A plan to cap rent increases to 5% annually for landlords with more than 50 units is being proposed by the Biden administration but will face stiff opposition in Congress.
The White House announced it is asking Congress to pass legislation giving corporate landlords a choice to either cap rent increases on existing units at 5% or risk losing current valuable federal tax breaks.
Broad Coalition of Housing Providers Oppose Rent Cap
In a release, the announcement said, “Some corporate landlords have taken advantage of the shortage of available units by raising rents by more than increases in their own costs—resulting in huge profits at a time when millions of Americans are struggling to cover rent each month.
“And recent analysis showed that the six largest publicly-traded apartment companies reported large profits earlier this year, and many of these same landlords are named in pending litigation for their alleged use of proprietary algorithms to raise rents on tenants,” according to the release.
Proposed changes in depreciation rules
According to the proposal large landlords, “beginning this year and for the next two years, would only be able to take advantage of faster depreciation write-offs available to owners of rental housing if they keep annual rent increases to no more than 5% each year. This would apply to landlords with over 50 units in their portfolio, covering more than 20 million units across the country. It would include an exception for new construction and substantial renovation or rehabilitation.”
Bloomberg reports the proposal faces steep odds in Congress, where legislation would have to pass the GOP-controlled House and win a supermajority of votes in a closely divided Senate — at a time when lawmakers are squarely focused on the November election.
FHFA Announces Multifamily Tenant Protections
The Federal Housing Finance Agency (FHFA) is announcing new actions to protect renters in multifamily properties financed by loans acquired by Fannie Mae and Freddie Mac. These protections apply to future loans acquired by Fannie Mae and Freddie Mac, which have financed an average of 1.2 million multifamily rental units over the past three years. The protections include:
- Requiring 30-day notice before rent increases;
- Requiring 30-day notice on lease expiration; and
- Providing a 5-day grace period before imposing late fees on rental payments.
Read the full announcement and other details here.
Rent Control Contributes To Affordable Housing Shortage
Report Cites Profits of Big Landlords Using RealPage
