In this extensive press conference, Biden attempted to alleviate concerns about his ability to secure re-election without explicitly making a campaign pledge. However, the White House's official record shows that he stated, "If I am re-elected, we will ensure that rent increases are kept within 5%, and rent for corporate apartments and similar housing will be capped at 5%."
Biden’s remarks have been interpreted as a plan to tighten the annual 10% rent increase cap announced by the Department of Housing and Urban Development (HUD) in April. This cap currently applies only to affordable housing financed through the Low Income Housing Tax Credit (LIHTC) program. However, Biden’s wording has also sparked speculation among housing policy experts that he might be planning to impose stricter caps on "corporate rents" for traditional housing nationwide.
The White House has declined to provide specific details to clarify Biden’s remarks, but noted that the administration has already taken numerous measures to protect renters, including providing emergency rental assistance to 8 million renters during the COVID-19 pandemic and combating unfair rent and price gouging. White House spokesperson Jeremy Edwards stated, "The president has taken a series of actions to limit rent, fight corporate landlords' price gouging, and will continue to take action."
Internet
Biden may have simply misinterpreted the administration’s previously announced 10% rent cap on LIHTC units. The previous policy limited rent increases for affordable apartments to 5% of the national median income change percentage or twice that, whichever is higher. The Biden administration’s new rule caps rent increases at 10%, regardless of income growth rates.
LIHTC is a federal tax credit program designed to encourage private investment in affordable housing projects. Since 1987, the program has provided at least 3.65 million units of affordable housing. However, housing policy experts suggest that Biden’s comments may have inadvertently revealed the administration's readiness to take broader actions against "corporate landlords’ rent gouging" in traditional rental units.
Sarah Saadian, senior vice president of public policy and field organizing for the National Low Income Housing Coalition, stated, "This is not the first time he has mentioned capping rent. I am really curious to know if the administration plans to take action on this front because we have long been pushing for strong renter protections, one of which is against rent gouging."
Last month, Biden commented on rent caps during a debate with Republican presidential candidate Trump, but these remarks were largely overlooked due to his poor performance. In the debate, the Democratic incumbent stated, "We will ensure rent caps so corporate greed does not prevail."
The National Apartment Association, representing multifamily property owners, issued an angry statement in response to Biden’s latest comments at the NATO meeting. The organization stated, "To suggest that rent control will solve the nation's housing crisis is the simplest way out. Rent caps, commonly known as rent control, are a failed policy that does not work. Studies show that in areas with rent control, the problem of rental affordability is more severe."
If the Biden administration attempts to impose stricter caps on rent increases for traditional rental units, a possible mechanism is through the independent financial regulatory agency, the Federal Housing Finance Agency (FHFA). For example, the FHFA recently announced new tenant protection measures for multifamily housing financed by government-sponsored enterprises Fannie Mae and Freddie Mac. These regulations require landlords with government-backed loans to provide a five-day grace period for late rent payments and 30 days' written notice of rent increases or lease expirations. The new rules will be written into new multifamily loan agreements starting next February.
Internet
Saadian noted that the FHFA might adopt a similar mechanism to impose rent caps on properties financed by Fannie Mae and Freddie Mac. She said, "We have been in communication with the FHFA, encouraging them to implement renter protections on all federally-backed mortgage properties."
An FHFA official told Realtor.com that the agency does not rule out any new measures to protect tenants, including studying rent increases. However, the source stated that no decisions had been made regarding the timeline for future announcements and that potential changes must be carefully examined to avoid any legal or other risks.
If the Biden administration plans to implement a 5% rent cap, it would be a historic move. The federal government has never imposed widespread restrictions on landlords’ rent increases nationwide. Historically, rent control policies in the United States have been implemented at the state and local levels rather than the federal level. Local rent control policies have helped many afford rental housing in the past. However, some economists warn that these measures, if not carefully designed, could distort the market or hinder new construction.
Realtor.com economist Jiayi Xu stated, "Rent caps can help tenants alleviate affordability concerns by limiting rent increases and reducing the pressure of potential evictions. However, rent caps might also limit potential returns for developers, negatively impacting the supply side."
She added, "To address the current rental affordability challenges, more new construction is needed to lower housing prices. Therefore, balancing rent caps and housing supply is crucial in the current market."
