Housing policy is too important to be treated like a pinball machine in a political arcade, but that is precisely the game the White House is playing with its crude plan to cap rent increases at 5 percent in the middle of a presidential campaign.
National rent control, announced last month, would constitute a massive, federally imposed restructuring of a fundamental aspect of the economy of every state and local government across the country.
The Biden administration is playing a reckless political posturing game, letting itself be guided by affordability polls by proposing an unworkable federal economic mandate that would override state and local policies. And it’s a recipe for inevitable, widespread market disaster. It would cause housing markets across the country to collapse, just as it would surely destroy lending, construction, and the quality of life for renters everywhere.
Federalizing housing provided by private landlords is no different from the economy-destroying state policies we see in Latin America and China. Are these the countries the White House wants to emulate?
For 75 years, New York City has been experimenting with rent control. Three-quarters of a century of rent manipulation and political gamesmanship have made housing less affordable and less accessible to those who need it. But even in New York’s broken system, rent increases are higher than the federal rent control plan calls for.
Taxes are based on the net income generated by apartment buildings; that figure is based on the rent, which pays the bills. Federal rent control ignores all local considerations—the policies and laws in states like New York, Pennsylvania, Florida, California, Washington, Ohio, and every other state, city, and county in the country—while simultaneously gutting their local budgets.
Landlords (the colloquial term for owners of multi-unit buildings) don’t garner much sympathy. So it’s easy and inappropriate for the White House to vilify this group and attack people who can’t afford to pay their rent without considering the vital role that real estate plays in local and state budgets. Attacking landlords is a distraction from other concerns and issues.
Federal rent-setting without means testing would benefit nationally those who can afford to rent for their apartments in glass towers in trendy neighborhoods, new construction near commuter lines, and renovated townhouses. It would benefit affluent professionals in trendy neighborhoods who can afford to live where they want to live.
The federal rent control plan is a gift to coastal elites and “blue cities” that Democrats are routinely criticized for subsidizing at the expense of those everywhere else simply trying to make ends meet.
Federally imposed price controls are rarely the answer to complex problems, like housing, that are shaped by local circumstances and history. This may seem obvious at any time, but it is especially true when the idea is being floated in the middle of a presidential election. Replacing top-down diktat and price controls with locally negotiated and legislated policies is never a good idea.
The problem is that the state is making a clear assessment of the costs of providing housing. Therefore, more state intervention is not the solution. Property taxes, skyrocketing insurance premiums, water bills, high interest rates, energy policy: all these costs are compounded by government policies and mandates.
The only thing the administration’s proposed 5% cap plan does is reduce the revenues – rents – needed to meet these ever-increasing costs. The White House would be wise to heed the Hippocratic oath – “First, do no harm” – before embarking on political maneuvering.
This plan would inevitably break the backs of property owners across the country, with high costs and less rental income – the latter needed to maintain and repair their properties and, just as vital, fuel the economy of every village, town and city in America.
Instead of adopting a reckless plan that would send affordable housing construction down a disastrous path, the administration should focus on the causes of high rents. It would mean lowering energy costs, controlling interest rates, and making local property taxes more equitable.
There is no good reason to impose New York-style rent control systems on the rest of the country – in this case, federal rent control. This short-sighted approach from the White House is not the answer to the country’s housing crisis.
Strasburg is president of the Rent Stabilization Association, whose members own and manage millions of apartments in New York City, the largest such organization in the country and the largest provider of affordable housing in New York City.
