Yves here. The fact that Biden has only now announced a headline-grabbing proposal that will almost certainly not be passed this term, targeting young people and low-income workers, is further evidence of his administration’s cynicism and desperation. Yours truly is far from alone in thinking this way:
If Biden had embraced eliminating medical debt, capping rent increases and expanding Social Security months or years ago, Trump likely wouldn’t be leading with voters aged 18 to 29. https://t.co/7Ph1Vi1sds
— Sam Haselby (@samhaselby) July 13, 2024
In addition, there is some controversy over the effectiveness of rent controls. While the conventional wisdom is decidedly negative, the studies do not address this particular implementation, which prohibits the use of accelerated depreciation for landlords with more than 50 units. So this is not just a blanket limit. Second, it is unclear how many landlords are early enough in their depreciation programs that the loss of accelerated depreciation is felt. Third, rent increases have been substantial in many markets, far outpacing cost increases. Our Conor Gallagher, and many others, have written about how The main owners have agreed to increase prices:
After becoming the target of multiple lawsuits and investigations by state attorneys general, nationwide class action lawsuits, a criminal investigation by the Justice Department and the likely target of a recent FBI raid in Atlanta, RealPage — a private equity-owned company that creates software for property management — is finally responding to allegations that it orchestrated a nationwide rent-fixing cartel that sent rent prices skyrocketing.
Texas-based RealPage is accused of acting as a middleman between real estate rental giants and large property managers (1). The lawsuits filed against it and large property managers (1) allege that the latter agreed to set prices through RealPage’s software, which also allowed the companies to share data on vacancy rates and prices in many of the most expensive markets in the United States.
Many rental markets dominated by large landlords have seen astronomical rental price growth in recent years (even before the pandemic), as well as increasing evictions and spikes in homelessness. The lawsuits against RealPage and property management companies claim that its software covers at least 16 million units in the United States, and that privately held property management companies are the most eager to adopt RealPage’s technology. Another lawsuit filed last year targets Yardi Systems and property management companies (2) that use its pricing software to collude on at least eight million additional units…
Once again, the lawsuits against RealPage and the statements of the company’s founder indicate that RealPage played a role in the undersupply by advising real estate companies to leave homes vacant in order to create an artificial shortage of rentals. This anti-competitive behavior is made possible because property managers know that their “competitors” also use RealPage’s system and will not compete with them.
This ceiling is therefore not at all comparable to the rent control regimes put in place (mainly) during the Second World War and which continue in some cities in a reduced form until today. There was no persistent and generalized collusion regime which led to price increases well beyond those justified by supply and demand. This is a legal intervention intended to compensate for a generalized abuse.
It is therefore not certain that a cap after a period of speculation would slow down new development, as it might take several years (or more!) of restrictions to bring the profits of large landowners back to their former normal levels.
But again, this discussion is moot, because it is certain that this measure will not pass Congress. This is not just virtue signaling, but also a “too little, too late” measure.
By Jessica Corbett. Originally published on Common dreams
As former US President Donald Trump secured the Republican nomination and announcement His running mate, Democratic President Joe Biden, was set to unveil a proposal Monday that would cap annual rent increases at 5% for tenants of major landlords.
After Biden briefly preview the proposal at a press conference last week, The Washington Postreported on the announcement scheduled for Monday, citing three people familiar with the matter. The Associated Press separately confirmedthe plan.
Biden is expected to formally introduce the proposal Tuesday in Nevada, which “has seen one of the largest housing cost explosions in the country,” the spokesman said. Job “Democrats are increasingly concerned that Trump could win the state in November.”
The president, who is seeking reelection, will propose eliminating a tax break for landlords who raise rents by more than 5% a year, according to reports. The plan would only apply to the existing housing stock of landlords who own more than 50 units and would require congressional approval. It is unlikely to pass unless Biden wins the election in November and Democrats win majorities in both houses of Congress.
As the newspaper details:
The Biden administration is also implementing a raft of policies aimed at increasing housing construction, encouraging local governments to change their zoning codes and providing new federal financial incentives to builders. If implemented, they could bring 2 million new units to market on top of the 1.6 million already in the pipeline.
“It would be unwise to do this alone. But it has to be seen in the context of the measures that are being proposed to increase supply,” said Jim Parrott, a nonresident fellow at the Urban Institute and co-owner of Parrott Ryan Advisors. “The question is, even if we can build all this new housing, what do we do while we wait for rents to rise? It makes a lot of sense to have a relatively targeted bridge to help renters while new supply comes in.”
While housing industry representatives have criticized the announced proposal, Diane Yentel, president and CEO of the National Low Income Housing Coalition, said The Associated Press that its implementation in recent years could have helped tenants.
“The unprecedented increase in homelessness in communities across the country is the result of the equally unprecedented and unjustified rent increases that occurred just a few years ago,” she said. “Had such rent-hike protections been in place at the time, many families could have avoided homelessness and remained stably housed.”
Other rent control advocates and progressive officials also praised the plan, including Kendra Brooks, the first Working Families Party member ever elected to the Philadelphia City Council.declarant “This is exactly the kind of leadership working families need!”
JacobinBranko Marcetic said “This is huge,” especially considering that “housing has quickly become a cost-of-living issue (and is also the biggest issue for people under 30).”
Several activists and organizations have praised housing advocates for pushing for rent control at the national level.
“It’s amazing how quickly the debate around rent caps has evolved,” note Shamus Roller, executive director of the National Housing Law Project. “Tenant organizing is driving this change. This is a proposal before Congress that’s going to face some serious hurdles, but the president just called for a rent cap (even if it’s only temporary).”
The Debt Collective said“We will say it again and again: rents are really too high, and rent control is a real solution.”
“Rent capping would not be a national policy proposal without the tenant unions across the country who organize to make it possible,” the group added. “On our path to a landlord-free nation, remember that rent control works. The need of the 99 percent of the population to have a roof over their heads should not be a profit for the 1 percent.”
