Housing policy is too important to be treated like pinball in a political arcade, but that is precisely the game the White House is playing with their sketchy plan of a 5% cap on rent increases in the midst of a presidential campaign.
National rent control, which is what last month’s announcement is, would be a massive federally-imposed restructuring of a foundational aspect of every state and local economy throughout the country.
The Biden administration is playing a reckless game of political posturing, pandering to poll-tested concerns about affordability by proposing an unworkable federal economic mandate that would override policies set by state and local governments. And that is a recipe for inevitable and widespread market disaster. It would collapse the housing market throughout the country just as it would surely wreck lending, building, and the quality of life for tenants everywhere.
Federalizing housing provided by private owners is no different than statist, economy-wrecking policies we see destroying Latin American countries and China. Are these the nations the White House wants to emulate?
For 75 years, New York City has experimented with rent controls — three-quarters of a century of rent manipulation and political gamesmanship that has made housing less affordable and less accessible to those who need it. But even in New York’s flawed system, rent increases are more than what the federal rent control plan calls for.
Taxes are based on the net income apartment buildings generate; that number depends on the rent, which pays the bills. Federal rent control ignores every local consideration — the policies and laws on the books in places like New York, Pennsylvania, Florida, California, Washington State, Ohio and every other state, city and county in the country — while simultaneously gutting their local budgets.
There’s not much sympathy for landlords (the conversational and colloquial term for multi-family building owners), so it is as easy as it is misplaced for the White House to vilify this group and take cheap shots about affordability without considering the vital role real estate plays in the budgets of localities and states. Attacking building owners is a transparent distraction from other concerns and issues.
Federal rent-setting without means-testing would benefit nationally those who can pay the rent for their glass tower apartments in hip neighborhoods, in new construction near commuter lines, and in renovated urban townhouses. It would benefit affluent professionals in trendy locales who have the means to pay for where they desire to live.
The federal rent control plan is a giveaway to the coastal elites and “blue cities” that Democrats are routinely criticized for subsidizing at the expense of those everywhere else who are just trying to make ends meet.
Cookie-cutter-imposed federal government price control is rarely the answer to complicated issues, like housing, that are shaped by local peculiarities and history. This would be obvious at any time but is especially true when floated in the middle of a presidential election. Substituting top-down dictates and price controls for negotiated and legislated local policies is never a good idea.
Government is the problem in a clear-eyed assessment of the costs of providing housing; so, more government is not the answer. Property taxes, spiking insurance premiums, water bills, high interest rates, energy policy — all of these costs are made worse by government policies and mandates.
The only thing the administration’s 5% cap plan does is cut off income — rent — needed to meet these always escalating costs. The White House would be well advised to consider the Hippocratic Oath — “First, do no harm” — before engaging in political pandering.
This plan would inevitably break the back of building owners across the country with high costs and less rental income — the latter which is needed to maintain and repair their properties and, equally vital, fuel the economies of every village, town and city in America.
Instead of a reckless plan that would place the affordable housing infrastructure on a calamitous course, the administration should focus on the causes of high rents. Energy costs should be brought down, interest rates tamed, and local property taxes made more equitable.
There is no sound reason to impose New York-style rent schemes — in this case, federal rent control — on the rest of the country. This myopic perspective by the White House isn’t the answer to the nation’s housing crisis.
Strasburg is president of the Rent Stabilization Association, whose diverse members own and manage millions of apartments in New York City, the largest organization of its kind in the country, and the largest providers of affordable housing in NYC.
