Biden proposes capping rent increases and penalizing landlords who don’t listen

President Biden just announced new actions to lower housing costs, targeting corporate landlords with more than 50 units to make housing more affordable for tenants. Other initiatives aimed at spurring more affordable housing development could be an opportunity for investors.

According to one congressman, the main points of the president’s proposal are Press release:

• Call on Congress to pass legislation that would either limit rent increases on existing units to 5% or put landlords at risk of losing valuable federal tax breaks. The most obvious assumption is that the goal depreciation and 1031 Exchange.

• Sustainable repurposing of public land to create 15,000 new affordable homes be built In Nevada.

• Renovate dilapidated buildings and build affordable housing housing, and revitalize las vegas Community.

The president called on Congress to pass the Biden-Harris housing plan to make housing more affordable for American families. It would allow the construction of 2 million homes and provide $10,000 in mortgage relief toward homeownership.

According to a White House press release, more homes are being built than in the past 50 years, and new home construction is up 17% since the Trump administration.

The White House has also highlighted several high-profile cases in which corporate landlords have been named in pending lawsuits (no doubt referring to RealPage Lawsuit), on the grounds that “they allegedly used a proprietary algorithm to raise tenants’ rents.”

What rent protection means for landlords

Crucially for landlords, the Federal Housing Finance Agency (FHFA) declare New actions to protect tenants Multifamily Properties financed by loans acquired through Fannie Mae and Freddie Mac. The new protections apply to future loans from Fannie Mae and Freddie Mac (the government-backed housing organizations have financed an average of 1.2 million rental units over the past three years). Landlords of these buildings must comply with the following regulations:

• Requires 30 days notice before rent increase;
• 30 days notice is required before the lease expires; and
• Provides a five-day grace period before late rent fees are imposed.

Repurposing public land for affordable housing

Repurposing city-owned land to build more affordable housing is not a new concept. It is typically used in dense urban centers, e.g. New York City. However, the Biden administration plans to do the same to repurpose federal land to build tens of thousands of affordable homes in Nevada.

Bureau of Land Management (BLM) announces launch of public comment period 20 acres of public land in Clark County, Nevadapriced below market value at just $100 per acre—the largest affordable housing sale ever under the Southern Nevada Public Lands Stewardship Act programthe county estimates it will develop nearly 150 units of affordable housing for families earning less than 80 percent of area median income.

Other land and housing initiatives across Nevada have also been announced, including housing-related requests for approximately 26,000 acres in the Las Vegas Valley that remain under BLM control and are eligible for programs under the Southern Nevada Public Lands Management Act for disposal.

Select community grants can benefit developers and investors

The administration earmarks $325 million in HUD funding for Select Community Implementation Grant Build new homes and stimulate economic development. Grantees will jointly develop more than 6,500 new mixed-income units, including the one-for-one replacement of 2,677 severely distressed public housing units. These rewards will be shared between nonprofits and local developers, including house flippersrevitalizing communities that adhere to government guidelines.

final thoughts

The new Biden-Harris housing initiative accomplishes several important tasks, some of which have clear political motivations. They prioritize affordable housing — which is desperately needed — and focus on Nevada, a swing state that could Determining the 2024 presidential election.

For investors, there are opportunities to work within the system and leverage government grants to build and renovate affordable housing that meets federal guidelines. The advantage for experienced house flippers is that in many cases there may be buyers lined up who are already through the government-backed low-rate affordable home buying scheme, or they may have pre-approved tenants ready to use Section 8 Voucher check-in, or other government-recognized program.

Regarding the 5% rent cap: in other parts of the country, esp. New York City– Common practice is to cap rent increases at 5% per year. This will now apply to buildings of a certain size across the country. How this will impact the redevelopment of multi-unit buildings that investors rely on raise rent It remains to be seen whether it will be profitable to renovate the apartments.

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Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.