New Biden Admin Proposal Could Cap Rental Costs

(DailyDig.com) – On July 16, President Biden proposed a policy that would cap any tenants’ rent increases by landlords at five percent across the nation. The goal of this policy, according to the White House, is to stop or slow down the increasing cost of housing.

The policy would only be effective for landlords owning over 50 dwellings, and only for two years. The government estimates that this would affect nearly half of every rental unit, which adds up to nearly 20 million. This policy will not affect newly built units.

To encourage compliance with the policy, landlords who raise rent by more than five percent would no longer be able to claim faster write-offs for depreciation, according to the government.

In his policy announcement, Biden stated that affordable housing, a national dream, should be a reality. Despite the fact that homeownership is not a realistic goal for young and working American families, Biden claimed that he aims to make it possible. He also said that the blame for this unavailable dream is that, during the last few decades, new homes have not been built to match the needs of Americans.

With the rising cost of housing, both rental and homeownership, over the last few years, voters have made the issue a major factor when they vote for the US leadership in November.

Biden’s proposed policy regarding the five percent rent increase would require approval from Congress.

Housing experts are not confident that limiting rent increases would be productive. Redfin’s economics leader stated that it may help somewhat at first, but it would be detrimental if developers began to reduce their projects due to low profits for the amount of work involved. This could then affect the supply of housing in the near future. This would reduce availability just as demand increases.

President of the Mortgage Bankers Association, Bob Brokesmit, said that there are so many examples around the US that show rent control harms renters by reducing new housing projects, distorting housing prices, and reducing landlords’ abilities to maintain rental property.