The Biden administration is poised to introduce a change aimed at easing the burden of rising rents on Americans living in federally subsidized housing.
A new regulation will cap annual rent increases at 10 percent for certain affordable housing units, marking an effort to address the affordable housing crisis that has intensified across the U.S.
Set to be announced next week, the new policy represents the latest stride taken by the administration of President Joe Biden toward mitigating the housing affordability challenges that have become a central concern for many Americans.
An “apartment for rent” sign is posted in South Pasadena, California. A new initiative could potentially affect over 1 million homes, aiming to shield tenants from the volatility of rent increases.
FREDERIC J. BROWN/AFP via Getty Images
While the cap is celebrated by tenant advocates for providing a measure of protection against steep rent hikes, according to The Washington Post, which initially reported on the topic, it also raises questions about its impact on the availability of affordable housing and the broader housing market dynamics.
The regulatory effort aligns with Biden’s broader strategy to combat the housing affordability crisis. Last week, the president announced a plan to construct 2 million new homes, addressing the supply shortage driving up housing costs. The Neighborhood Homes Tax Credit, as part of the initiative, aims to foster the construction or preservation of 400,000 starter homes.
Newsweek reached out to the U.S. Department of Housing and Urban Development (HUD) and the White House for comment but did not receive an immediate response.
According to a report, the forthcoming regulation targets affordable housing units subsidized by the federal government, specifically those participating in a tax credit program designed to encourage the development of low-income housing.
The initiative could potentially affect over 1 million homes, aiming to shield tenants from the volatility of rent increases amid a backdrop of rising living costs and persistent inflation.
Biden’s housing strategy also wants to renovate existing structures into affordable housing units, thereby utilizing the Low-Income Housing Tax Credit to invigorate the rental market. A $20 billion fund was also proposed to encourage construction of multifamily rental units and starter homes for middle-class families.
The regulatory change aims to assist a housing market dealing with a shortage of homes and an affordability gap.
The administration said that the new 10 percent cap will not further constrict the housing supply, and HUD added that its analysis of income and housing data supports the viability of the cap, suggesting that it will not hinder the development of new affordable housing on a national scale, according to the report.
Recent developments in the new homes market have shown promising signs, with a sharp increase in completed homes and construction starts, indicating a potential easing of the housing supply crunch.
Yet the Biden administration acknowledges the longstanding nature of the affordable housing challenge, advocating for a sustained build-up of the housing stock as a fundamental solution to affordability issues.
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