On January 25, the White House released a 19-page document titled, “A Blueprint for a Renters Bill of Rights.” Prepared by the Domestic Policy Council and National Economic Council, this blueprint is divided into five principles, outlining goals for improving conditions for renters and steps to get there. These five principles are:
- “Access to safe, quality, accessible and affordable housing.”
- “Clear and fair leases.”
- “Education, enforcement and enhancement of rights.”
- “The right to organize.”
- “Eviction prevention, diversion and relief.”
The document’s text makes clear that it is not legislation or legally binding. The prescribed legislative or administrative actions are also bound to face hurdles in Congress and the Judiciary. While the Renters Bill of Rights is unlikely to have an immediate impact, the text provides insight into the Biden administration’s goals and likely approach to intervention in the rental market.
Industry reaction has been split. NAR believes relief efforts would be better directed towards generating more affordable housing supply and direct rent assistance.
“Federally enacted policies can potentially drive housing providers out of the market,” said NAR President Kenny Parcell, ”which will have an immediate and long-term impact of making rental housing even more competitive and, therefore, more expensive for renters.”
The National Association of Home Builders (NAHB) concurred with NAR, calling this document “the wrong strategy.” Stacey Johnson-Cosby, a REALTOR® and landlord based in Kansas City, Missouri who serves as the president of the KC Regional Housing Alliance (a local landlord/“housing provider” advocacy group), was also critical of the proposals in an interview with RISMedia.
“The goal of REALTOR® organizations is to protect private property rights and encourage homeownership,” said Johnson-Crosby. “This bill does the exact opposite.”
Conversely, Diane Yentel, president and CEO of the National Low Income Housing Coalition, praised this blueprint as a positive first step: “It’s the first time in decades, I think probably the first time since the Great Depression, that the federal government is acknowledging that there could be an important federal role in preventing rent-gouging.”
However, Yentel added that she would prefer more aggressive action: “ not actually implementing these new protections now. They’re not even committing to ensuring that they will. They’re only committing to a process to consider such protections.”
Here are some that these ideas could reverberate back on the real estate industry, including agents and brokers.
Renters can become homebuyers
The five principles outlined all indicate a singular goal: lower rents. This goal comes as a response to the current rental market, which has seen a steady rise in rates paid by tenants and only recently slowed. Despite its own challenges and costs, renting remains more affordable than buying a house.
Should rent rates drop, that could incentivize potential buyers to opt out of homeownership in favor of renting. Johnson-Cosby agreed, saying, “These tell people, ‘You’re going to be a tenant forever,’ can reduce the pool of homebuyers. The way I’m combating that is I’m doing more homebuyer workshops, targeting courses towards renters.”
On the flip side, reports say that many Americans are spending at least 30% of their income on rent, an all-time high. In the face of these costs, it becomes more difficult for people to build up the savings to buy a house–so an obvious remedy for this is lower rents.
A more open renting market is sure to impact your customer base size one way or the other, which is all the more reason to pay close attention to the way that market shifts.
New HUD inspection standards
One of the stated “Principle To Practice” goals of the Renters’ Bill of Rights is to improve housing quality. To that end, HUD will be launching a new inspection standard for homes come the 2024 fiscal year, dubbed NSPIRE (National Standards for the Physical Inspection of Real Estate). FHFA, Freddie Mac and Fannie Mae will also be updating their diligence standards for radon testing.
There is no mention of a plan to make these standards the law of the land in the private sector. However, that’s not to say agents or home inspection companies can’t use the NSPIRE standard as a guideline. Home inspections can make or break a deal, so extra due diligence is always a good idea.
Preventing housing discrimination
The Renters Bill of Rights’ third principle outlines new ways the government plans to prevent housing discrimination, citing difficulties with which Black, Latino and disabled people and domestic violence survivors face in finding rental housing. For instance, the Consumer Financial Protection Bureau (CFPB) will institute new guidelines and oversight on tenant background checks to ensure compliance with the law.
The document’s third “From Principle to Practice” section outlines this new oversight. The CFPB will work with both the Federal Trade Commission (FTC) to ensure background check companies maintain “reasonable procedures” and report accurate credit information. These two agencies will work alongside HUD, the Department of Agriculture (USDA), and the Federal Housing Finance Agency (FHFA) to release guidelines on “best practices” for tenant screenings and urge property owners to adhere to them. HUD is likewise investigating ways that tenant screening algorithms may violate the Fair Housing Act and will publish new guidelines based on its findings.
Johnson-Crosby feels that limiting landlords’ ability to deny renters based on past payment/eviction histories, source of income (such as Section 8 vouchers), or criminal records constitutes an expansion of “protected classes.” She feels, in turn, that this will cause an undue burden on property owners’ abilities to collect rent.
“There are three categories they want to add to the protected classes that, for us locally if you were found guilty of them, means a fine or jail time,” Johnson-Crosby said. “If you’ve been previously evicted, we couldn’t use your eviction records or payment history records to determine if you would pay us.”
Information sharing
The bill’s first principle discusses ways to increase rental housing affordability. When discussing strategies thereof the bill mentions that the Department of Justice (DOJ) is consulting both legal and tech experts on ways information sharing may be anti-competitive in “consumer-facing markets.
The implication is that information-sharing is creating a renters market slanted against consumers. In 2022, Texas software firm RealPage was accused of colluding with property managers to price-fix rents. This has resulted in an ongoing class-action lawsuit.
This planned crackdown on information sharing reflects a pattern of more aggressive antitrust enforcement by the Biden Administration than other recent administrations. For example, the DOJ filed an antitrust lawsuit against NAR, Zillow and Trulia in 2021. Now, that case seems to have been resolved in the defendants’ favor. However, the Renters’ Bill of Rights’ citation of information-sharing as an affordability impediment indicates a continued hunger for undoing potential monopolization in housing markets.
Changing negotiations
If you’re a real estate investor or owner leasing your property, the way you negotiate with your tenants could change per The Renters Bill of Rights. It outlines a restructuring of landlord-tenant communication. In accordance with the document’s fourth principle, “the right to organize,” the document includes the promotion of Tenant Unions, where member renters can collectively bargain with landlords on anything from maintenance to eviction.
The report cites the Department of Defense’s Tenant Bill of Rights, which mandates a “supplemental plain language briefing” be used alongside leases, to ensure tenants understand what they’re signing. The fifth principle in the document, covering evictions, states that tenants must be given 30 days notice before eviction and have the right to counsel during that time.
Johnson-Cosby says she believes landlords would support these principles as common sense measures, concluding, “ need to tell us that…We want our customers to be happy with the property, then the better we all are.”
