Biden proposes capping national rent increases at 5%
FILE - A sign advertising units for rent is displayed outside a Manhattan building on April 11, 2024, in New York City. (Photo by Spencer Platt/Getty Images)
WASHINGTON - President Joe Biden has unveiled a proposal that would help put a 5% cap on annual rent hikes for tenants of major landlords in the U.S. as he aims to tackle the high cost of housing ahead of the 2024 election.
The proposal, shared on Tuesday by the White House, calls on Congress to pass legislation that would give corporate landlords a choice to either cap rent increases on existing units at 5% "or risk losing current valuable federal tax breaks."
The plan is being championed by the president in the middle of a tense presidential campaign and a time when housing costs have been a major driver of overall inflation.
However, such a plan would require solid Democratic control of Congress to become law. Additionally, most policymakers have said the best way to limit housing costs would be through more construction and changes to land use regulations.
Biden first previewed the announcement on Thursday at his NATO news conference, adding it to comments that blamed inflation on companies trying to maximize their profits in the aftermath of the pandemic.
"It’s time things get back in order a little bit," Biden said. "If I’m reelected, we’re going to make sure that rents are kept at 5% increase."
Biden’s 5% cap on annual rent hikes proposal: What to know
The plan would only apply to landlords who own 50 or more units, which would cover "more than 20 million units across the country," according to the White House.
The price cap would not apply to units that have yet to be built, as well as those that have undergone "substantial renovation or rehabilitation."
"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," a White House statement reads.
The median national rent was $1,411 a month in June, up from roughly $1,150 in early 2021 when Biden became president, according to Apartment List.
Asking prices for rentals jumped in the aftermath of the pandemic and have since cooled, but the Harvard University Joint Center for Housing Studies found in its most recent report that half of renters were "cost burdened" because they spend more than 30% of their income on housing and utilities.
In recent months, housing has been a primary contributor to keeping the consumer price index elevated at 3% annually. Inflation has been a fundamental obstacle for Biden politically as he competes against Donald Trump, the former president and Republican nominee.
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The president has proposed policies designed to increase home construction, but industry representatives were quick to criticize the rent cap as ineffective for addressing the overall shortage and possibly leading to fewer habitable units than the country would otherwise have.
"This is not going to create a single unit of housing — which is what is needed to create more housing opportunities for Americans," said Sharon Wilson Géno, CEO of the National Multifamily Housing Council. "This is really a campaign-driven piece of rhetoric."
Géno noted that landlords need to be able to keep up with costs such as maintenance, insurance and state and local taxes. If those costs exceed what they can charge for rent, the risk is that landlords will do less to maintain their properties and tenants could be worse off.
"What does that mean — the quality of the housing suffers," she said.
But affordable housing advocates said that if Biden's proposal had already been in effect, it would likely have reduced evictions and homelessness.
"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," said Diane Yentel, president and CEO of the National Low Income Housing Coalition. "Had such protections against rent gouging been in place then, many families could have avoided homelessness and stayed stably housed."
Study: Best, worst cities to rent in America
With roughly 45 million Americans choosing to rent instead of buying, WalletHub released a report earlier this month on what it deemed to be the "best and worst" places to rent in the United States.
The report compared over 180 rental markets using 21 criteria, such as rental rates, mortgage payments, rental affordability, the cost of living and job availability, and quality of life.
Bismark, North Dakota, and Overland Park, Kansas, topped the list of best cities for renters, while Jackson, Mississippi, and Tacoma, Washington, were among the worst, according to the report.
The Associated Press contributed to this report.