This is idiocy: Biden to call for 5% cap on annual rent increases, as he tries to show plans to tame inflation
They can temporarily hold prices, which leads to less investment (money will go where the best returns are available), leading to fewer new housing units – which leads eventually to worsening housing shortages and eventually higher prices.
Price controls sound good to not very bright voters who live in rental properties and this is a short-term attempt to prop up Biden’s election potential, just as are his repeated attempts to transfer educational loan debts to blue collar taxpayers.
Some rental price controls still allow respectable price hikes. Oregon still permits hikes up to 10%+inflation rate (I think, it was this for a while but haven’t kept up if they changed it again). They enacted this after a rental company completely renovated very old apartments into modern apartments, and then raised their rental prices by something like 50%+ (or more) as they were no longer the same building. The state responded by enacting statewide rental price hike limits. A side effect is this discourages property owners from improving their properties over time. This has been seen in other jurisdictions that enacted rules like this – and the result is that over time, the rental stock becomes lower quality.
There’s no magic to this – its basic microeconomics.
