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Tenant advocates are asking the White House for help in curbing what they call \\u201crent inflation.\\u201d A coalition of tenant unions, community organizations, and legal groups is asking the Biden administration to declare a state of emergency and investigate ways to regulate rents. As reported by the Washington Post, these groups want the government to address rent growth with the same urgency as it has with high gas prices. (1)

Hi, I\'m Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

The coalition sent a proposal that would involve six government agencies for an \\u201call-out government intervention\\u201d on rent inflation. The Consumer Price Index shows that overall annual inflation hit 9.1% in June, which is a 40-year high. That includes food and energy, which helped drive that number to a record high, along with housing costs.

According to data firm Yardi Matrix, the year-over-year rate of inflation for multi-family rents was 12.6% in July. For single-family detached homes, CoreLogic reports that the annual rate was 12.8% in June. And some hot rental markets have seen much higher rates of rent growth, such as Miami with a June year-over-year reading of 35.5% for single-family homes.

On economist told the Post that it\\u2019s important that policymakers address the issue of high prices for necessities. He says: \\u201cAt this point, we\\u2019re talking about food, gasoline, and housing.\\u201d

Call for Immediate Action

Just recently, the Biden administration addressed the high price of gas with a release of oil from the national reserve. Congress was also asked to consider a gas tax holiday, but that hasn\\u2019t materialized. The coalition says the high price for housing is also an economic crisis and needs the same kind of attention.

It wrote in a memo: \\u201cWe urge the President to act immediately to regulate rents, as part of the Administration\\u2019s efforts to curb inflation, and as a critical foundation for long term protections to correct the imbalance of power between tenants and their landlords.\\u201d

The appeal is part of an effort called \\u201cHomes Guarantee\\u201d which has a website. You\\u2019ll find a link in the show notes. The main message is: \\u201cEveryone living in the United States should have safe, accessible, sustainable, and permanently affordable housing: A Homes Guarantee.\\u201d It says that \\u201ccurrently, a team of 75 directly impacted tenant leaders representing over 25 organizations are building our federal campaign with a focus on executive and agency actions to regulate rents and address the rent inflation crisis.\\u201d

Potential Rent Regulations

In addition to the emergency declaration, the coalition wants President Biden to convene a cabinet-level interagency task force to identify possible rent regulations. The document mentions enforceable affordability, quality housing standards, and legal representation for tenants facing eviction.

The agencies it calls upon to help impose these regulations include the Federal Housing Finance Agency, the Federal Trade Commission, HUD, the Securities and Exchange Commission, The Department of the Treasury, and The Consumer Financial Protection Bureau.

High Rents Due to Housing Shortage

Although there are some landlords who impose unreasonable rent increases, it\\u2019s not just greedy landlords who are at fault. As the Post reports, one of the big reasons for the high cost of housing is the housing shortage. The U.S. needs as many as five million more residential units to meet demand.

The White House has introduced a \\u201cHousing Supply Action Plan\\u201d which would close the gap in another five years. But that doesn\\u2019t help tenants right now. The Federal Reserve is the one that is tasked with bringing down inflation, and it\\u2019s doing that with incremental interest rate hikes which don\\u2019t target the housing market specifically.

The Value of a Good Tenant

Many of the mom and pop investors we work with at RealWealth know the value of a good tenant and the results of fair rent levels. Although rent increases are often necessary for a rental business to remain in operation, it\\u2019s not wise or even ethical to impose unrealistically high rents on tenants.

We just put together a Conscious Capitalism statement at RealWealth that addresses that issue. Conscious Capitalism refers to a socially responsible economic and political philosophy. At RealWealth, we believe that landlords need to be sensitive to tenant needs, and that above market rent increases do not show sensitivity.

They can also lead to highly restrictive rent controls which is what this coalition would like to see at the federal level. If you are a landlord, or even a tenant, you must know that rent control is bad for everyone because it limits what landlords can do to maintain their properties for the tenants\\u2019 wellbeing. And it discourages landlords from wanting to remain in business, which is bad for the housing supply.

As RealWealth Investment Counselor, Joe Torre, said in our Conscious Capitalism statement: \\u201cIf you try to squeeze every last dollar of rent from them, the good tenants will leave, and you\\u2019ll be stuck with the tenants who don\\u2019t have any other options.

You\\u2019ll find a link to the Washington Post article, and the Home Guarantee website in the show notes at newsforinvestors.com. If you\\u2019d like to learn more about owning single-family rentals, please hit the join link at the website. And please remember to hit the subscribe button, and leave a review!

Thanks for listening. I\'m Kathy Fettke.

Links:

1 - https://www.washingtonpost.com/business/2022/08/09/rent-inflation-biden/

2 -https://peoplesaction.org/wp-content/uploads/2022/08/Federal-Actions-to-Regulate-Rents_V3a.pdf