The Biden administration unveiled a proposal that would force many landlords of large complexes to limit rent increases.
The proposal would require landlords with over 50 units in their portfolio to not raise rent more than 5% per year, or risk losing tax incentives. An exception would be made for new construction and or units undergoing substantial renovation or rehabilitation. The White House estimates that this would impact 20 million rental units in the U.S.
Rent costs in recent years have exceeded 5% increases. In 2023, average rent costs rose 6% nationwide. In 2022, rent costs rose 8.6%. But in 2021, average rent costs increased a mere 3.6%. From January 2021 through June 2024, average rent costs have jumped 21.5%, according to the consumer price index.
The proposal would require Congressional approval, and would likely not get much support in a Republican-led House.
Several GOP-led states, including Ohio, have banned municipalities from enacting rent control within the state.
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Additionally, the Biden administration announced additional measures impacting renters. The Federal Housing Finance Agency said renters in multifamily properties financed by loans acquired by Fannie Mae and Freddie Mac will be afforded certain protections in the future. They include a 30-day notice before rent increase, 30-day notice on lease expiration, and a five-day grace period before imposing late fees on rental payments.
The Biden administration estimates that Fannie Mae and Freddie Mac have financed an average of 1.2 million multifamily rental units over the past three years.
President Biden's plan builds on his overall proposal that he says would make housing more affordable. One facet of the plan is to provide $10,000 tax credits for first-time homebuyers and people who sell their starter homes.
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"Families deserve housing that’s affordable—it’s part of the American Dream. 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," President Biden said in a statement.
Arguments against rent control
While states try to combat rising rents, the National Apartment Association claims that rent control actually makes things worse for tenants. In a report, the association found that over 70% of housing providers said they would reduce investments, shift plans to other markets, or cancel plans altogether in areas with rent control.
The report also suggested that rent control causes landlords to put off maintenance of properties.
"Rent control has been proven to negatively impact renters, housing providers and even entire communities," the National Apartment Association said. "This research shows that rent control policies can inadvertently lead to reduced housing supply, lower property values and decreased quality of available properties. Additionally, rent control disincentivizes new construction, which could exacerbate the housing affordability crisis."
