Democrats will seek to impose rent control if Biden wins the 2024 election. That would reduce the quantity and quality of housing available over time. The Washington Post reports:
President Biden will unveil a new proposal in Nevada on Tuesday to cap rental costs nationwide….as he works to assuage Democratic concerns about the viability of his candidacy… Biden’s plan — which would need to be approved by Congress — calls for stripping a tax benefit from landlords who increase their tenants’ rent more than 5 percent per year, the people said. The measure would only apply to landlords who own more than 50 units, which represents roughly half of all rental properties..It wouldn’t cover units that have not yet been built, in an attempt to ensure that the policy does not discourage construction of new rental housing….The president hinted at the plan during his news conference at the conclusion of the NATO summit last Thursday….Biden also referenced a plan to “cap rents” during his late June debate with Trump, although he has not explained the policy publicly or how it would work. “If I’m reelected, we’re going to make sure that rents are capped at 5 percent increase — corporate rents, for apartments and the like, and homes, are limited to 5 percent,” Biden said at the news conference….
The plan is also likely to prove controversial among economists, including many Democrats. Experts on both sides of the aisle tend to argue that government limits on rent discourage new development by making it less lucrative….With construction and labor costs already high, some fear that developers could respond to new restrictions by reducing new construction.
“Rent control has been about as disgraced as any economic policy in the tool kit. The idea we’d be reviving and expanding it will ultimately make our housing supply problems worse, not better,” said Jason Furman, who served as a top economist in the Obama administration and is now a professor at Harvard. That’s the case even if future units are exempted, Furman said, because it could change how developers consider their incentives….After Biden raised the idea of a rent cap, a coalition of major housing groups, including the National Multifamily Housing Council, National Apartment Association and Mortgage Bankers Association, said such a policy would backfire on those who need it most.
Economists oppose rent control because it makes it more difficult for people to find decent housing in the long run. In a 1992 poll, 93 percent of them said rent control reduces the quantity and quality of housing available. As the Wall Street Journal notes, “If there’s any consensus in economics, it’s that rent control achieves the opposite of its intended goal. It leads to housing shortages by discouraging new development and maintenance of existing properties.” As economic professor Chris Freiman notes, “experts agree that rent control doesn’t work.”
Even progressive economists mostly think rent control is a bad idea: The Swedish economics professor Assar Lindbeck, a Social Democrat, said, “rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” Similarly, the liberal Washington Post explains, “Rent-control laws can be good for some privileged beneficiaries, who are often not the people who really need help. But they are bad for many others.” For example, after San Francisco imposed rent control, “landlords responded by converting their buildings into condos they could sell or business properties they could lease without rent-control restrictions — or by demolishing their old buildings and replacing them with new ones” not subject to rent control. Moreover, “landlords have less incentive to maintain their properties in a rent-controlled environment,” reducing housing quality. “And since rent-stabilization policies often tend to discourage people from moving, they harm worker mobility and the economic dynamism associated with it.” These observations were made by the progressive-leaning editorial board of the Washington Post, which has not endorsed a Republican for president since 1952.
Rent control also reduces the quality of housing over time. As the liberal Brookings Institution points out, “Rent control can also lead to decay of the rental housing stock; landlords may not invest in maintenance because they can’t recoup these investment by raising rents.”
When landlords can’t raise rents to pay for repairs and renovations, they may let apartment buildings decay. After New York limited rent increases to pay for major capital improvements to 2 percent, landlords cut back on such improvements. A survey of rent-stabilized landlords found that when rent increases were curbed,
Three out of four reported cutting back on essential building-wide repairs, such as a roof or boiler replacement, since the rent law passed. Nearly 90 percent said they had forgone kitchen or bathroom renovations. Just over half decided against revamping their buildings’ security systems to include cameras or video intercoms or adding storage lockers for deliveries to thwart porch pirates. Efficiency upgrades have also been pushed to the back burner. Over 40 percent of respondents said they would not replace lighting with LED fixtures that use 90 percent less energy — a budget saver for tenants. A quarter said they opted against installing fuel computers, which better regulate heat and hot water systems and reduce a building’s energy consumption.
Rent control reduces the value of housing stock, shrinking the property tax revenue that funds schools and local governments. “Researchers at the University of Southern California said rent control hurt property values in St. Paul, Minn. by $1.6 billion,” noted Market Watch.
Democrats lead on the generic Congressional ballot, suggesting that they will pick up control of the House of Representatives in this election. That could enable them to impose rent control nationally, even if it is a very bad economic policy. All current Democratic Senators who will still be in the Senate in 2025 support abolishing the filibuster, in order to enable left-wing legislation to pass Congress with the barest of partisan majorities. The only two senators elected as Democrats who opposed abolishing the filibuster are both retiring (Senators Manchin and Sinema). All other Democrats support abolishing the filibuster to allow the Democrats to pass legislation that would transform American society in a progressive direction.
