Biden to call for corporate landlords to cap rent increases at 5%

President Joe Biden is pushing for Congress to make it so corporate landlords have to cap rent increases on existing units at 5% or lose prized tax breaks.

The push, which would almost certainly not happen given Republican control of the House , comes in a fierce election year in which housing affordability has rankled consumers. The policy would apply only to corporate landlords, those with only 50 units in their portfolios, and would cover more than 50 million units across the country, according to the White House.

Biden said in a statement that people “deserve housing that is affordable” and that affordable housing is part of the American dream.

“Rent is too high and buying a home is out of reach for too many working families and young Americans, after decades of failure to build enough homes,” Biden said. “I’m determined to turn that around. Today, I’m sending a clear message to corporate landlords: If you raise rents more than 5%, you should lose valuable tax breaks.”

The new Biden plan, which will be unveiled on Tuesday during an event in Nevada, would make it so such corporate landlords would only be able to use faster depreciation tax write-offs available to owners of rental housing if they cap rent increases at 5% each year. The administration envisions the policy beginning this year and going for the next two years.

Economists generally oppose controls on rent on the grounds that they discourage investment in maintenance and new construction.

“This policy wouldn't affect new construction and units that have recently undergone substantial rehabilitation so as not to discourage new supply,” National Economic Council Director Lael Brainard said during a call with reporters on Monday evening.

Also on Tuesday, Biden will call on all federal agencies to assess what excess federal land owned by the government can be repurposed to build more affordable housing across the U.S., according to the administration.

Domestic policy adviser Neera Tanden said the Biden administration knows that in order to make housing more affordable, it has “to rapidly boost supply of affordable housing.”

The National Housing Conference’s president and CEO, David Dworkin, panned the Biden rental cap plan after reports began to surface of it on Monday. He argued that it would have the opposite effect of the one intended and ultimately increase rents.

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Dworkin said that research has “consistently shown that mandatory rent control is an ineffective policy that fails to address the underlying issues of housing affordability.”

“Rent Caps don’t work and will have a chilling effect on housing supply,” he said in a statement. “Exempting new construction will do nothing to change this, making clear that long term investments in housing can be made uneconomic retroactively. It’s time to stop making policy by bumper sticker and get serious about housing production.”