As the Federal Housing Finance Agency (FHFA) considers changes for multifamily properties backed by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, a broad coalition of associations representing housing providers and lenders are cautioning against rent control mandates.
Eighteen associations sent a letter to FHFA director Sandra Thompson warning that mandatory rent control and rent stabilization policies will increase rents, reduce the amount of capital needed to increase the housing supply, and potentially hurt current and future renters.
The associations have requested that FHFA reject imposing rent regulations as a condition of GSE-backed financing, saying it will exacerbate the nation’s affordability crisis. Instead, they recommend the creation of additional voluntary incentives within Fannie Mae and Freddie Mac programs that will help expand the supply of much-needed affordable housing. The letter signers include American Seniors Housing Association; Council for Affordable and Rural Housing; Commercial Real Estate Finance Council; Institute of Real Estate Management; Leading Builders of America; Manufactured Housing Institute; Mortgage Bankers Association; NAIOP, the Commercial Real Estate Development Association; National Apartment Association (NAA); National Association of Home Builders; Nareit; National Association of Realtors; National Association of Residential Property Managers; National Housing Conference; National Housing & Rehabilitation Association; National Leased Housing Association (NLHA); National Multifamily Housing Council (NMHC); and The Real Estate Roundtable.
According to the letter, research has shown that mandatory rent control is a failed policy that does not address the root causes of housing affordability issues and disincentivizes multifamily housing investments across markets. It also states that rent regulation is not equitable and does not target renters who are most in need of support and housing stability.
“Decades of research has shown time and time again that mandatory rent control is not effective in facilitating the building of needed homes,” says NMHC president Sharon Wilson Géno. “It only exacerbates housing affordability among the communities it effects and worsens housing availability and equity for generations to come. Moreover, it supports mostly upper-income households that do not need the assistance.”
NAA senior vice president of government affairs Greg Brown echoes the sentiment. “For decades, rent control has proven to be a poor policy option proffered to address the nation's very real housing affordability challenges. As the voice of housing providers of all portfolio sizes and backgrounds, NAA proudly stands alongside industry leaders calling for balanced, responsible policy solutions from the Biden administration and policy makers at every level of government,” he says. “Rent control does not build a single unit of desperately needed housing, nor is it directed at those renters in need of support.”According to the letter, if the FHFA implements rent control, it would be contrary to the goals and missions of the GSEs to create more affordable housing opportunities for low- and moderate-income households.
“The GSEs play an important role in creating affordable housing opportunities for low- and moderate-income residents and have been an important financing tool for NLHA’s members,” says NLHA executive director Denise Muha. “However, the FHFA proposal to impose rent regulation as a condition of financing would disincentivize housing investments. Such mandatory rent control will create instability in the market and reduce, not increase, the supply of affordable apartments.”
The letter also makes a plea for more investments in the programs that have helped boost housing supply and lower costs.
“For decades, federal, state, and local governments have failed to invest in housing or otherwise remove regulatory barriers which has limited housing supply. Voluntary programs that incentivize and subsidize more affordable housing opportunities, such as Section 8, the low-income housing tax credit and zoning reforms, need to be enhanced and expanded,” says Wilson Géno. “The only way we can meet the needs of our growing population, especially those that need housing assistance, is by focusing on expanding housing supply today. We call on Congress, and state and local lawmakers, to act quickly on such measures.”