Why Biden's Rent Cap Proposal Isn’t Going to Happen

Legislative processes and political realities suggest that national rent control won’t work this year at least.

President Biden was expected yesterday to propose a cap of 5% on annual rent increases for tenants of major apartment landlords, and he did. Whether it can happen is something else.

As the White House communicated on Tuesday, the administration is looking for Congress to pass legislation for landlords with more than 50 units in their portfolios, that being the proxy for institutional owners, although it would also affect private investors, family offices, and others that might own at least that many units. According to administration calculations, the total pool would cover 20 million rental units.

The law would then give landlords a choice. They could either restrict annual rent increases to no more than 5% a year or they would forfeit the ability to take fast depreciation of rental housing. There would be an exception for new construction or “substantial renovation or rehabilitation.”

Some of Biden’s proposals can be done within executive power exercised through administrative agencies and existing budgets. The rent cap, however, needs the cooperation of Congress.

“It’s got no legs,” said Mark Calabria, currently a senior advisor at the Cato Institute, previously director of the Federal Housing Finance Agency during the Trump administration, and before then chief economist for Vice President Mike Pence, and earlier a senior aide to the U.S. Senate Committee on Banking, Housing, and Urban Affairs under chairs Richard Shelby and Phil Gramm.

One strike against the bill is that it requires a change to the tax code, “which is harder to do than normal legislation,” Calabria said, even though he thinks it might pass constitutional muster. Because it isn’t a spending issue, it can’t be tied into a “must-pass” end-of-year financial bill.

He also said, “The year’s almost over in terms of Congress.” Getting both the House and Senate to consider a bill takes time. Additionally, with the House under Republican control, even if thinly, and the existence of the filibuster in the Senate, it’s a non-starter during a presidential election year.