President Joe Biden has unveiled plans to introduce a rent cap on some landlords in an effort to tackle unaffordable housing.
Under new plans that are subject to congressional approval, the Biden-Harris administration would give corporate landlords a choice to either cap rent increases on existing units at five percent or risk losing federal tax breaks.
The proposal takes aim at landlords with more than 50 units in their portfolio, businesses which the administration says have enjoyed "huge profits at a time when millions of Americans are struggling to cover rent each month."
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"Some corporate landlords have taken advantage of the shortage of available units by raising rents by more than increases in their own costs," the White House said in a statement released on Tuesday, July 16. "President Biden is calling on Congress to pass legislation presenting corporate landlords with a basic choice: either cap rent increases on existing units to no more than five percent or lose valuable federal tax breaks."
If applicable landlords do not keep rent increases up to the five percent limit, they would lose access to "faster depreciation write-offs." According to Investopedia, this is a method that allows landlords to deduct the property's purchase price and improvement costs from their tax returns.
Most U.S. residential rental property is typically depreciated at a rate of 3.636 percent each year for 27.5 years, and depreciation can be applied as soon as a property is made available to rent on the market.
It comes at a time when rents have risen nationally by 26 percent since 2020, according to a report by the Joint Center for Housing Studies of Harvard University. Elsewhere, Zillow's observed rent index indicates that rents across the country have increased by 32.1 percent during the same period.
Overall, housing costs have risen by 5.2 percent in the year since July 2023, the U.S. Bureau of Labor Statistics reports.
The rent cap would affect around 20 million units across the country, the White House said. It would not apply to any units that are yet to be built or those undergoing substantial renovation or rehabilitation.
"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 seen by Newsweek. "Republicans in Congress should join Democrats to pass my plan to lower housing costs for Americans who need relief now."
During the presidential debate in June, Biden also said he had plans to cap rent amounts "so corporate greed can't take over."
The Biden administration has also detailed plans for repurposing public land to build 15,000 affordable homes in Nevada.