The Biden administration plans to announce a new cap on rent increases for certain affordable housing units subsidized by the federal government. The move, which will limit yearly rent increases to 10 percent for low- income housing tax credit properties, has been hailed by tenant advocates but criticized by others in the housing industry. As we argue in a chapter on rent control for the forthcoming War on Prices, such policies are misguided and ultimately counterproductive. While well- intentioned, rent control fails to achieve its primary goal of improving housing affordability for the poor and disadvantaged. In fact, it often generates unintended consequences that exacerbate the very problems it seeks to solve. Economic theory predicts that binding rent controls will discourage upkeep and improvements on rent- controlled units, resulting in lower property values. Landlords, unable to charge market rents, convert rental units to condos and sell them, reducing the quantity of rent- controlled housing and creating rental housing shortages. Tenants in rent- controlled units become less mobile to avoid losing access to below- market rents.
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- United States of America
