President Joe Biden will reportedly propose a 5% annual cap on rent increases nationwide on Tuesday Washington post, It cited “three people familiar with the matter.”
The proposal would eliminate an unspecified tax break for landlords who increase rent by more than 5%, but would only apply to landlords with more than 50 rental units. That would cover about half of the country’s rental units, according to Washington Post sources.
It does not apply to units that have not yet been built, lest they hinder the construction of new housing, which the Biden administration has made a cornerstone of its housing policy. Affordable housing advocates also support policies to build new housing.
However, studies on rent control tend to conclude that lowering rents is not a wise policy because it prompts landlords to convert rental properties into apartments, thereby reducing the supply of rental housing.
During the first presidential debate three weeks ago, Biden mentioned capping rent increases at 5% but offered no details. He also said the country would build 2 million new homes during his second term.
During his State of the Union address in March, Biden called on lawmakers to create a $10,000 tax credit for first-time homebuyers and people selling new homes. He also mentioned the construction of 2 million new apartments, as well as unspecified cost reduction measures for tenants, which currently appear to be capping rent increases at 5% per year.
Landlords can receive several federal tax breaks. These include things like depreciation, mortgage interest, operating expenses and property taxes. The IRS also offers a low-income housing tax credit that landlords who build or rehabilitate affordable rental housing can apply for.
In addition to home prices, rents have also skyrocketed since the COVID-19 pandemic began in March 2020. ZilloLooking at the rental index, national rents have increased 32.1% from then to now. Housing costs have been a major driver of inflation, an issue that has dogged Biden’s campaign.
