The Joe Biden–Kamala Harris proposed national rent control policy sets a dangerous precedent that threatens to nationalise the housing industry and promote an unhealthy dependence on federal government intervention.
While the proposal aims to alleviate concerns surrounding the current housing market, it is a misguided approach that ignores the root causes of housing problems and disregards the effectiveness of local solutions.
National rent control represents a fundamental shift towards federal oversight in a sector that thrives on local management and market dynamics. By setting a precedent for federal involvement in rent control, we risk reaching a point of no return: the housing industry will become a puppet of national policy and lose the flexibility and responsiveness that local management offers.
Instead, federal housing policy should focus on tax incentives to spur investment and offset the costs that burden the industry and homeownership today.
The main problem with the housing crisis is the lack of supply, not the level of rents themselves. While rent control can provide temporary relief to tenants by freezing rents at their current level and capping future increases, it ultimately discourages investment in new residential construction.
If investors expect limited returns due to controlled rents, they will invest less in building new properties or maintaining existing ones. This leads to a stagnant or even shrinking housing supply, thereby exacerbating the very problem that rent control is intended to solve.
Today, inventory levels directly impact property values. It’s simply a matter of supply and demand. Local governments often limit housing supply through land use and zoning regulations. To counteract this, we need to increase inventory in a responsible and thoughtful way.
Ensuring adequate housing supply and preventing price explosions requires careful planning and coordination at the local and state level. This includes not only reforms in land use planning, but also investments in infrastructure and citizen engagement to balance growth and quality of life.
Local solutions are inherently more adaptable and can be tailored to specific challenges, whereas a uniform national policy such as rent control ignores regional differences in housing markets.
The current housing crisis is exacerbated by high interest rates, which make home buying difficult and lock current homeowners into their homes without the option to move to larger or smaller homes. This situation artificially reduces demand for homes and limits the inventory of existing homes on the market.
In addition, the insurance crisis we are experiencing across the country from California to Florida is further exacerbating the problem. Homeowners are faced with a lack of clarity about premiums, with annual increases doubling or even tripling with no end in sight. This unpredictability is putting additional pressure on the real estate market and discouraging investment in new and existing properties.
Free market principles combined with strategic local governance provide a more effective framework for addressing housing problems. Local and state governments have a nuanced understanding of their respective housing markets and are better equipped to implement zoning, land use and density policies tailored to the needs of their communities.
These instruments can have a significant impact on housing supply and ensure that prices remain affordable without imposing blanket regulations that hamper market dynamics.
The American Enterprise Institute (AEI) has consistently advocated for market-based solutions to housing affordability. AEI’s research emphasizes the importance of supply-side interventions, such as loosening zoning restrictions and streamlining the permitting process, to stimulate housing construction. Its findings underscore that increasing supply, rather than imposing rent controls, is the key to stabilizing prices and ensuring long-term affordability.
The Biden-Harris proposal for national rent control is a misguided attempt to solve housing problems through federal overreach. It threatens to undermine the dynamics of the housing market and encourage dependence on government intervention.
Instead, we should focus on empowering local governments to implement zoning and land use policies that increase housing supply. By embracing free market principles and leveraging local expertise, we can develop sustainable solutions that address the root causes of the housing crisis without sacrificing market dynamics or individual autonomy.
The way to solve the homeownership problem is to ensure there is enough supply to prevent skyrocketing prices. This requires hard work and planning at the local and state levels.
Some state governments have tried to pass legislation to address this, but it is unclear whether one-size-fits-all policies are effective. Perhaps the best position for states is to encourage local governments to address supply and demand issues. We can address the housing crisis in a way that promotes long-term stability and affordability.
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Daniel Diaz-Leyva is a Coral Gables-based attorney and businessman.
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