President Announces Rent Cap Proposal
Issue Date: July 16, 2024
On Tuesday, July 16, 2024, President Biden announced that his Administration is calling on Congress to pass legislation to force certain rental housing providers to choose between keeping annual rent increases at 5% or below, or face losing a valuable tax break. Price controls, which shift the full burden of economic challenges onto housing providers, are a failed policy solution for a shortage of available and affordable housing, as they discourage developers from building new rental properties and drive small, “mom-and-pop” housing providers from the market.
The President’s proposal would create a temporary (2-year) change to the Internal Revenue Code (IRC) to incentivize capping rent increases at or below 5% annually by making certain depreciation write-offs for rental housing owners only available to those who do. New construction would be exempted, and it would only apply to housing providers with more than 50 individual units. As this proposal requires changes to the IRC, it must go through the full legislative process and be approved by Congress before being signed into law. While the proposal has almost no chance at passage in this Congress, it is concerning that the Federal government is pushing for policies that intrude upon both an area of law typically left to the states and private property rights.
NAR strongly opposes rent control policies. Studies have shown that price caps on rent increases actually have the effect of decreasing the supply of low- to mid-range housing units, while chasing developers away and thus stagnating housing production. To make real progress in addressing the nation’s housing challenges, policymakers should focus on eliminating barriers to new housing development and provide targeted assistance to renters and housing providers where there is a gap between rising wages and rising rents. To accomplish those changes, NAR supports bipartisan proposals including the “Yes In My Backyard” (YIMBY) and Neighborhood Homes Investment Act (NHIA) bills.
Learn more about NAR’s advocacy efforts and find resources on rent control.