How Joe Biden's Rent Cap Could Impact New York City

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President Joe Biden this month proposed a 5 percent rent cap that has landlords fuming and tenants hopeful.

The rent cap would go into effect for corporate landlords in an attempt to make renting more affordable as prices remain at record levels in several parts of the country. Landlords would be forced to choose between capping their rent increases at 5 percent or losing federal tax breaks. Specifically, they wouldn’t be able to get faster depreciation write-offs unless they followed the cap rules.

“Creating a cap on rent is usually a decision that would immediately meet legal blowback, but the Biden-Harris Administration is handling the concept through a different way,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek. “For New York City tenants, it sounds like a great deal and highly needed in our current inflated financial landscape.”

For rent
A sign advertising units for rent is displayed outside of a Manhattan building on April 11 in New York City. President Joe Biden has proposed a rent cap of 5 percent for corporate landlords.

Spencer Platt/Getty Images

It would apply to landlords with more than 50 units in their portfolio, so smaller landlords wouldn’t be affected.

In New York City, where rent averages $4,726, according to Redfin, the cap could have severe ramifications.

The city’s tenants are no strangers to landlords raising prices by more than their increasing costs, and because of the limited supply available, residents often are forced to put up with the extreme hikes.

“I don’t think it’s a bad idea, especially in a market where tenants have seen much higher increases than that,” Coldwell Banker Warburg broker Bill Kowalczuk told Newsweek. “At this point, everyone’s rent has increased exponentially since 2021. Five percent is still a good amount of money on top of already-high rents.”

Coldwell Banker Warburg broker Sean Adu-Gyamfi said it would be a “significant game changer” for renters, but not everyone is on board with what the changes would mean.

“In NYC, where demand is perpetually strong, the key to alleviating high rents is increasing supply,” John Walkup, co-founder of real estate platform UrbanDigs, told Newsweek. “By capping rent increases, the proposal could inadvertently crimp supply as landlords cut back on available rental units or even convert them into condos.”

It remains to be seen whether Biden’s proposed rent cap becomes law. Previously, congressional Republicans blocked Biden’s affordable housing agenda.

“While Republicans side with corporate landlords that are raising rents, President Biden is cracking down on price gouging and building more homes to lower rents and put homeownership in reach for working families,” the White House said in a statement.

Beene said the cap is just a proposal at this point, and even if it becomes a reality, landlords likely won’t go down without a fight.

“This could include taking the government to court or finding loopholes in the proposed legislation that would allow them to increase rents under certain conditions,” Beene said. “In other words, these types of financial restrictions are never as black and white as some may make them seem.”

For June, the median national rent was $1,411, up from $1,150 in 2021, according to Apartment List.