President Biden is going to propose today a cap of 5% on annual rent increases for tenants of major apartment landlords, according to sources familiar with the matter who have spoken with The Associated Press and the Washington Post, which first broke the news.
He plans to unveil the proposal in Nevada today, the sources said, but hints of the plans were made by Biden at his NATO news conference Thursday.
Biden’s plan calls for stripping a tax benefit from landlords who increase their tenants’ rent by more than 5 percent per year, according to the Washington Post. The measure would only apply to landlords who own more than 50 units and it wouldn’t cover units that have not yet been built in order not to discourage construction of new rental housing. The plan would require Congressional approval.
Furthermore, the plan would only apply to rental units for two years, after which it is theorized that rents would come down naturally as new supply enters the pipeline.
Not surprisingly the commercial real estate industry has come out against the plan.
“Rent control has been tried for decades and been a resounding failure,” said National Multifamily Housing Council President Sharon Wilson Géno. “If the administration’s goal is to lower housing costs and support residents it would be better advised to implement policies that expand housing supply – the only real way to sustainably lower housing costs and create more housing security for renters as the Biden administration pointed out in its very own Housing Supply Action Plan.”
The NMHC points to research that shows that rent caps – or rent control – reduce the supply of available housing and fail to target those renters who need help the most. Rent control reduces the quality of housing, the association said.