{"id":175369,"date":"2024-07-17T12:43:05","date_gmt":"2024-07-17T18:43:05","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=175369"},"modified":"2024-07-17T13:10:15","modified_gmt":"2024-07-17T19:10:15","slug":"biden-proposes-rent-increase-caps-at-five-percent","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/biden-proposes-rent-increase-caps-at-five-percent","title":{"rendered":"Biden Proposes Rent Increase Limits, With Penalties for Landlords Who Don&#8217;t Listen"},"content":{"rendered":"\n<p><span data-preserver-spaces=\"true\">President Biden just announced new actions to lower housing costs, aimed at corporate landlords who own over 50 units, to make housing more affordable for tenants. Additional initiatives aimed at sparking more affordable housing development could be an opportunity for investors.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The main points of the president\u2019s proposal are, according to a <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.whitehouse.gov\/briefing-room\/statements-releases\/2024\/07\/16\/fact-sheet-president-biden-announces-major-new-actions-to-lower-housing-costs-by-limiting-rent-increases-and-building-more-homes\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">press release<\/span><\/a><span data-preserver-spaces=\"true\">:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Calling Congress to pass legislation to either cap rent increases on existing units at 5% or risk landlords losing valuable federal tax breaks. The most obvious assumption would be to target <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/beginners-guide-depreciating-investment\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">depreciation<\/span><\/a><span data-preserver-spaces=\"true\"> and <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-exchange\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">1031 exchanges<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Repurpose public land sustainably, allowing 15,000 additional affordable housing units to <\/span><span data-preserver-spaces=\"true\">be built<\/span><span data-preserver-spaces=\"true\"> in Nevada.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Rehab distressed housing, build affordable <\/span><span data-preserver-spaces=\"true\">housing,<\/span><span data-preserver-spaces=\"true\"> and revitalize <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/markets?market=Las%20Vegas-Henderson-Paradise%2C%20NV\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Las Vegas<\/span><\/a><span data-preserver-spaces=\"true\"> neighborhoods.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">The president called on Congress to make housing more affordable for American families by passing the Biden-Harris Housing Plan. It would allow the construction of 2 million homes and provide $10,000 in mortgage relief to enable homeownership.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">According to the White House&#8217;s press release, more homes are under construction than in the last 50 years, and new housing construction is up 17% over the Trump administration.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The White House also highlighted several high-profile cases of corporate landlords being named in pending litigation (referring undoubtedly to the <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/realpage-being-investigated-by-the-doj-puts-landlords-on-alert\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">RealPage lawsuit<\/span><\/a><span data-preserver-spaces=\"true\">), citing \u201ctheir alleged use of proprietary algorithms to raise rents on tenants.\u201d<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What Rental Protections Mean for Landlords<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Crucially for landlords, the Federal Housing Finance Agency (FHFA) is <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.fhfa.gov\/news\/news-release\/fhfa-announces-multifamily-tenant-protections-july-2024\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">announcing<\/span><\/a><span data-preserver-spaces=\"true\"> new actions to protect renters in <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/finding-multifamily-properties\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">multifamily<\/span><\/a><span data-preserver-spaces=\"true\"> properties financed by loans acquired by Fannie Mae and Freddie Mac. The new protections apply to future loans with Fannie and Freddie (the government-backed housing organizations have funded an average of 1.2 million rental units over the past three years). Landlords in these buildings must adhere to the following:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Requiring 30-day notice before rent increases;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Requiring 30-day notice on lease expiration; and<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Providing a five-day grace period before imposing late fees on rental payments.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Repurposing Public Land for Affordable Housing<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Repurposing city-owned land to build more affordable housing is not a new concept. It is often used in dense urban centers such as <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.costar.com\/article\/1649502010\/greater-new-yorks-underused-land-near-transit-estimated-at-74000-acres\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">New York City<\/span><\/a><span data-preserver-spaces=\"true\">. However, the Biden administration plans to do the same thing to repurpose federal land to build tens of thousands of affordable homes in Nevada.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The Bureau of Land Management (BLM) announced the opening of a public comment period on a sale of <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.blm.gov\/press-release\/blm-seeks-input-proposed-sale-public-lands-affordable-housing\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">20 acres of public land to Clark County, Nevada<\/span><\/a><span data-preserver-spaces=\"true\">, for below market value at just $100 per acre\u2014the largest-ever sale for affordable housing under the Southern Nevada Public Lands Management Act <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.blm.gov\/sites\/default\/files\/documents\/files\/SNPLMA_3%20PROGRAM%20STATISTICS.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">program<\/span><\/a><span data-preserver-spaces=\"true\">, which the county estimates will enable the development of nearly 150 affordable homes for households making less than 80% of area median income.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Other land and housing initiatives throughout Nevada were also announced, including housing-related requests for the roughly 26,000 acres in Las Vegas Valley that remain under BLM control and are eligible for disposition under the Southern Nevada Public Lands Management Act program.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Choice Neighborhood Grants Can Benefit Developers and Investors<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The government is dedicating $325 million of HUD grants toward <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.hud.gov\/press\/press_releases_media_advisories\/HUD_No_24_182\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Choice Neighborhoods implementation grants<\/span><\/a><span data-preserver-spaces=\"true\"> to build new homes and spur economic development. Grantees will collectively develop over 6,500 new mixed-income units, including one-for-one replacement of 2,677 severely distressed public housing units. <\/span><span data-preserver-spaces=\"true\">These rewards will be shared amongst nonprofits and local developers, including <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-flip-houses\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">house flippers<\/span><\/a><span data-preserver-spaces=\"true\">, to revitalize communities that adhere to government guidelines<\/span><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The new Biden-Harris housing initiatives accomplish several important tasks, some with clear political motives. They prioritize affordable housing\u2014which is urgently needed\u2014and spotlight Nevada, a swing state that could <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.usnews.com\/news\/elections\/articles\/the-2024-swing-states-nevada-could-sway-the-presidential-election#:~:text=The%202024%20Swing%20States:%20Why,and%20potential%20bellwether%20%E2%80%93%20this%20year.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">decide the 2024 presidential election<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For investors, there are opportunities to work within the system and utilize government grants to build and renovate affordable housing that fits within federal guidelines. The advantage for seasoned flippers is that, in many instances, there might be a line of waiting buyers who have been through government-backed affordable homebuying programs with low interest rates, or they might have preapproved renters ready to move in with Section 8 vouchers or other government-endorsed programs.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Regarding the 5% rent cap: In other parts of the country\u2014notably <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/rentguidelinesboard.cityofnewyork.us\/resources\/faqs\/rent-increases\/#:~:text=Abatement\/Exemption%20FAQ.-,Back%20to%20Top,day%20notice%20is%20now%20mandatory.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">New York City<\/span><\/a><span data-preserver-spaces=\"true\">\u2014it has been common practice to have a 5% rent cap on increases per year. That will now apply nationwide for buildings of a certain size. How this will affect the redevelopment of multi-unit buildings where investors are relying on <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/13-ways-increase-rent-add-rental-property\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">raising rents<\/span><\/a><span data-preserver-spaces=\"true\"> to turn a profit after renovating an apartment remains to be seen.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_ca5e131c54267066952e8341ccc54fc5\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_4c34402dd8f263ab1b2cd3c4940d295f\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_33762082686796247df1a85cc91090cd class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/biden-proposes-rent-increase-caps-at-five-percent&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? 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