President floats 5% rent cap on ‘corporate apartments and homes’ 

Housing affordability has become a major issue at the national level — and one that is top of mind for many voters. 

Last summer, the Biden administration announced the so-called "Blueprint for a Renters Bill of Rights," a policy initiative that would introduce new rules to protect renters during the screening, leasing and eviction processes. Then in March, the administration floated a package of housing credits and assistance programs, including $20 billion in grants intended to spur new home construction and help lower the cost of homeownership.

And just last week, the president spoke at a press conference about a rent cap specifically on corporate-owned properties, which some industry observers are referring to as a "national rent control" effort. 

What the president said: "I'm not anti-corporate, but corporate profits have doubled since the pandemic. For example, if I'm re-elected, we're going to make sure that rents are kept at a 5% increase — corporate rents for corporate apartments and homes — are limited to 5%. We're going to make a lot of changes that I've been talking about. Because we're going to continue growing this economy."

The cap, Biden said, would be on apartments with corporate and private equity landlords.

FHFA rule changes are already underway: The comments from President Biden came just a day before the Federal Housing Finance Agency announced new guardrails for renters going into effect next February. The changes are aimed at multi-unit properties financed by Fannie Mae and Freddie Mac and include new rules for landlords, such as:

• 30-day written notice for rent increases

• 30-day notice of lease non-renewal or termination 

• A 5-day grace period for late rent payments 

The rules will apply to new mortgages and refinances by Fannie Mae and Freddie Mac for multi-unit buildings starting in February 2025, and a more thorough description of the new rules will be released next month, the FHFA said in last week's announcement. The agency also noted that a landlord's failure to comply with the new rules "could result in penalties under the loan agreement."

Do the rules go far enough? In some major cities — such as Chicago — where there is a large population of renters, these rules have already been in effect for years. Chicago passed even more stringent rules for lease renewals and rent increases during the pandemic, requiring that landlords provide tenants 60 days notice on a lease termination or rent increase if a tenant has been in the apartment for more than six months but less than three years, and 120 days notice for tenants who've been in the same unit for more than three years. 

Tara Raghuveer, director for the nonprofit National Tenant Union Federation, told Bloomberg that the new FHFA changes are a "first step toward conditioning federal financing on tenant protections," while Diane Yentel, president and CEO of the National Low Income Housing Coalition, called the rules a "bare minimum level of tenant notification."

NAR's response: NAR President Kevin Sears issued a comment Tuesday morning expressing the organization's opposition to any such federal policy decision. Sears said rent or price controls can "backfire" by depressing builder sentiment and decreasing the housing pipeline. Instead, Sears said that "the long-term solution remains increasing supply" in order to "keep cities affordable for working-class families."

"Rent control is a rare instance where the research is fairly conclusive: It doesn't work. 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," Sears said.