Rent caps, push to lower housing costs in Biden’s 2nd term agenda
Kelsey Reichmann
WASHINGTON (CN) — President Joe Biden proposed a new plan to address the housing crisis on Tuesday, unveiling a slew of new actions including a cap on rent increases.
“Families deserve housing that’s affordable — it’s part of the American Dream,” Biden said in a statement.
Biden said the proposal was meant as a message to corporate landlords, tying valuable federal tax breaks to a 5% cap on rent increases for the next two years. He also renewed a call for legislation to build 2 million new homes to lower housing costs for good.
“While the prior administration gave special tax breaks to corporate landlords, I’m working to lower housing costs for families,” Biden said. “Republicans in Congress should join Democrats to pass my plan to lower housing costs for Americans who need relief now.”
Although inflation has cooled in recent months, rental costs remain higher than before the pandemic. One-third of Americans are renters, and young people and low-income households make up a higher percentage of renters overall.
A senior administration official said the proposal came together in the months after Biden called for action on affordable housing in his State of the Union, noting that the proposal previews issues he would fight for in a second term.
Congress would need to pass Biden’s rent cap proposal and it is unlikely lawmakers will act on any major legislation before the November election. A senior administration official could not say if the White House had specific conversations with lawmakers about the proposal.
Over 20 million units would be covered under the proposal, which would only apply to landlords with more than 50 units — roughly half of the rental market. National Economic Advisor Lael Brainard said the plan wouldn’t cover new construction units or buildings with substantial renovations.
Brainard described the proposal as a bridge to assist renters until new housing units are built.
“The president's housing agenda prioritizes building more new units to bring down the cost of housing over time,” Brainard said during a call with reporters.
Chris Freiman, a business and economics professor at West Virginia University, said rent caps can be counter-productive because they tend to inhibit new construction.
“I think having these exceptions carved out is a better scenario than not having them carved out, but I would say not having a policy at all would be the best case,” Freiman said in a phone call.
To address the housing crisis, Freiman said the government needed to increase the supply of units to drive down housing prices and suggested that the administration direct its efforts toward making units easier to build.
“Right now, there are just tons and tons of restrictions on where you can build, how you can build … it just makes it very costly to build new housing, and in some cases, it might even be impossible,” Freiman said.
Biden’s 2025 budget included a $20 billion housing innovation fund and additional low-income housing tax credits. To encourage building on new affordable housing, Domestic Policy Advisor Neera Tanden said the administration launched a government-wide effort to repurpose federal land.
“This is a crucial component of our agenda,” Tanden told reporters. “The federal government is the biggest landowner in the country and some of its land is currently underutilized or entirely unused. The president is asking federal agencies from the Department of Interior to the Department of Defense to identify opportunities to repurpose surplus property to build more affordable housing.”
Coinciding with Biden’s planned trip to the state, the administration announced several actions specific to Nevada. The Bureau of Land Management announced that it would sell 20 acres of public land to develop 150 affordable homes for households making less than 80% of the area’s median income.
An additional 300 affordable units could be available in Henderson, Nevada under the agency’s plan to sell the city an additional 18 acres.
Biden gave the city of Las Vegas and the Southern Nevada Regional Housing Authority a $50 million grant to restore 235 existing units for extremely low-income renters. The city also plans to build 400 new affordable units.
Nevada Congressman Steven Horsford commended the administration for taking a broad approach to tackling the housing crisis. The chairman of the Congressional Black Caucus said he would work with other lawmakers to pass legislation alongside Biden’s executive actions.
“Today's announcement by President Biden is a significant step forward in addressing the housing crisis here in Southern Nevada, as well as all throughout the country,” Horsford told reporters. “But we must continue to push for more comprehensive solutions to ensure that everyone has a fair shot at being able to afford the rent.”
Tennessee, Alabama, Texas, Florida, New York and New Jersey also received funding. The administration awarded a total of $325 million in grants to build more homes and revitalize neighborhoods that have been left behind.
Renters in multifamily properties with loans from Fannie Mae and Freddie Mac received new protections under the plan. The administration said these properties must give a 30-day notice before rent increases or lease expirations. Properties will also have to provide a five-day grace period before charging late fees on rental payments.