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President Joe Biden is ready to propose a 5% cap on annual rent increases for tenants of major landlords as he tries to show he\u2019s doing something about the high cost of housing, according to a person familiar with the plan.<\/p>\n
The proposal, to be announced while the president visits Nevada on Tuesday, is being championed by Biden in the middle of a tense presidential campaign and a time when housing costs have been a major driver of overall inflation.<\/p>\n
But the plan would require solid Democratic control of Congress to become law. Additionally, most policymakers have said the best way to limit housing costs would be through more construction and changes to land use regulations.<\/p>\n
The person familiar with the plan spoke on the condition of anonymity because the proposal has not yet been formally announced.<\/p>\n
Biden himself previewed the announcement at his NATO news conference Thursday, folding it into comments that blamed inflation on companies trying to maximize their profits in the aftermath of the pandemic.<\/p>\n
\u201cIt\u2019s time things get back in order a little bit,\u201d Biden said. \u201cIf I\u2019m reelected, we\u2019re going to make sure that rents are kept at 5% increase.\u201d<\/p>\n
The Washington Post first reported Monday the details of the plan, which would only apply to landlords who own 50 or more units. The price cap would not apply to units that have yet to be built.<\/p>\n
White House officials declined to comment.<\/p>\n
The median national rent was $1,411 a month in June, up from roughly $1,150 in early 2021 when Biden became president, according to\u00a0Apartment List<\/a>.<\/p>\n Asking prices for rentals jumped in the aftermath of the pandemic and have since cooled, but the\u00a0Harvard University Joint Center for Housing Studies<\/a> found in its most recent report that half of renters were \u201ccost burdened\u201d because they spend more than 30% of their income on housing and utilities.<\/p>\n In recent months, housing has been a primary contributor to keeping the consumer price index elevated at 3% annually. Inflation has been a fundamental obstacle for Biden politically as he competes against Donald Trump, the former president and Republican nominee.<\/p>\n The president has proposed policies designed to increase home construction, but industry representatives were quick to criticize the rent cap as ineffective for addressing the overall shortage and possibly leading to fewer habitable units than the country would otherwise have.<\/p>\n \u201cThis is not going to create a single unit of housing \u2014 which is what is needed to create more housing opportunities for Americans,\u201d said Sharon Wilson G\u00e9no, CEO of the National Multifamily Housing Council. \u201cThis is really a campaign-driven piece of rhetoric.\u201d<\/p>\n G\u00e9no noted that landlords need to be able to keep up with costs such as maintenance, insurance and state and local taxes. If those costs exceed what they can charge for rent, the risk is that landlords will do less to maintain their properties and tenants could be worse off.<\/p>\n \u201cWhat does that mean \u2014 the quality of the housing suffers,\u201d she said.<\/p>\n But affordable housing advocates said that if Biden\u2019s proposal had already been in effect, it would have likely reduced evictions and homelessness.<\/p>\n \u201cThe recent unprecedented increases in homelessness in communities across the country are the result of those equally unprecedented \u2014 and unjustified \u2014 rent hikes of a couple years ago,\u201d said Diane Yentel, president and CEO of the National Low Income Housing Coalition. \u201cHad such protections against rent gouging been in place then, many families could have avoided homelessness and stayed stably housed.\u201d<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n