Critics of Biden’s plan to cap rent hikes at 5% say what’s really needed is more housing

While addressing the NAACP convention in Nevada Tuesday, President Joe Biden announced a multi-faceted plan to address the housing crisis. The facet that is receiving the most attention is his proposal to condition specific tax breaks for larger landlords who don’t raise rents more than 5 percent in a year, according to an article in the Nevada Current. It something many in the industry see as just another form of “rent control.”

That may sound familiar to Bay Staters who voted to abolish rent control via a ballot initiative in 1994.

Doug Quatrocchi is executive director of MassLandlords and a landlord himself. He said he supports many tenants’ rights, they’re his customers, after all. But his organization’s analysis of rent control details the many reasons why Massachusetts’s voters chose to repeal rent control and why it’s still a bad idea.

“The proposed 5 percent cap on rents is leftwing populism detached from the reality of how markets work,” he said. “Under rent control, landlords hold units vacant longer waiting for a perfect applicant. This unfairly results in less housing availability.”

Carolyn Chou is the executive director of Homes For All Massachusetts. She supports the Biden proposal and added that the state should do even more.

“We hope Congress acts quickly to make this a reality for tenants across the state and the country,” she said. “In the meantime, the Massachusetts Legislature should act now to make rent stabilization a reality here. We urge our state legislators to act with the same urgency and conviction we are seeing at the federal level.”

National Multifamily Housing Council president Sharon Wilson Géro said her organization opposes the plan and questions whether or not it could even be implemented. She said renters would be better served if the country implemented some components of the president’s Housing Supply Action Plan to incentivize more housing, not take away incentives to building more housing.

“Decades of research in the U.S. and around the world shows that rent control hurts renters in a number of different ways,” she said. “It decreases the supply of housing because it decreases investment in housing. It very much decreases the quality of that housing, and it also deflates the property valuations which generate the taxes that a community needs to support its resources.”

If Biden really wants to help cost-burdened renters, she said, he should help address the issues that have prevented the building of more housing.

“We need to do the thing we need to do, which is build more housing in this country,” she said. “The chilling effect that that has on investors — who we need to invest in building the housing that we need; we’ll be feeling that for years to come. It’s going to set housing back, not forward.”

Lending Tree, the online lending platform, issued a long analysis offering commentary on many components of the Biden proposal as well as stating:

“In truth, without building more housing units (especially in major urban areas), prices and rents are likely to remain high regardless of whether or not this proposed legislation comes to fruition. Building more homes is arguably the single best way to combat high housing costs,” the company wrote in an email.