Finally, something nearly all Americans can agree on – rent increases should be capped. That’s the clear result of a Redfin survey, which found 82% of U.S. residents favor limits on how much landlords can raise rents.
Within this big picture, there were some differences. Democrats (86%) were slightly more likely to hold this view than Republicans (79%). So were renters (86%) compared to homeowners (78%). Overall, however, only 7% of the 1,802 people surveyed opposed rent caps. Some states have already taken action to limit rent increases.
The survey, conducted in September, comes at a time when rents are consuming a growing share of household budgets, often exceeding 30% of income, even though excessive supply in some regions is pushing rents down.
Redfin noted that the White House in July proposed a federal rent control policy that would limit increases on existing rents to 5% — a move that would require Congressional approval. Corporate landlords who exceed this limit would risk losing valuable federal tax breaks, such as faster depreciation write-offs. The legislation would apply to landlords with over 50 units in their portfolio and would affect more than 20 million units nationwide. However, there would be an exception for new construction and substantial renovation or rehabilitation.
A White House fact sheet accompanying this announcement accused some corporate landlords of raising rents by more than increases in their own costs—”resulting in huge profits at a time when millions of Americans are struggling to cover rent each month.”
“And recent analysis showed that the six largest publicly traded apartment companies reported large profits earlier this year, and many of these same landlords are named in pending litigation for their alleged use of proprietary algorithms to raise rents on tenants.”
Plus, the fact sheet announced steps the Federal Housing Finance Authority (FHFA) has taken to protect renters in multifamily properties financed by future loans acquired by Fannie Mae and Freddie Mac. Under the new rules, landlords will have to give 30 days’ notice before rent increases or lease expirations. They will also have to provide a five-day grace period before imposing late fees on rental payments. Together, the agencies have financed an average of 1.2 million multifamily rental units over the past three years.
At least seven states have already initiated various forms of rent control laws. They are Oregon, California, New York, New Jersey, Maine, Maryland, and Minnesota. So does the District of Columbia. In 2022, over 200 local governments had a rent control policy in place, according to the National Apartment Association (NAA).
Redfin, however, cited studies by its own economists that argue rent control laws have the opposite effect because they worsen supply shortages, and reduce incentives for developers to build more apartments and homes.
That view is shared by the NAA, which noted that 33 states currently bar local governments from adopting rent regulation laws. “Decades of empirical research have shown that these policies distort the housing market by discouraging the development of new rental housing and the maintenance of existing units. With little to no ability to earn a profit, investors will transfer their funding to other non-rent controlled jurisdictions,” the NAA stated in a policy brief.
The Administration, however, is sticking to its guns. “The President believes that this combination of anti-gouging policies and historic levels of support to build more affordable housing effectively balances the needs of tenants without limiting incentives for more supply,” the fact sheet stated.