In a statement released on July 16, 2024, President Joe Biden announced new actions to lower housing costs. Per his statement, he plans to do this by putting a cap on rent increases and building more homes, making renting more affordable for millions of Americans. Today, we’re going over some of the details of Biden’s housing policies and how they may impact rental property owners.
What Is Biden’s Plan to Lower Housing Costs?
After several years of Americans struggling to pay rent and make ends meet, President Biden has proposed a few solutions. Washington, DC, property managers know that affordable housing has been an issue affecting tenants and rental owners for years.
In the President’s statement on July 16, 2024, he provided three actionable measures to lower housing costs. Biden’s housing policies include the following.
- Cap Rent Increases and Lower Rents
- Build More Affordable Housing
- Housing and Community Development
Cap Rent Increases and Lower Rents
The first step in Biden’s plan is to give corporate landlords a choice–cap rent increases on existing units to no more than 5% or lose valuable federal tax breaks. Landlords typically benefit from various tax deductions and incentives, such as deductions for mortgage interest, taxes, repairs and maintenance, and more.
However, Biden’s housing policies may impact some of these write-offs. This applies to landlords with over 50 units in their portfolio and could potentially affect over 20 million units nationwide.
Biden’s housing policies aim to address the excessive profits made by corporate landlords while many Americans still struggle to find affordable housing. Additionally, part of his plan includes protections for renters in multifamily properties financed by Fannie Mae and Freddie Mac. According to his statement, these protections include:
- A required 30-day notice before increasing rent,
- 30-day notice for lease expirations, and
- 5-day grace period before charging fees for late rent payments
Build More Affordable Housing
Biden’s housing policies aim to make housing more affordable. His second action involves repurposing public land to build tens of thousands of affordable homes. The President is calling on federal agencies to assess unused or underutilized federal land that can be repurposed to build more homes for Americans.
There are several steps being taken to address this part of his plan. For instance, USPS will work to repurpose surplus properties for housing. According to his statement, “USPS owns more than 8,500 facilities nationwide, including some that are not needed for postal operations in areas that face a shortage of affordable housing.”
Aside from that, there are several more actions from other federal agencies to build more affordable housing across the country.
Housing and Community Development
The final step in this particular plan includes investing $325 million in housing and community development. According to BIden’s statement, “HUD is announcing $325 million in Choice Neighborhood grants to build new deeply-affordable homes, spur economic development, and revitalize neighborhoods in communities across the country.”
Essentially, the awards will build over 6,500 new housing units, support small businesses, build new parks and childcare centers, and be used to “leverage over $2.65 billion in public and private investments in these neighborhoods.”
The goal here is to encourage engagement, provide benefits to local residents and business owners, and invest in those who live in these communities.
How Will Biden’s Housing Policies Impact Landlords?
While these actions are set to help renters and potential homebuyers, some of them may negatively impact some investors. For instance, while rent caps are good for those needing affordable housing, they can impact some investors’ overall income. Here are some of the impacts of Biden’s housing policies.
Rent Control- Depending on who you are, when you hear the words “rent control,” you either get excited or disgruntled. Unfortunately for some major landlords, Biden’s plan means you may face a cap on rent increases at 5% per year, which can limit revenue growth.- Increased Regulation– Along with that, new tenant protections may lead to stricter requirements for evicitons and lease renewals. For instance, new actions to protect renters in multifamily properties may make it harder for landlords to impose late fees or eviction notices for late rent.
- Financial Impacts– With more affordable housing units going up, it will likely lead to increased competition. This can be good and bad for investors. For instance, you’ll have to work harder to attract renters. However, those efforts can allow you to charge more for rent, leading to higher revenue.
How Can You Protect Your Investments?
If you’re worried about Biden’s housing policies impacting your bottom line, it’s important to do what you can to protect your investment properties. Hiring professional property management is one of the best ways to ensure you get your best return on investment. Companies like Bay Property Management Group stay up-to-date with housing news and policies and can help rental owners adjust to them seamlessly.
Need More Advice? contact us today!
If you need help managing your rental properties, look no further than BMG. Our large team of rental management professionals can help you with any aspect of your business. From rental marketing to rent collection, maintenance, tenant screening, and more, we’re here for you. Contact us today to learn more about our services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.
