President Joe Biden is preparing to propose a 5% annual cap on rent increases for tenants of major landlords, aiming to address the high cost of housing and show he is taking steps to combat inflation.
This initiative, according to a person familiar with the plan, will be unveiled during Biden’s visit to Nevada on Tuesday, amidst a tense presidential campaign where housing costs have become a significant driver of overall inflation.
The proposal, which would need solid Democratic control of Congress to become law, is expected to face challenges. Most policymakers agree that the best long-term solution to high housing costs involves more construction and changes to land use regulations. The anonymous source revealed these details before the formal announcement, highlighting the administration’s strategy to manage rising rents.
Biden hinted at this plan during his NATO news conference on Thursday, attributing inflation to corporate profit maximization in the pandemic’s aftermath. He emphasized the need to restore order and pledged to enforce the 5% rent increase cap if re-elected. “It’s time things get back in order a little bit,” Biden stated. “If I’m reelected, we’re going to make sure that rents are kept at a 5% increase.”
The proposed rent cap would only apply to landlords owning 50 or more units and would exclude newly built units. White House officials have declined to comment on the matter.
The median national rent in June was $1,411 a month, an increase from around $1,150 in early 2021 when Biden took office, as reported by Apartment List. Although rent prices surged post-pandemic and have since stabilized, the Harvard University Joint Center for Housing Studies’ latest report revealed that half of the renters are “cost burdened,” spending over 30% of their income on housing and utilities.
Housing has been a significant contributor to the 3% annual rise in the consumer price index in recent months, making inflation a critical political challenge for Biden as he faces off against former President Donald Trump, the Republican nominee. While Biden has proposed policies to boost home construction, industry representatives have criticized the rent cap as ineffective for addressing the overall housing shortage, suggesting it might even reduce the number of habitable units.
Sharon Wilson Géno, CEO of the National Multifamily Housing Council, expressed her concerns, stating, “This is not going to create a single unit of housing — which is what is needed to create more housing opportunities for Americans. This is really a campaign-driven piece of rhetoric.” Géno argued that landlords must cover costs such as maintenance, insurance, and taxes. If rent caps prevent them from doing so, the quality of housing could deteriorate, negatively impacting tenants.
Affordable housing advocates, however, argue that Biden’s proposal could significantly reduce evictions and homelessness. Diane Yentel, president and CEO of the National Low Income Housing Coalition, highlighted the potential benefits of such a policy. “The recent unprecedented increases in homelessness in communities across the country are the result of those equally unprecedented — and unjustified — rent hikes of a couple years ago,” Yentel said. “Had such protections against rent gouging been in place then, many families could have avoided homelessness and stayed stably housed.”
The debate over Biden’s proposed rent cap reflects the broader challenges of addressing housing affordability and inflation. While some view it as a necessary measure to protect tenants from excessive rent hikes, others believe it could hinder the long-term solution of increasing housing supply. As the administration prepares to roll out this proposal, it remains to be seen how it will navigate the political and practical obstacles to make it a reality.
