In a bid to spur new housing construction, President Biden has announced his intention to keep in place federal tax credits for structures that are both being built as well as those undergoing renovations.
According to a statement issued by the White House, the proposal, which also includes a more controversial cap on rent increases on existing units at 5%, “effectively balances the needs of tenants without limiting incentives for more supply.”
In a holistic proposal addressing a series of housing issues, the President also called on Congress to pass what is officially called the Biden-Harris Housing Plan, which is designed to spur the construction of up to two million homes, while also providing up to $10,000 in mortgage relief for new homeowners.
The President is additionally asking that unused federal lands be repurposed for housing construction. Said the White House statement: “The Federal Government is the largest landholder in the country,” adding that such land is often “underutilized and may be used in ways that better reflect local priorities and housing needs.”
The lands in question may well also include property owned by state and local governments, as well as territorial entities, and community, school districts, public utilities, transit agencies, and even non-profit and faith-based organizations.
By far the most controversial aspect of the President’s housing package is the rent cap, which the White House has said will apply only to larger landlords, otherwise defined as “corporate landlords,” operating complexes with fifty apartments or more.
“Some corporate landlords have taken advantage of the shortage of available units by raising rents by more than increases in their own costs,” asserted the White House document, “resulting in huge profits at a time when millions of Americans are struggling to cover rent each month.”
The fate of the rent cap proposal in Congress is uncertain. According to the publication Curbed, the proposal is a “rare example of federal intervention in rental pricing.”
In an interview with the Washington Post, Tara Raghuveer, director of the National Tenant Union Federation, characterized the rent cap idea as “monumental,” and adding: “Tenants need action. Congress must act, and the President can and must take the first step by immediately regulating rents in federally financed housing.”
In a press release, the NTUF applauded the rent cap move, remarking: “The lack of national renter protections, including limits on rent gouging, leaves tenants vulnerable to housing instability and evictions.”
A different perspective was offered by Carl Harris, chairman of the National Association of Home Builders, who remarked: “Rent control in any form is bad for housing.” The cap, Harris continued, “will worsen the housing affordability crisis by discouraging developers from building new rental housing units at a time when the nation is experiencing a shortfall of 1.5 million housing units.”
In order to become law, the rent cap proposal would have to pass both houses of Congress, a feat, notes the publication Business Insider, “which doesn’t seem likely before the November presidential election.”
By Garry Boulard
Image Credit: Courtesy of the White House
