Biden Rent Control Idea is Bad Housing Policy

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President Biden today issued a call to impose federal limits on rent increases nationwide. That idea would have many drawbacks, not just for landlords but for renters and the housing market, as CEI experts explain.

Ryan Young, Senior Economist

"Rent control is one of the most ridiculed economic policies there is, right up there with tariffs. Rent controls create housing shortages and discourage maintenance and improvement of existing housing. The best way to lower rents is to build more housing. Higher supplies equal lower prices.

"For example, Austin, Texas is allowing new housing to be built at ten times the rate as in San Francisco. As a result, Austin rents are falling 7 percent per year, while Bay area rents continue to soar." < View the full analysis on cei.org

Joel Zinberg, Senior Fellow

"Rent controls in general and these in particular are a poor policy that Congress is unlikely to enact. The administration's plan seems more like a politically popular ploy than a well thought out proposal.

"The administration calls on Congress to pass legislation giving corporate landlords owning over 50 units a choice to either cap rent increases on existing units to 5 percent of less or lose the federal tax benefit of faster depreciation write-offs (with exemptions for new construction and substantial renovation or rehabilitation). But there is no explanation of why 50 units is a threshold for imposing the controls or if 5 percent is an adequate return to ensure that rental properties can be maintained."

John Berlau, Director of Finance Policy

"Nothing brings out unity in economists and land use scholars like the folly of rent control. Famed progressive economist and New York Times columnist Paul Krugman pointed to a poll of the American Economic Association that found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.' In his NYT column, Krugman signaled his agreement with that 93 percent.

"Getting rid of regulatory barriers to new housing will increase supply and lower cost for homeownership and renting. But slapping an arbitrary 5 percent cap on rent increases - particularly after years of rampant inflation - will reduce rental housing stock, as property developers and owners shift to profitable uses of space such as condominiums and office leasing.

"Renters deserve better options then warmed-over socialist schemes that have caused documented housing shortages and have attracted criticism across the political spectrum."