Biden’s “Renters Bill of Rights” Is Here — Is Nationwide Rent Control Coming?

The Biden-Harris Administration Is Responding rent-burdened nation with new action Also released a “Blueprint for a Renters Bill of Rights” designed to promote a fair rental market. Housing demand to skyrocket in 2021, leading to an increase in rents 17.1% increase Year-to-date peak in February 2022.

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are being charged with identifying unfair practices that prevent tenants from accessing or maintaining housing. The Federal Housing Finance Agency (FHFA) announced that it will consider limits on rent increases and other tenant protections through a transparent and public process. And the US Department of Housing and Urban Development will publish proposed rules that would require some owners of rental assistance properties and public housing authorities to give 30 days’ notice to terminate a lease for nonpayment.

The administration is calling on state and local governments as well as the private sector to make commitments to improve conditions for renters – for example, the Wisconsin Housing and Economic Development Authority (WHEDA) and the Pennsylvania Housing Finance Agency ( PHFA) limited the increase in rents on subsidized affordable housing to 5%.

A Renters Bill of Rights

The Biden-Harris administration has also drawn up a “blueprint for a Renters Bill of Rights” that will be used to guide policy decisions. It states that tenants should have the following protections:

• “Safe, Quality and Accessible Affordable Housing”
• “Clear and Fair Lease”
• “Education, Enforcement and Enhancement of Tenant Rights”
• “right to organize”
• “Eviction Prevention, Diversion, and Relief”

Is Rent Control Next?

Prior to the rollout of these new actions, voters in many states Rent increases and limits on rent controls had already been approved as a solution to the housing affordability crisis. The Biden-Harris administration’s actions do not yet establish federal residential rent controls, leading some progressive lawmakers to say the solutions are insufficient.

one in Letter In a letter to President Biden earlier this month, 50 progressive lawmakers suggested that Biden ask the FTC to issue new rules defining “excessive rent increases as a practice that unfairly affects commerce and enforces action against unfair rent raising practices.”

Rent affordability In emergencies, public opinion often favors rent control. But several studies have found that the long-term effects of rent control hurt the very people these policies are supposed to help. For example, a study from Brookings Institution Rent control has been found to have a long-term negative effect on housing affordability, even though it helps with displacement in the short term. Similarly, a Stanford study showed that the rent cap in San Francisco prompted landlords to reduce rental housing supply by up to 15%, ultimately leading to an unwarranted increase in market rents.

National Apartment Association Note that rent controls discourage the construction of new affordable rental housing and discourage rehabilitation and maintenance of existing properties. and a report from National Bureau of Economic Research Indicates that rent control leads to misallotment of housing to existing tenants. For example, with rent controls, households are discouraged from downsizing even when they need less space, which constrains the supply of available units and further harms homelessness. National Multidimensional Housing Council It has even been noted that rent control exacerbates the wealth gap while promoting housing discrimination.

While economists are notoriously divided on many issues, a survey of economists from top institutions found that 81% disagree Rent controls have had a positive effect on the quantity and quality of affordable housing in cities such as New York and San Francisco.

crux of the matter

Consumer Price Index Shows Accelerating Rent Inflation, But It’s a delayed signal Actual rental prices. Zillow View Rent Index Shows that rents are already falling. In fact, the decline from October to November was Zillow’s steepest decline in seven years. During this, 565,200 new rental units Estimated to be online in 2023. This is the biggest number of new apartment deliveries in decades, a boom generated by stalled construction during the pandemic.

But rents are still up 8.4% from last year, and the average renter is burdened with costs. Even with the oversupply of apartments, rents are expected to keep rising year-on-year. And even if the economy eventually rights itself, the impact of scarce affordable housing on the well-being of low-income Americans in the meantime could be devastating if the federal government doesn’t intervene.

It often happens that government intervention in the economy helps certain groups in the short term while harming economic conditions in the long run for the people as a whole. But failing to intervene can be dehumanizing. There are ethical problems with allowing individuals to suffer for the good of the wider economy. This is why the federal government approved a massive stimulus package that later became the primary driver of inflation.

The problem with rent control as a stopgap solution is that it can be difficult to remove, especially if it has been aggressive over a long period of time. The removal of rent controls in the future may require another solution to prevent tenants in rent-controlled buildings from paying sudden and drastic increases in rent. National Multifamily Housing Council Argument that direct subsidies to renters and builders/remodelers of affordable housing complexes are more likely to have the desired effect of providing safe, affordable housing to low-income people.

Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.