US President Joe Biden is set to unveil a proposal to cap rental increases at 5% nationwide, according to sources close to the matter. This announcement, expected to be made in Nevada on Tuesday, is part of the administration’s broader strategy to address the soaring housing costs that have become a significant burden for many Americans.
The proposed policy targets corporate landlords owning more than 50 rental units. These landlords would lose specific tax benefits if they increase rents by more than 5% annually. This measure would not apply to newly built units, aiming to prevent any discouragement in new construction, which is crucial in addressing the housing shortage.
Housing costs have skyrocketed since the pandemic, contributing significantly to inflation and economic instability for many families. According to a recent Gallup poll, 41% of Americans consider inflation and the high cost of living as their most pressing financial issues, with 14% specifically highlighting housing costs.
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Nevada, where Biden will announce the plan, has seen some of the highest increases in housing prices in the country. Democratic concerns are mounting that former President Donald Trump could leverage this issue to gain voter support in the state during the upcoming election.
During a news conference at the NATO summit, Biden hinted at the rent control plan, saying, “It’s time to get things back in order a little bit. For example, if I’m reelected, we’re going to make sure that rents are capped at 5 percent increase — corporate rents, for apartments and the like, and homes, are limited to 5 percent.” This statement caught many aides by surprise as the announcement was not scheduled yet.
Tenant advocates have praised the proposal. Tara Raghuveer, director of the National Tenant Union Federation, described it as “monumental,” emphasizing the need for immediate action.
“Tenants need action. Congress must act, and the president can and must take the first step by immediately regulating rents in federally financed housing,” Raghuveer stated.
However, the plan is likely to face significant opposition from economists and industry groups. Critics argue that rent control measures could disincentivize new housing developments, exacerbating the housing shortage. Jason Furman, a Harvard professor and former top economist in the Obama administration, warned, “Rent control has been about as disgraced as any economic policy in the tool kit. The idea we’d be reviving and expanding it will ultimately make our housing supply problems worse, not better.”
The Biden administration asserts that the rent cap is a temporary measure to provide relief to renters while new housing units are being constructed. They project that within two years, these efforts will result in millions of new units, alleviating the housing crunch. Jim Parrott, nonresident fellow at the Urban Institute, remarked, “Coming up with a relatively targeted bridge to help renters while new supply is coming on line makes a fair amount of sense.”
Despite these assurances, major housing groups, including the National Multifamily Housing Council and the Mortgage Bankers Association, have voiced concerns. In a joint statement, they noted, “Despite President Biden’s mention of rent caps during the debate, he and his policy experts know that the real reason so many Americans struggle with housing costs is because we need to build more housing. There is no debate.”
This announcement comes at a critical time as Biden trails Trump in most Nevada polls. The administration’s focus on addressing housing costs reflects a strategic effort to regain voter confidence and address the pressing economic concerns that could define the upcoming election.
Information for this briefing was found via The Washington Post and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
