Should You Be Worried About the Renters Bill of Rights?

The White House. Image by NomadJim via Pixabay

Housing policy has been a high-profile effort by the Biden administration, but a new proposal is raising significant concerns from multifamily industry stakeholders. In the latest move targeting affordability-related burdens, on Jan. 25 the White House unveiled its blueprint for a Renters Bill of Rights. The document features sweeping actions on the part of numerous federal agencies and national-level nonprofits designed to guarantee better access to quality affordable housing, combat discriminatory and exclusionary practices related to the rental process, prevent unjust evictions and allow residents to organize without fear of retaliation from landlords or property managers.

The Housing Supply Action Plan announced last May by the White House has generally been well received by the industry, and the new blueprint mentions actions by several multifamily organizations. Yet the response from industry organizations and other observers has been largely lukewarm to negative.

Supply and affordability

A frequent criticism of the new blueprint is that it fails to acknowledge supply-related housing challenges. That contrasts with the Housing Supply Action Plan. “The administration’s blueprint ultimately fails to address the root of affordability challenges: a shortage of housing supply at all price points,” Nicole Upano, assistant vice president of housing policy and regulatory affairs at the National Apartment Association, told Multi-Housing News.

Some critics see the blueprint as counterproductive. New regulations, such as the potential limits on investment-related rent increases by the Federal Housing Finance Agency, could hike costs and stymie much-needed development.

“It was disappointing to see this week’s announcement, which really didn’t include any agency action that would expand supply and, in fact, will only serve to worsen affordability by adding costly and complex regulations,” said Sharon Wilson Géno, president-elect of the National Multifamily Housing Council. “Rent stabilization policies has been proven, time and time again, to result in significantly less investment in communities where it has been implemented, further exacerbating the housing problems which drive up cost,” she added.

Such federal mandates would not only contribute to the existing shortage, Géno contends, but hurt renters whose protection is the blueprint’s stated mission. “Incorporating rent control provisions into their deals would run counter to their missions and worsen affordability by destabilizing the market and disincentivizing investors whose capital is needed for the creation of new housing,” she said. She contends that the mandates would expand bureaucracy, increase costs for housing providers and residents, and discourage investment. Lease agreements, as well as laws and regulations on the state and local levels, already give renters wide-ranging protections, Géno added.

Driving a wedge

In a similar vein, observers say, the new items appear to place responsibility for the current crisis primarily on owners. That unnecessarily deepens the divides between renters, owners and operators in matters of cost responsibility, services, labor and evictions and approvals.

“The fundamental problem with the blueprint is that it conceptualizes the landlord-tenant relationship as a zero-sum game,” Alexander Lycoyannis, a veteran attorney with Rosenberg & Estis, a New York City-based real estate law firm, told MHN. “Underpinning the blueprint is the idea of ‘rights’ in rental housing as a fixed pie, with renters being entitled to a greater proportion of the pie than they currently have, and [the] owners’ piece of the pie reduced.”

READ ALSO: How the Housing Shortage Became a Crisis

These policies could have unintended consequences, Lycoyannis warns, such as the ripple effect of disruptions to a property’s revenue stream. “It would reduce real estate tax collections and thus the funds allocable to public schools, police, fire departments, and other essential local government functions,” Lycoyannis told MHN.

Moreover, some perceive the blueprint to lack analysis of fractures in the tenant-landlord relationship, and how they contribute to an ever-shrinking housing supply. For instance, the document does not address the cause of evictions. That raises the concerns of Larry Keys, vice president of government affairs at the National Affordable Housing Management Association (NAHMA). “Our members do everything possible to notify residents of alternative payment plans, recertification and emergency rental assistance,” Keys noted. “We are very concerned about the long-term negative financial impacts to residents resulting from their increasing outstanding rent balances, as well as the negative financial impacts over time on property maintenance and operations resulting from cumulative non-payments of rent.”

Breaking a cycle

Amid the widespread concerns, the plan’s attempt to address income-based discrimination toward prospective residents drew praise from some corners.

“This insidious form of discrimination, where renters are denied housing based on their reliance on other forms of income like vouchers, perpetuates a cycle that makes it that much harder for a person or family to get ahead. It can also be a proxy for perpetuating racism that has a dark legacy in housing,” argued Jacqueline Waggoner, president of solutions at Enterprise Community Partners.

Waggoner sees the blueprint’s use of federal agencies to address this problem as a step in the right direction, particularly given a history of lackluster enforcement of the Fair Housing Act. “Even the places that have made it (discrimination) illegal lack the necessary funding and infrastructure to enforce the law. This must change,” she said.

Room for improvement

Nearly all the responses to the Blueprint were in agreement about the most effective solution to the supply problem: more funding, and a whole-of-society approach. The Biden administration is in a unique position to effect such a change, by way of its ability to combine and cater to the interests of all the relevant parties. For Keys of the National Affordable Housing Management Association, this comes by way of supporting the availability of development funding and the flexibility of bond requirements.

“[We] urge this administration to prioritize the Housing Supply Action plan it issued last year, including expanding the Low-Income Housing Tax Credit (LIHTC) by increasing the Housing Credit by 50 percent or working to reinstate the 12.5 percent increase in credit authority available in 2018-2021 as adjusted for inflation.”

Waggoner sees value in the administration’s relationship with federal agencies, and its ability to play a mediatory role with federal agencies and Congress. Such a responsibility could allow for the passage of both meaningful legislation and increased public-private synergy.

“We know that government can’t do this alone,” Waggoner stated. “The Administration should work directly with Congressional leaders to enable this by expanding the Low-Income Housing Tax Credit, our nation’s most powerful tool for creating and preserving affordable housing, by passing the nonpartisan Affordable Housing Credit Improvement Act.”