In President Biden’s press conference on July 11, he mentioned his plan to impose rent control with a 5 percent rent increase cap on corporate landlords as part of his second term agenda if reelected.
UPDATE
President Biden announced his rent control plan at a campaign event with the NAACP in Las Vegas, Nevada July 16.
While he misstated his proposal during his remarks, President Biden intends to limit rent increases to 5 percent per year. He intends the limitation to apply to “corporate” apartment owners with 50 or more units and to only apply to existing housing stock. New supply would be exempt. However, there is no guarantee that the limitation would not be expanded in the future.
The limitation would remain in place for two years. The rent cap would be enforced by eliminating a Federal tax break on depreciation for those who increase rents more than the limit.
There is now a very strong apartment construction pipeline with nearly 900,000 units currently under construction. The high level of new supply expected over the next two years should put downward pressure on rents. The two-year limitation on the program is intended to give renters relief until the new supply arrives. However, New York City’s rent control program was introduced as a temporary measure in 1943 and it is still going strong, so it is possible that politicians will be reluctant to take away a benefit to voters once it has been given. After all, renters greatly outnumber landlords.
The program will require Congressional action to authorize since it affects tax law. The outcome of the upcoming election is likely to determine whether President Biden’s national rent control plan is implemented.
ORIGINAL ARTICLE CONTINUES
According to the White House transcript of his remarks he said, “And so, we got more to do, though. We got to finish the job.
“And, by the way, I come from the corporate state of the world. Delaware has more corporations than an- — you know, registered in Delaware than every other state in the — in the nation combined.
“I’m not anti-corporate. But corporate — corporate profits have doubled since the pandemic — doubled. It’s time things get back in order a little bit. It’s time — for example, if I’m reelected, we’re going to make sure that rents are kept at 5 percent increase, cor- — corporate rents for cor- — apartments and the like and homes are limited to 5 percent.
“We’re going to make a lot of changes that I’ve been talking about, because we’re going to continue to grow this economy.”
In response to President Biden’s remarks, the National Apartment Association released a statement that said, in part “Implying that rent control will solve the nation’s housing crisis is the easy way out. Rent caps, more commonly known as rent control, are failed policies that don’t work – research has shown it, the lack of affordability in rent-controlled jurisdictions reinforces it and statements from countless economists across generations and the political spectrum are crystal clear. We need leaders to stop playing politics with our housing supply.”
Last March, the Biden Administration announced plans to reduce housing costs. Those plans included a potential limited rent control provision. The planning document stated that, “FHFA and the Enterprises, Fannie Mae and Freddie Mac, has announced it will launch a process to conduct stakeholder outreach and engagement to identify the opportunities and challenges of adopting and enforcing tenant protections including policies that limit egregious rent increases at properties with Enterprise-backed mortgages going forward.” The plan also called for the Department of Justice to intervene on behalf of the plaintiffs in suits against companies providing or using revenue management software.
President Biden’s statement appears to indicate plan to expand his administration’s previously announced rent control plans beyond properties with Enterprise-backed mortgages to all properties managed by large, corporate landlords.
