The Biden administration has put a cap on how much rents can be increased in some affordable housing units subsidized by the federal government.
The cap will effectively limit the amount property owners can raise rents at 10% if they are part of the government's tax-credit program for low-income housing. The cap was announced on Monday, April 1, and is now in effect.
"Since FY 2010, HUD has limited annual decreases in the low- and very-low-income limits to five percent and all annual increases to the greater of five percent or twice the change in the national median family income. For 2024 and hereafter, HUD is specifying that the cap should be measured using the annual change in the unadjusted national median family income subject to an absolute cap of 10 percent," the announcement read.
Who Does the Cap Apply To?
Biden's rent hike cap applies to all affordable housing units that receive funding from the Low-Income Housing Tax Credit. An estimated 2.6 million rental homes across the U.S. currently have LIHTC rent and income restrictions, per the National Housing Preservation Database (NHPD).
Tenants who live on properties with "tax credit" or "LIHTC" on their lease qualify for the new cap. Renters can also check with their state housing agency or local recorder's office to know if their units qualify for Biden's new cap.
"This policy can be difficult to understand and explain, so we highly recommend that tenants contact their local free legal services provider to help determine if the cap applies to them and if so, challenge unlawful rent hikes," Shamus Roller, the executive director of the National Housing Law Project, said, as quoted by CNBC.
The rent cap aims to keep "seniors, families with children, people with disabilities and the lowest-income tenants in their homes."
The new rent cap comes after the Biden administration announced a $10,000 tax incentive for qualifying first-time homebuyers and current homeowners who sell their "starter home." The proposal would still need to be enacted by Congress. It is unclear whether the initiative will progress during a presidential election year.
READ MORE: Americans May Get $10,000 Tax Credit for Buying, Selling a Home
