Biden will call for 5% cap on annual rent increases as he tries to show plans to control inflation

WASHINGTON – President Joe Biden is poised to propose a 5% cap on annual rent increases for tenants of large landlords as he tries to show he is doing something about the high cost of housing, according to a person familiar with the plan.

The proposal, to be announced during the president’s visit to Nevada on Tuesday, is being defended by Biden in the midst of a tense presidential campaign and at a time when housing costs have been one of the main drivers of overall inflation.

But the plan would require solid Democratic control of Congress to become law. Furthermore, most policymakers stated that the best way to limit housing costs would be through more construction and changes to land use regulations.

The person familiar with the plan spoke on condition of anonymity because the proposal has not yet been formally announced.

Biden himself previewed the announcement at his NATO press conference on Thursday, grouping it into comments that attributed inflation to companies trying to maximize their profits in the wake of the pandemic.

“It’s time for things to get back to order a little bit,” Biden said. “If I am re-elected, we will ensure that rents are maintained at 5% increases.”

The Washington Post first reported on Monday the details of the plan, which would only apply to landlords who own 50 or more units. The price cap would not apply to units that have not yet been built.

White House officials declined to comment.

The average national rent was $1,411 per month in June, up from about $1,150 at the start of 2021 when Biden became president, according to List of apartments.

Asking prices for rentals increased after 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 major contributor to keeping the consumer price index elevated at 3% per year. Inflation has been a key political hurdle for Biden as he competes with Donald Trump, the former president and Republican nominee.

The president has proposed policies aimed at increasing home construction, but industry representatives have been quick to criticize the rent cap as ineffective in addressing the overall shortage and possibly leading to fewer livable units than the country would otherwise have. .

“This will not create a single housing unit – which is what is needed to create more housing opportunities for Americans,” said Sharon Wilson Géno, CEO of the National Multifamily Housing Council. rhetoric.”

Géno noted that homeowners need to be able to afford costs like maintenance, insurance and state and local taxes. If these costs exceed what they can charge for rent, the risk is that landlords will do less to maintain their properties and tenants will be worse off.

“What that means – the quality of housing suffers,” she said.

But affordable housing advocates said if Biden’s proposal had already been in place, it likely would have reduced evictions and homelessness.

“The recent unprecedented increases in homelessness in communities across the country are the result of those equally unprecedented – and unwarranted – income increases from a few years ago,” said Diane Yentel, president and CEO of National Low Income Housing Coalition. “If these protections against rent fraud were in place, many families could have avoided homelessness and remained in stable housing.”