White House Proposes 5% Cap on Rent Increases

On Tuesday, President Biden proposed a five percent cap on rent increases as a part of his efforts to lower housing costs. The proposal, which would require Congressional approval, would deny the ability of landlords to utilize depreciation tax benefits if they increase rents by more than 5%. This would apply to landlords with more than 50 units in their portfolio and include an exception for new construction and substantial renovation or rehabilitation. Tuesday’s announcement also included planned administrative actions to repurpose federal lands for affordable housing development and rolled out grants under an existing program to support affordable housing development.

In a White House briefing on the announcement, National Economic Council (NEC) Director, Lael Brainard, said that their rent-control policy is aimed at “institutional investors” some of whom she suggested are “raising rents by more than their costs,” and also mentioned what she characterized as “junk fees” imposed by landlords in this context (e.g. move-in fees). President Biden, during his keynote address at an NAACP conference in Las Vegas, expounded, “[t]he idea that corporate-owned housing is able to raise your rent three-, four-hundred bucks a month or something – under what I’m about to announce, they can’t raise them more than $55.” He later added, “We’re going to bring rents down. We’re going to build 2 million more affordable homes and cap rent increases at 5% a year so corporate landlords can’t gouge you…they’re just gouging Americans.” Watch a video of his remarks here.

As MHI’s research team demonstrated in a March 2023 paper, rent control has damaging long-term effects due to reduced investment and development. Further, former President Obama’s chair of the Council of Economic Advisers, Jason Furman, told the Washington Post in response to the proposal: “Rent control has been about as disgraced as any economic policy in the tool kit. The idea we’d be reviving and expanding it will ultimately make our housing supply problems worse, not better.”

According to MHI’s advocacy team, the latest proposal has no immediate effect, other than perhaps normalizing among Democrats nationally support for what had until recently been seen as a somewhat fringe policy position in support of rent control, and as the latest signal of the increasingly populist tone the administration intends to take toward housing costs generally, and institutional landlords specifically, leading up to the November elections.

MHI is working alongside its partners in the rental housing industry to counter the narrative about housing providers and the mischaracterization of landlords and for-profit owners. As a coalition, we continue to counter the President’s push for rent control using clear facts and proposing effective strategies to expand the affordable housing supply that could be implemented immediately.