Biden’s Plan to Cap Rent Increases Faces Backlash from Housing Industry
President Joe Biden has proposed a plan to address soaring housing costs by capping annual rent increases at 5% for large landlords. This proposal has drawn criticism from various housing groups, including the National Association of REALTORS® (NAR), who argue that such measures could harm renters by reducing the availability of affordable housing.
NAR President Kevin Sears voiced his opposition, stating, “Price controls may seem appealing, but they have backfired on local governments and harmed the people we need to help the most. Developers are reluctant to build in areas where rent controls are imposed, which actually decreases the supply of low- to mid-range housing units.”
The Housing Solutions Coalition, which includes the National Apartment Association, Mortgage Bankers Association, and National Multifamily Housing Council, also criticized the rent cap proposal. They argue that rent controls reduce the supply of housing and fail to target those most in need, ultimately harming renters and communities.
Biden’s proposal, which needs Congressional approval, targets landlords who oversee more than 50 units, impacting over 20 million rental units nationwide. New constructions and substantially renovated buildings are excluded from this plan. Biden emphasized his stance against corporate landlords, stating, “If you raise rents more than 5% on existing units, you should lose valuable tax breaks.”
The urgency of affordable housing is highlighted by the fact that 22.4 million renter households are currently spending more than 30% of their income on rent and utilities—a record high. Alongside the rent cap, Biden’s plan includes repurposing federally owned land for affordable housing and a push to build 2 million new homes. However, homebuilders warn that the rent cap could deter new construction. Carl Harris, chairman of the National Association of Home Builders, stated, “These rent caps would also hurt existing tenants because owners and developers would be unable to cover rising costs if rents are fixed.”
Homebuilders and NAR are advocating for policies that increase the rental housing supply, such as strengthening the Low-Income Housing Tax Credit and adopting supportive zoning laws and building codes. NAR Chief Advocacy Officer Shannon McGahn emphasized, “Policymakers should look at the tax code to incentivize the development of affordable housing units, not punish housing providers. This plan would dig us further into a hole and harm the very people it aims to help.”
In summary, while President Biden's proposal to cap rent increases aims to alleviate the burden of high housing costs for renters, it has generated significant concern among housing industry leaders. Critics argue that such measures could inadvertently reduce the supply of affordable housing and discourage new construction, ultimately exacerbating the housing crisis. The debate highlights the need for balanced solutions that protect renters while encouraging the development of new housing units to meet growing demand. As the proposal moves forward, it will be crucial for policymakers to consider these perspectives and work towards a comprehensive approach to address the nation's housing challenges.
