WASHINGTON (NEXSTAR) — The White House is working to cap annual rent increases to combat the high cost of housing across the country.
President Joe Biden made the official announcement Tuesday during his trip to Las Vegas to rally support from Black and Latino voters.
“We have to deal with corporate greed now,” President Biden said during the 115th NAACP National Convention.
About a third of Americans are renters. The president is proposing a 5% cap on yearly rent increases, which would apply to corporate landlords who own 50 or more units, roughly half of the landlords in the rental market.
“The idea that corporate-owned housing is able to raise your rent $300, $400 a month or something…,” President Biden said.
According to Apartment List, the average rental is about $1,400 so the president’s proposal would limit the increase to $70 a month.
Biden administration officials said the cap would last for two years.
“Serve as a bridge until more housing units are built and housing units currently under construction become available,” said National Economic Council Director Lael Brainard.
However, some industry groups criticize the plan because it doesn’t immediately address the overall housing shortage. In a statement, the National Multifamily Housing Council said, “Rent control has been tried for decades and been a resounding failure. Now is the time for actual solutions, not electioneering.”
Housing costs have been a major driver of overall inflation, but the latest inflation report revealed a long-awaited decline. That could help urge the Federal Reserve to make an interest rate cut soon.
On Monday, Fed Chair Jerome Powell stressed it’s still a delicate balance.
“If we ease too early, we can undermine the progress on inflation,” Powell said. “And if we wait too late, we can undermine economic activity.”
The Fed meets next at the end of the month.
Congress would ultimately have to act on rent control. If lawmakers pass President Biden’s plan, landlords will lose special tax breaks if they don’t abide by the cap.