Biden Proposes Nationwide Rent Control
The Mortgage Bankers Association (MBA) has expressed concerns over President Joe Biden's reported plan to introduce a cap on rent increases, arguing it might not achieve the goal of making housing more affordable. According to reports from The Washington Post and The Associated Press, Biden plans to announce a 5 percent annual limit on rent hikes by landlords as part of his administration’s efforts to tackle high housing costs.
During a press conference at the NATO Summit in Washington, D.C., Biden hinted at this plan, stating, "If I'm reelected, we're going to make sure that rents are kept at 5 percent increase."
However, lenders suggest that this move could discourage new home construction, which they believe is crucial for a more affordable rental market. Bob Broeksmit, MBA's President and CEO, criticized the proposal, stating, "Increasing the supply of affordable rental housing nationwide—not politically-motivated and self-defeating rent control proposals floated during election campaigns—is the best way to alleviate affordability constraints for renters."
Scoop: Biden WILL announce plan to cap rents at 5% nationwide, sources say
Would strip tax benefit from corporate landlords who dont comply
Plan, which likely requires D control of Congress, comes as Biden emphasizes populist econ ideas after debate
W/ @rachsieg… https://t.co/iOcmE9ig0e
— Jeff Stein (@JStein_WaPo) July 15, 2024
Broeksmit argued that rent caps might limit supply and, amid high demand, could lead to rising prices. He pointed out numerous examples of rent control policies in the U.S. and worldwide that have proven counterproductive, ultimately harming renters by distorting market pricing, discouraging new construction, and degrading the quality of rental housing.
He further noted that while the likelihood of this proposal passing Congress is slim, a federal rent control law could be catastrophic for renters and the rental housing market.
The White House has yet to comment on these concerns.
Housing costs have become a significant concern for Americans, with the housing market disrupted by elevated interest rates and high prices. Would-be first-time homebuyers are struggling to afford homes with current mortgage rates around 7 percent, and home prices are at record highs. This dynamic has intensified competition in the rental market, pushing prices up.
According to Zillow, rent increased by 3.5 percent in June compared to a year ago, reaching over $2,000 at the national level. Since the COVID-19 pandemic, rental prices have soared nearly 33 percent. Zillow also noted that rents have risen in 48 of the 50 largest metropolitan areas in the U.S.