Biden's Rent Control Proposal Sparks Backlash From Industry Executives: 'Rent Control Is A Counter-Productive Policy Idea'
President Joe Biden’s proposal to cap rent increases has ignited a debate, with real estate executives and economists warning that the plan could backfire, potentially worsening the very affordability crisis it aims to solve.
The proposal, announced on Tuesday as part of a broader strategy to address persistently high housing costs, would withdraw tax credits from landlords who raise rent by more than 5% per year. The measure would apply to larger landlords with more than 50 units, affecting roughly 20 million rental units nationwide.
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"While the prior administration gave special tax breaks to corporate landlords, I’m working to lower housing costs for families," Biden said in a statement issued on Tuesday. However, industry leaders argue that the plan misses the mark.
Bob Broeksmit, President and CEO of the Mortgage Bankers Association, didn’t mince words in his response. "Rent control is a counterproductive policy idea that ultimately harms renters by distorting market pricing, discouraging new construction, and degrading the quality of rental housing," he said.
Broeksmit noted that increasing the supply of affordable rental housing, not rent control, is the best way to address affordability constraints. "While the odds are stacked against this proposal ever passing Congress, a federal rent control law would be catastrophic to renters and our nation's rental housing market."
Jay Parsons, a housing economist, echoed the same concerns. "The White House announced a proposal to install rent control AND stimulate more housing, which is like arguing to cap organic food prices AND produce more of them," Parsons wrote in a critique of the plan on X, formerly Twitter.
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Parsons pointed out that the proposal contradicts bipartisan expert opinion. He cited Jason Furman, a former top economist in the Obama administration, who told The Washington Post, "Rent control has been about as disgraced as any economic policy in the tool kit."
Critics also question the plan’s focus on "corporate" landlords, arguing that it creates an arbitrary distinction between renters based on the size of their landlord’s portfolio. They also contend that exempting new construction from the rent cap is an empty promise, as investors may be wary of future policy changes that could expand controls.
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The backlash comes at a time when housing affordability remains an issue for many Americans. According to a report from Harvard University’s Joint Center for Housing Studies, a record-high 22.4 million renter households spent more than 30% of their income on rent and utilities in 2022.
While the Biden administration argues that the plan "effectively balances the needs of tenants without limiting incentives for more supply," industry leaders like Parsons remain skeptical.
He pointed to recent data showing a sharp decline in multifamily construction starts, which he attributed to higher interest rates and flattening rents for new construction. "Another sign of a proposal that lacks seriousness: It exempts the vast majority of single-family rental homes while targeting most apartments ... in spite [of] the fact that rents have been growing faster in single-family homes than in apartments," Parsons said.
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This article Biden's Rent Control Proposal Sparks Backlash From Industry Executives: 'Rent Control Is A Counter-Productive Policy Idea' originally appeared on Benzinga.com
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