"It’s hard to think of a worse idea than imposing rent control nationwide through the tax code," writes the Wall Street Journal Editorial Board. That may be a premature observation. Joe Biden has a year and five months before he leaves office.
The latest shameless pander from the Biden campaign is an idea designed to invite the economically ignorant to vote for the president. It involves preventing landlords from raising rent by more than 5%. Otherwise, landlords would be ineligible for the faster depreciation schedule that makes apartment buildings an attractive investment.
The bill would cover only existing units so the White House claims it won't affect investment in rental housing. But developers aren't stupid. They anticipate that the policy will eventually be extended to new units to satisfy Washington's unquenchable desire for more tax money.
The measure would apply only to properties of more than 50 units. That, too, is subject to alteration. As it stands, the new tax schedule would apply to about 50% of all rental units in the United States.
Rents have increased 30% since Joe Biden took the oath of office. Everything associated with housing has gone up: construction costs, maintenance, and insurance. To cap rent increases is the height of folly and demonstrates a profound ignorance on the part of the president and his advisors who have demanded that more "affordable housing" be built while now discouraging the construction of new units altogether.
"Inflation is impacting both landlords and tenants, with some real estate costs rising even faster than the general inflation rate," a spokesperson for the American Apartment Owners Association told FOX Business. The spokes noted that multifamily insurance premiums have doubled in certain markets.
"Rent increases are often necessary for landlords to cover these rising costs and continue providing high-quality housing," the AAOA added.
The National Association of Realtors pushed back on the Biden administration's proposal, too, issuing a statement saying, "NAR opposes misguided attempts to cap or control rental rates. Price controls may seem appealing, but they have backfired on local governments and harmed the people we need to help the most."
Many states had various forms of rent control in the 1970s, another time of high inflation. However, several banned rent control after that, when there was a consensus that price controls were destructive policies.
Despite warnings from economists, rent control is becoming more and more popular in progressive strongholds, and now Biden is aiming to implement it at the federal level.
As you can imagine, tenant rights advocates are overjoyed. Tara Raghuveer, director of the National Tenant Union Federation, said the move was “monumental."
“For now, this directive is just messaging,” Raghuveer said. “Tenants need action. Congress must act, and the president can and must take the first step by immediately regulating rents in federally financed housing.”
"Rent control is a rare instance where the research is fairly conclusive: It doesn’t work," the National Association of Realtors said. "These measures fail to improve most renters' financial situation and shift the burden of economic difficulties, inflation, and other costs onto the housing provider with no counterbalance."
The NAR argued, "The only way to keep cities affordable for working-class families is to ensure that the supply of housing keeps pace with the growing demand."
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Steven Greenhut, a resident senior fellow at the R Street Institute, told Fox, "There are many reasons this is a terrible idea."
Greenhut argued that, for starters, housing regulations are not a proper role for the federal government. He then pointed out that in California, where he resides, cities with rent controls such as San Francisco and Santa Monica have the state’s worst housing problems.
Greenhut said that in the short term, rent controls limit prices for select renters, but over the long term, they discourage developers from investing in new rental housing and encourage people to pull their houses off the rental market. That increases the cost of rentals by limiting the number of available units.
He concluded, "The Biden administration plan is a misguided idea that will only make matters worse."
Yes, but it's likely to draw millions of votes from ignorant Democrats living in the cities and suburbs.
