Federal rent control? Debate over national renter protections heats up
As rents close in on a record high, more Americans, including the federal government, are wondering if it’s time for national rent control that will regulate rent increases and place restrictions on evictions.
In January, the Biden administration announced a blueprint for a renters bill of rights and encouraged federal governmental agencies and politicians to help tenants find, afford and stay in housing. The blueprint is only guidance, not law or policy, on types of protections renters need and how to achieve them. The blueprint explains how different agencies can play a role, but the one that has drawn attention is the Federal Housing Finance Agency’s (FHFA) examining ways to limit “egregious rent increases.”
FHFA’s request for public input on renter protections in Fannie Mae- and Freddie Mac-financed properties received thousands of comments, including from 17 Democrats led by Sen. Sherrod Brown, D-Ohio. Their letter asked FHFA to “condition” Fannie Mae- and Freddie Mac-backed mortgages based on various tenant protections, including limits on “egregious rent hikes.” Rents have risen 25%, or more than $400, since 2019, according to the apartment search engine Rent.com.
Frustrated, many Americans have coalesced around rent control as a solution, but critics say this will only push rents higher. They say a national plan to increase housing stock is a better solution but takes much longer to implement.
“There are proven solutions to our housing challenges,” said Sharon Wilson Geno, president of the nonprofit apartment advocate National Multifamily Housing Council (NMHC). “At the state and local level, communities have successfully used zoning changes to encourage the creation of new rental housing communities and financial incentives to reuse dead malls and empty office buildings for more housing, just to name a few.”
Why do people like the idea of rent control?
After two years of elevated inflation, Americans are tapped out. Many can’t afford soaring rents, exacerbated by a housing shortage, and need quick relief.
From 2019 to 2021, the share of renters spending more than 30% of their income on housing rose 2.6 percentage points to 49%, according to the Joint Center for Housing Studies of Harvard University.
“America is increasingly becoming a renter nation yet rent remains unaffordable for millions,” Tram Hoang, senior housing associate at research and action institute PolicyLink, wrote in an op-ed. “Spiking costs and stagnant wages mean that even households with two working adults struggle to afford an apartment.”
Limiting the amount government agency-backed owners can raise rents each year has “the potential to benefit a third of renting households,” Hoang said.
To view thousands of comments FHFA received on this topic, go to FHFA’s website and choose “Tenant Protections” in the drop-down menu.
Who owns apartment rentals can shape your view
Rent control would prevent corporate landlords from profiting by using low-interest, government-backed financing while raising rents and evicting tenants, Hoang said.
Though that may be true, critics say, rent control could hurt millions of people, including some who supplement their retirement with rental income.
Among 49.5 million rental units, nearly 46% are small rental properties of one to four units, the National Association of Realtors said. More than 70% of those are owned by individuals, or mom-and-pop landlords. About 70% are also managed by them.
“Cost of rental housing is expensive,” Geno said. “If they can’t pass on expenses they don’t control, many owners will be upside down.”
Many mom-and-pop landlords were forced into forbearance during the 1½-year pandemic-related rent moratorium that allowed tenants to forgo rent payments without fear of eviction. Some even had to sell their properties and defer maintenance on their rentals.
Proponents note rent regulations generally allow landlords to file for exemptions to the rental cap to offset capital investments and sometimes pass on expenses like property tax or utility rate increases to tenants. But opponents say exemptions aren’t easy to get.
“If it was easy, you wouldn’t see the reduction in supply that you see from academic studies on the topic,” said Jim Lapides, NMHC’s lead on rent control. Additionally, given rent boards sometimes don’t even approve rents to keep up with inflation, “it’s not difficult to see how hard it would be for someone to earn an exemption.”
What does rent control research say?
“There’s decades of research that show ultimately, rent control increases prices because owners or developers can’t cover costs if they rise,” Geno said.
An often-cited 2019 Stanford University study said rent control intensified San…
Read More: Federal rent control? Debate over national renter protections heats up