The recent Republican National Convention and President Joe Biden’s decision not to seek a second term overshadowed an important announcement by the Biden administration to impose a national rent control policy. The administration’s federal rent control proposal would force corporate landlords to agree to cap rent increases at 5% or lose the ability to depreciate residential rental properties over a depreciation period of 27.5 years, as is current law. Landlords who refuse to abide by the rent control restrictions would be forced to depreciate their properties over a period of 39 years.

A shorter depreciation schedule for residential rental real estate is intended to increase the incentive for the private sector to invest in rental housing. Imposing federal rent caps in addition to the already burdensome regulatory barriers to development at many state and local levels will disincentivize housing investors, exacerbating the supply shortage and reducing housing opportunities for the nation’s renters.

NAIOP and a coalition of real estate associations sent a letter to the White House requesting the administration reconsider the proposal, stating our “strong opposition to your recent proposal to cap rents nationwide. Rent control policies have proven time and again to increase rents, reduce the capital needed to boost the supply of housing, and ultimately hurt renters today and in the future.” Any change in tax policy will require congressional approval, and NAIOP will continue to work to ensure that tax policies are positive for commercial real estate.