Biden to call for 5% cap on annual rent increases, a critical issue for voters

President Joe Biden will announce a new 5% cap on rental increases nationwide, a proposal aimed at stemming inflation-driven housing costs that have not dipped since the pandemic.

Biden hopes to unveil the proposal during his campaign stop in Nevada, a critical swing state for Democrats that has been crippled by soaring housing costs.

Under the new measure, which would require congressional approval, corporate landlords would lose the ability to write off depreciation values from their units if they increase tenants' rent more than 5%.

“Some corporate landlords are raising rents by more than their costs, expanding their profits at a time when millions of Americans are struggling to cover rent each month to address the high cost of rent,” said Lael Brainard, Biden's National Economic Council director in a call with reporters.

In places like Las Vegas investors are buying up homes with cash, turning them into rental properties and raising rents, the Biden advisor said.

The plan would only apply to landlords with over 50 units in their portfolio, who account for roughly half of the rental market. The cap wouldn't apply to units that haven't been built.

“The policy is a bridge to rents stabilizing as President Biden’s plan to build more takes hold,” Brainard said.

In Biden's budget for fiscal year 2025, he has sought an investment of more than $258 billion to build or preserve more than 2 million housing units to lower rents and make housing more affordable.

Rental prices have surged 29% since the onset of the COVID-19 pandemic, averaging an annual increase of 7% over the last four years, according to Zillow.

Currently, rents are up 3.4% compared to last year reaching $1,958 according to the Zillow Observed Rent Index. This annual growth rate is significantly lower than the pre-pandemic average of approximately 4.1% observed in 2018 and 2019.

A USA TODAY analysis found that in some swing states, which are critical to the president's reelection bid, rental costs have more than doubled in the past four years. In fact, 6 out of the top 10 markets and 34 of the top 100 markets with the largest increases are in swing states, according to the analysis of data obtained exclusively from Rent.com.

The top 10 metro areas with the largest increases are Hickory-Lenoir-Morganton, North Carolina (111%); Oshkosh-Neenah, Wisconsin (106%); Racine, Wisconsin (100%); Waco, Texas (94%); Port St. Lucie, Florida (75%); Fayetteville, North Carolina (75%); Daphne-Fairhope-Foley, Alabama (67%); Burlington, North Carolina (64%); Syracuse, New York (64%); Sierra Vista-Douglas, Arizona (63%).

Housing advocates have long called for rental caps.

Rent caps should be attached to every dollar of federal subsidy and financing, including in all properties purchased with federally backed mortgages, says Tenant Union Federation Director Tara Raghuveer told USA TODAY in May.

Brainard pointed out that state and local governments have already invested nearly $20 billion from the American Rescue plan and that federal investments have contributed to the 1.7 million housing units under construction.

The Biden-Harris Administration will also announce a plan to repurpose federal land to build affordable homes. The federal government is the largest landholder in the country, and state and local governments, as well as entities like transit agencies, school districts and public utilities.

Biden will direct federal agencies to assess surplus federal land that can be repurposed to build more affordable housing across the country. The Bureau of Land Management is announcing new actions to create thousands of affordable housing units on BLM land in Nevada.

The bureau is opening a public comment period on a sale of 20 acres of public land to Clark County, Nevada — the largest-ever sale for affordable housing under the Southern Nevada Public Lands Management Act program, which the county estimates will enable the development of nearly 150 affordable homes for households making less than 80% of area median income.

"The administration is using all available tools and taking a number of new steps to unlock more affordable housing," said Brainard.

Swapna Venugopal Ramaswamy is a White House correspondent for USA TODAY. You can follow her on X, formerly Twitter, @SwapnaVenugopal

This article originally appeared on USA TODAY: Biden to propose capping rental increases at 5%