Amid growing concerns over escalating housing costs, President Joe Biden has called on Congress to establish a national rent cap, focusing primarily on large corporate landlords. His proposal aims to tackle rental inflation, which has fueled discontent nationwide and deteriorated his political support. The plan would cap annual rent increases at 5% for landlords with 50 or more units, with those who fail to comply facing the loss of valuable tax benefits, including depreciation write-offs.

During his formal announcement in Las Vegas, Biden framed the initiative as a necessary intervention for the millions of Americans grappling with skyrocketing rent. Under the plan, exceptions would be made for newly constructed units or those undergoing significant renovations, a move intended to encourage future development. Advocates welcomed the plan, with Lael Brainard, White House National Economic Council director, emphasizing the importance of affordable housing. However, critics, particularly from the real estate industry, have been swift to respond. They argue that rent caps could harm future development and suggest that exempting new projects while imposing restrictions on existing ones sends a contradictory message.

The proposal, though aspiring, faces a challenging legislative path. The Republican-controlled House and a divided Senate make the passage of such a measure unlikely, especially amid the heightened focus on the upcoming elections. The policy’s implications have also sparked debate among housing experts and industry leaders. Sharon Wilson Géno, president of the National Multifamily Housing Council, dismissed the idea as a political maneuver that wouldn’t address the core issue of housing supply. She argued that the cap would benefit higher-end renters while leaving low-income households, often residing in units owned by smaller landlords, without relief.

Despite the divided opinions, the Biden administration continues to pursue other measures aimed at curbing rental inflation. These include unlocking public lands for the development of affordable housing and creating tenant protections for federally-backed mortgages. The president’s push highlights the pressing nature of the housing crisis but leaves the question of whether the proposed solutions will gain sufficient traction. While the efficacy of rent control remains debated, the problem of rising rents is undeniable. The outcome of this policy initiative could significantly impact the lives of millions of renters in the U.S. Still, it remains uncertain whether Biden’s plan can overcome the political hurdles it faces in Congress.

Source: BLOOMBERG.COM