Biden’s Renters Bill Of Rights: Rent Control Next?

Biden’s Renters Bill Of Rights: Rent Control Next?

President Biden reacting to a nation burdened with housing affordability seeks reforms. Our “Biden’s Renters Bill Of Rights: Rent Control Next?” article explains its implications.

Biden recently declared a solution to a “rent-burdened nation” with his “Blueprint for a Renter’s Bill of Rights” published in January 2023.

 

KEY TAKEAWAYS

• January 2023 President Biden announces his Bill of Rights for Renters.
• It intends to protect tenants from rising rents.
• Also, to make leases easier to understand and fair.
• Prevent landlords from deceptive and unfair practices.
• Make housing affordable, accessible, safer, and better quality.
• Educate renters about their rights and enforce them.
• The freedom for renters to organize for better conditions.
• Lessen evictions by diversion, relief, and prevention.
• Is Biden attempting to enact federal rent control?

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Biden’s Renters Bill Of Rights: Rent Control Next?

The reasons for President Biden’s Renters Bill of Rights are:

• Housing demand skyrocketed in 2021;
• Rents increased by 17% in 2022; and
• A national crisis exists over unaffordable housing.

This Bill of Rights attempts to protect tenants nationwide from recent rent hikes.

The President required the Federal Trade Commission (FTC) and the Consumer Finance Protection Bureau (CFPB) to identify unfair housing practices preventing tenants access or maintaining housing. This resulted in the Federal Housing Finance Agency (FHFA) considering limiting rent increases and other actions to protect renters.

The U.S. Department of Housing and Urban Development (HUD) will issue proposed rules. They will require rental assistance. Also, property owners and public housing authorities are to give 30 days’ notice before terminating a lease for nonpayment.

The President also asks state and local governments and the private sector to make their own commitments to improve renters’ conditions. As a result, the Pennsylvania (PHFA) and Wisconsin (WHEDA) housing agencies now limit rent increases on subsidized affordable housing to 5%.

 

What does Biden’s Renters Bill of Rights Assert?

 

Simply put, President Biden issued his blueprint of a Renter’s Bill of Rights to provide these protections for nationwide tenants:

• Safe, Quality, Accessible, and Affordable Housing;
• Clear and Fair Leases;
• Education, Enforcement, and Enhancement of Renter Rights;
• The Right to Organize; and
• Eviction, Prevention, Diversion, and Relief.

Biden’s blueprint provided reasons for each of these 5 principles.

1. Access to Safe, Quality, Accessible, and Affordable Housing – In 2019, nearly 25% of the 44 million rental households spent 50% of their income on rent. During the pandemic, rents rose by 26% nationwide. This burdens too many households that also pay for education, healthcare, and food.

2. Clear and Fair Leases – Renters need clear and fair leases with defined rental terms. Lease terms should be written in simple and clear language. Leases must be free from deceptive or unfair clauses.

3. Education, Enforcement, and Enhancement of Renter Rights – the Fair Housing Act is the cornerstone for an equal and fair housing market. Despite enforcement measures, millions of renters experience discrimination in the housing market. Yet, too few report it.

4. The Right to Organize – Renters have the right to organize and advocate reforms to increase accessibility, quality, and affordability. Yet, research shows organizing efforts face retaliation from property managers and housing providers. This must end.

5. Eviction, Prevention, Diversion, and Relief – Nearly 900,000 evictions occurred annually before the pandemic. Evictions increase homelessness and reduce earnings. The eviction process is full of inequities that jeopardize low-income households. Eviction filings appear on tenant screening reports even after dismissal in the tenant’s favor. Significant procedural differences in the eviction process exist across jurisdictions. Eviction prevention or a fair eviction process must be implemented.

Is Rent Control Next?

 

Before Biden’s blueprint, voters in some states already approved rent control and limits on rent increases. However, Biden hasn’t established residential federal rent control. Yet, the pressure is on.

Last January 50 progressive lawmakers wrote a letter to President Biden. They asked him to order the FTC to issue new regulations. They demanded: “defining excessive rent increases as a practice that unfairly affects commerce and enforce actions against unfair rent gouging practices,”

 

Pasadena Calif. Rent Control Ordinance

 

The State of California already caps rents. Learn more about cap rates in our article explaining California’s rent cap rate.

That was not enough for voters in Pasadena who recently passed a rent control law. While California caps rents at no higher than the rate of inflation, Pasadena goes further.

In November 2022 Pasadena voters approved a rent control ballot initiative. Pasadena landlords can only raise the rent once per year. The maximum rate increase is no more than 75% of the annual inflation rate.

According to the Astanehe California real estate law firm:

“The annual general adjustment shall be equal to seventy-five percent (75%) of the percentage increase in the Consumer Price Index for the Los Angeles-Riverside-Orange County region.  Where the change is negative, the annual general adjustment shall be zero percent (0%).”

That’s 25% lower than California state law.

Affordable housing activists in Pasadena hope the new ordinance will lessen the percentage of renter’s income going toward housing.

 

The Cons of Rent Control

Media reports often claim public support of nationwide rent controls. Yet, many studies show adverse long-term effects hurting tenants. Let’s examine 6 of them.

1. A Stanford University study shows rent caps in San Francisco made landlords cut the rental housing supply by 15% resulting in market rent increases;
2. A Brookings Institute report found a long-term negative impact on housing affordability;
3. The National Apartment Association reveals that rent control discourages new affordable rental housing construction;
4. The National Multifamily Housing Council shows rent control widening the wealth gap and encouraging housing discrimination;
5. A National Bureau of Economic Research study found rent control causes misallocation of housing by discouraging rent-control families from downsizing when they need less space; and
6. The Initiative of Global Markets organization survey of top institutions economists revealed that 81% disagreed that rent control had a positive impact on the amount and quality of affordable housing in major U.S. cities.

 

Biden’s Renters Bill Of Rights: Rent Control Next? – Conclusion

 

President Biden recently proposed a “Blueprint for a Renter’s Bill of Rights”. Landlords are now asking what is Biden’s Renters Bill of Rights and is whether Rent Control is next.

It calls for:

1. Safe, Quality, Accessible, and Affordable Housing;
2. Clear and Fair Leases;
3. Education, Enforcement, and Enhancement of Renter Rights;
4. The Right to Organize; and
5. Eviction, Prevention, Diversion, and Relief.

To Summarize, these 5 Bill of Rights:

• They are a “response to large rent hikes during the pandemic and the end of the federal eviction moratorium”;
• The main goal is to protect renters and promote rental affordability;
• Tenant protections include easily understood leases, housing affordability, fewer evictions; and
• Several federal agencies will implement these new policies.

 

Does Biden intend to enact rent control?

 

No. These are only policies taking baby steps. He wants tenants to understand their leases. Also, prevent deceptive landlord practices, reduce the number of evictions, and make rentals affordable.

 

Need Property Management Services in San Diego?

 

WeLease Property Management Company offers fair-priced professional services by experienced managers. We handle all types of residential rentals including single-family homes, duplexes, multi-family housing, apartment buildings, and large complexes throughout San Diego County.

Contact us today to learn more about the many rental investment opportunities and landlord services.

 

 

Steven Rich, MBA – Guest Blogger

 

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