Yves here. The fact that only now Biden has announced a proposal to record the title, which is certain not to be passed this term, aimed at young and low-income people, is further evidence of the criticism and desperation of his administration. Yours truly is not alone in this observation:
If Biden had accepted to end the medicare bill, raise rents, and expand social security months or years ago, Tr*mp would likely not have a lead among 18-29 year old voters.
— Sam Haselby (@samhaselby) July 13, 2024
In addition, there is a good deal of controversy about whether rent controls are effective. Although the general view is decidedly negative, the studies are not for this implementation, which prevents the application of accelerated depreciation for homeowners who own more than 50 units. So this is not easy across the board. Second, it’s not clear how many homeowners are early enough in their depreciation schedules to lose the accelerated depreciation to a minimum. The third is that rent increases have been large in many markets, in addition to cost increases. Our own Conor Gallagher, along with many others, wrote about how the big landlords were colluding to drive up prices:
After being the victim of multiple lawsuits and multiple state attorney investigations, a worldwide class action lawsuit, a criminal investigation by the Department of Justice, and a possible target in the recent FBI raid in Atlanta, RealPage – a private equity-owned company that creates property management software – is finally responding to allegations of organizing a national rent adjustment company that has sent rents through the roof.
Texas-based RealPage is accused of acting as an information-sharing middleman for real estate giants. Lawsuits against it and managers of large buildings [1] argue that the latter agreed to set prices through RealPage software, which also allowed the companies to share data on vacancy rates and prices in many of the US’s most expensive markets.
Many rental markets dominated by large landlords have seen astronomical increases in rental prices in recent years (even before the pandemic), as well as a growing number of evictions and homelessness incidents. Lawsuits against RealPage and rental management companies contend that its software covers at least 16 million units across the US, and that private property management companies are the most enthusiastic adopters of RealPage’s technology. A separate lawsuit filed last year is against Yardi Systems and property management companies [2] using its pricing software to meet at least another eight million units….
Also, the lawsuits against RealPage and the statements of the company’s founder show that RealPage played a role in reducing the availability of properties by advising real estate companies to leave units empty in order to create a shortage of rentals. This anti-competitive behavior is made possible because property managers know that their “competitors” are also using the RealPage system and will not undercut them.
So this conclusion is not at all similar to the rent control laws that were implemented (mostly) during World War II and continue in some cities in a reduced form until today. There was no persistent and widespread regime of collusion that caused prices to rise beyond what supply and demand warranted. This is a legal intervention to compensate for widespread abuse.
So it’s not clear that the cap after the profit period will stop new development, as it may take several years (or more!) of restrictions to return the landlord’s gross profit to the old normal levels.
But again, this discussion is wrong as this measure is sure not to pass Congress. It is not only an expression of beauty, but also a “too little, too late” variety.
Written by Jessica Corbett. Originally published on Common Dreams
As former US President Donald Trump secured the Republican nomination and announced his running mate on Monday, Democratic President Joe Biden prepared to unveil a proposal that would reduce annual rent increases by 5% for tenants of large landlords.
After Biden briefly looked at the proposal during a press conference last week, The Washington Postreported the planned announcement on Monday, citing three people with knowledge of the matter. The Associated Press separately they confirm the plan.
Biden will formally introduce the proposal on Tuesday in Nevada, “which has seen the biggest explosion in housing costs in the country,” Submit noted. “Democrats are already very worried that Trump can win the state in November.”
The president, who is seeking re-election, will propose removing the tax incentive for landlords who increase their rent by 5% per year, according to the report. The plan will only apply to the existing housing stock of landlords with more than 50 units and will need congressional approval – so it is unlikely to go anywhere unless Biden wins in November and Democrats secure majorities in both chambers of Congress.
As the newspaper elaborated:
The Biden administration is also pushing a number of policies to increase housing construction, through incentives for local governments to change their zoning codes and new federal financial incentives for builders. If implemented, they could bring 2 million new units to the market over 1.6 million. it’s already on its way.
“It will not make sense to make this move alone. But you have to look at it in the context of what they’re proposing to do to increase supply,” said Jim Parrott, a fellow at the Urban Institute and owner of Parrott Ryan Advisors. “The question is: Even if we build all these new units, what do we do with the current rent increase? Coming up with a bridge aimed at helping tenants while new delivery is coming online makes a lot of sense.”
While housing industry representatives criticized the reported proposal, Diane Yentel, president and CEO of the National Low Income Housing Coalition, said. The Associated Press that its performance in recent years would have benefited employers.
“The recent increase in homelessness in communities across the country is the result of unprecedented – and unjustified – rent increases over the past few years,” he said. “If these rent control protections were in place at the time, many families could avoid homelessness and live in stable housing.”
Other rent control advocates and progressive officials also welcomed the plan, with Kendra Brooks—the first member of the Working Families Party ever elected to the Philadelphia City Council—declaring that “this is exactly the kind of leadership that working families need!”
Jacobin‘s Branko Marcetic said “this is huge,” especially considering that “housing has risen as fast as the cost of living (and it’s also less than the 30’s that matter).”
Many campaigners and organizations have praised housing advocates for pushing for rent control at the national level.
“It’s surprising how quickly the housing debate has changed,” noted Shamus Roller, executive director of the National Housing Law Project. “Planning employers is what caused this change. It’s a congressional proposal that will face severe storms but the president has already called for caps (albeit temporarily).
The Debt Collective said, “We’ll say it over and over again: Rent is too high—and rent control is the real fix.”
“The cost of hiring will not be a national policy proposal without employers’ unions across the country making it possible through planning,” the group said. “When we come to a country without landlords, remember that rent control is in effect. The need of the 99% for a roof over our heads should not be the profit of the 1%.