substantially rehabilitated.
- More than 20 million rental units — about half of what's on the market — would be affected, officials said.
The big picture: In an effort to tackle the rent affordability problem, the Biden administration has put forward a handful of policies — limiting rent increases on rentals built with federal tax credits, cracking down on rental junk fees, securing increased rental assistance, for example.
- The Justice department is reportedly readying a lawsuit against RealPage, a software company used by landlords across the country that is accused of price fixing.
- But some of the more ambitious proposals to lower housing costs — like those in Biden's 2025 budget — haven't gotten off the ground.
Flashback: The President has hinted in the past at the new plan to cap rental increases, both during his disastrous June debate, where it got little attention, and last week at a NATO press conference.
- "If I'm reelected, we're going to make sure that rents are kept at 5% increase, corporate rents for apartments and the like, and homes, are limited to 5%," he said last week.
The other side: "Rent Caps don't work and will have a chilling effect on housing supply," said David Dworkin, the CEO of the National Housing Conference, a nonprofit that advocates for affordable housing, in a statement on Monday.
Reality check: It's unlikely Congress has the appetite to do this anytime soon. "This is a proposal he would fight for in a second term," an administration official said on Monday's call.
- And there's little the White House can do to address the record high mortgage rates that have put homeownership out of reach for millions of first-time buyers.
