“Over the past several decades, the federal government has not only abdicated its responsibility tenants, it has actually become the financial enabler of some of the worst landlord business practices,” says Tara Raghuveer of the National Tenant Union Federation.
But, as of last month, that may be changing.
That is when the Biden administration announced it would impose a cap on rent increases on Low-Income Housing Tax Credit (LIHTC) housing. The 10% annual increase limit is far higher than the 3% cap that tenant unions have been pushing for, and the limitation to the LIHTC program leaves out a great deal of other federally financed and subsidized housing. But the new rule could apply to over a million households. And perhaps more importantly, it shows for the first time that the tenant union movement can make its power felt on the national stage.
“For many of these landlords, rent-gouging, evictions, and poor conditions are part of the business model, and what makes their business model work is the favorable terms they receive from our federal government.”
“It’s a huge win, and it wouldn’t have happened if not for tenant unions beating the drum for the past several years demanding that every dollar of federal financing and subsidies be conditioned on tenant protections,” Raghuveer says. “The federal government is finally recognizing its responsibility to protect tenants from price-gouging.”
It seems the landlord lobby agrees. The same organizations that cheered the words-only Biden Blueprint a year ago have joined together to bitterly criticize the new rent cap.
“You’re discouraging the creation of supply,” the CEO of the National Housing Conference complained to The Washington Post.
Landlords were particularly disturbed by the Biden administration explicitly dismissing their increasingly discredited argument that rent limits decrease the supply of affordable housing.
“We’ve seen no evidence that this limitation—even those much lower than 10%—have limited the supply of new affordable housing nationally,” said Department of Housing and Urban Development spokesman Zachary Nosanchuk.
The new rent cap also heralds a shift in tenant organizing in the U.S. Although tenant unions have traditionally built their power through local struggles, laws passed by state legislatures in places like Missouri and Kentucky put ceilings on local housing reforms. At the same time, federal financing plays an enormous role in the housing industry. In 2022, the Federal Housing Finance Agency, or FHFA, which manages both Fannie Mae and Freddie Mac, purchased $142 billion in mortgages issued by banks to multifamily landlords, thus assuming the risk of nonpayment. So tenant unions argue that this federal government largesse should come with conditions, specifically limits on rent hikes, obligations to keep the housing clean and safe, and promises not to evict tenants or not renew leases except for good cause. These types of tenant protections on federally backed housing could apply to over 12 million rental units, nearly one in three renting households in the country.
Winning these conditions and ensuring that the new rent cap is fully enforced are the next steps for the tenant union movement looking to build on the momentum of this win.
“For many of these landlords, rent-gouging, evictions, and poor conditions are part of the business model, and what makes their business model work is the favorable terms they receive from our federal government,” Raghuveer says.
“The rent is too damn high, and the government is in business with our landlords.”
