The Biden-Harris administration has proposed a set of renter protection rules that, if passed in Congress, would require landlords with federally backed mortgages to cap rent increases to 5%, among other measures.
In addition, the Federal Housing Finance Agency would require landlords to provide a 30-day notice before rent increases; a 30-day notice on lease expiration; and a five-day grace period before imposing late fees on rental payments.
“The tenant protections announced today are the culmination of a collaborative effort between FHFA, [Fannie Mae and Freddie Mac], tenants, and landlords to address challenges faced in rental housing today,” says Sandra L. Thompson, director of FHFA, in a statement. “These requirements reflect basic best practices to ensure housing providers effectively communicate with tenants and that tenants understand their rights and responsibilities under their leases.”
The GSEs will monitor and enforce the tenant protections – and failure to comply could result in penalties under the loan agreement, FHFA says.
These protections will be required for new loans signed on or after the policy effective date, February 28, 2025.
In a statement, Bob Broeksmit, president of the Mortgage Bankers Association, says the set of measures, if passed, would be “catastrophic” to the housing rental market.
“Increasing the supply of affordable rental housing nationwide – not politically-motivated and self-defeating rent control proposals floated during election campaigns – is the best way to alleviate affordability constraints for renters,” Broeksmit says. “There are endless examples in localities in America and around the world that prove that rent control is a counter-productive policy idea that ultimately harms renters by distorting market pricing, discouraging new construction, and degrading the quality of rental housing. While the odds are stacked against this proposal ever passing Congress, a federal rent control law would be catastrophic to renters and our nation’s rental housing market.
“MBA is focused on working with the Biden administration, Congress, and local communities on common sense solutions that will boost housing supply, lower costs for renters, and improve the federal government’s multifamily lending programs,” Broeksmit adds. “One such example would be for the Senate to approve the bipartisan House measure that passed earlier this year that includes meaningful enhancements to the Low-Income Housing Tax Credit program that would encourage the construction of more low-and moderate-income and workforce housing.”
Photo: Rivage
