Biden Proposed a Rent Cap for Corporate Landlords. What’s Next?

President Joe Biden made a splash this week by calling on Congress to revoke lucrative tax breaks from corporate landlords that raise the rent by 5 percent or more a year. Pitched as a stopgap measure to provide relief for tenants while more housing is built, Biden’s proposal would temporarily establish national rent control for an estimated 20 million housing units over a two-year period.

The move was quickly celebrated as a victory for the tenant unions and housing activists pushing policy makers to address the affordable housing crisis. However, the corporate landlord lobby has dug in for a fight in Congress, where anything backed by Biden is dead on arrival in the GOP-controlled House.

In other words, Biden is offering tenants temporary relief from price-gouging corporate landlords that own 50 or more units — but only if voters deliver the president and Democrats a resounding victory in November. Still, housing justice activists applaud Biden for publicly affirming that the federal government needs to step in and protect struggling home renters.

Rent control is sound economic policy and the only solution that meets the urgency and scale of the housing crisis, according to Tara Raghuveer, director of the Tenant Union Federation.

“The corporate-captured housing market is a catastrophe,” Raghuveer said in a statement this week. “The government should be regulating this market, Instead, they’ve enabled corporate rent gougers, subsidizing their businesses through financing and tax credits.”

“Tenants need action,” Raghuveer said. “Congress must act, and the president can and must take the first step by immediately regulating rents in federally financed housing.” Without further measures from the White House, Raghuveer said Biden’s proposal is “just messaging.”

Grace White, the Tenant Union Federation’s lead organizer, said activists have bolder ideas than those offered by Biden and Democratic lawmakers. White told Truthout that tenant organizers envision permanent federal protections for all tenants and tighter regulation of landlords who enjoy tax breaks and federally backed mortgages, such as those financed by the government-sponsored Fannie Mae & Freddy Mac companies.

White said Biden does not need to wait for Congress to place rent controls on properties with federally backed mortgages. Such mortgages are administered by the Federal Housing Finance Agency (FHFA), where regulators are considering rent controls and other protections after meeting with tenant activists in person.

While Biden’s proposed plan would cover a much larger number of tenants, White said action by the FHFA is an important place to start.

“The reason we feel the FHFA piece is so important is that there is not a pathway for passing a 5 percent rent cap through Congress today,” White said.

Thousands of tenants have submitted comments to FHFA in support of adding rent controls to federally backed mortgages, along with prominent Democrats in Congress and dozens of economists and academics, according to the Tenant Union Federation.

Of course, conservative economists disagree, highlighting the ideological divide over regulating housing costs. In a speech in Nevada on housing on Monday, Biden blamed the Trump administration for top-down economic policies that emboldened corporate landlords to dominate targeted housing markets and reap record profits off the backs of tenants.

“While the prior administration gave special tax breaks to corporate landlords, I’m working to lower housing costs for families,” Biden said as he urged Republicans to back his housing plans.

Likely in anticipation of critics who argue that rent control discourages real estate companies from investing in new housing, Biden’s proposal includes an exception for new construction. He also announced plans to repurpose land owned by the federal government for affordable housing construction. Biden’s announcement came against the backdrop of the Republican National Convention, where rivals are blaming Democrats for the rising cost of living.

With his campaign on the brink after a highly scrutinized debate performance against former President Donald Trump back in June, Biden is tapping into a very real source of pain felt by millions of people. An estimated half of all tenants now pay 30 percent of their income or more on rent, exacerbating financial strain on millions of families that are one disaster away from facing eviction.

Experts estimate the nation faces a shortage of 1.5 to 5.5 million housing units, and gentrification in both urban and rural areas has left neighborhoods unaffordable to working people. The number of people becoming homeless has skyrocketed alongside housing costs. Even as inflation cools in other parts of the economy, the Consumer Price Index for housing was 5.1 percent higher in June 2024 compared to the same time last year.

Echoing economic experts, the Biden administration says the permanent solution to the affordable housing crisis is making it easier to build more to meet demand and push prices down. Under the Biden plan, the temporary rent cap for corporate landlords is designed to protect tenants living in existing units from price gouging for only two years while policy makers at all levels of government race to increase the housing stock.

While the Biden administration has made tweaks at the federal level designed to encourage more housing development, the politics around new construction are often most complicated at the local level. Sometimes wealthier neighbors oppose construction of affordable housing in their midst, and developers often refuse to build units for lower-income renters without tax subsidies and other sweeteners from the public sector.

At the federal level, Biden is still asking lawmakers to take up a slate of proposals called the Biden-Harris Housing Plan, and Democrats blame Republicans for blocking progress on anything that could be seen as win for Biden during an election year.

In a statement on Tuesday, Sen. Ron Wyden said Republicans remain the “biggest obstacle” to implementing federal policies that encourage expansion of affordable housing. Wyden is a Democrat from Oregon, where skyrocketing housing costs and an increasingly visible houseless population is putting policy makers under mounting pressure.

“I wrote a bill, the Tax Relief for American Families and Workers Act, that would build more than 200,000 new affordable housing units, a solid down-payment on the construction we need,” Wyden said. “It got 357 votes in the House, but Senate Republicans have been blocking it for five and a half months.”

Like other Democrats, Wyden said the Biden-Harris administration is “absolutely right” that the key to solving the affordable housing crisis is to “build, build, build.” However, Republicans in Congress remain skeptical of Democratic proposals to address the housing shortage with subsidies, which they argue led to price inflation in the first place.

So, the partisan finger pointing continues. Wyden blamed Trump for letting the housing crisis get out of hand on his watch before the COVID-19 pandemic upended the global economy, adding that renters and middle-class homebuyers cannot trust a “billionaire real estate tycoon to lift a finger.” Republicans blame Democrats for spending too much and causing inflation.

Meanwhile, corporate landlords remain extremely powerful in Congress, where the real estate industry spent more than $108 million on lobbying in 2023 alone.