In a move designed to ignite enthusiasm among progressives, President Biden is proposing a 5 percent rent cap policy — along with several other measures aimed at addressing housing affordability. While Mr. Biden is now a lame duck, the push for a rent cap won’t end with him — his replacement on the Democratic ticket backs the idea, too. 

Vice President Harris in July signaled her support for a rent cap, hailing the White House’s “actions to limit rent increases.” She has also displayed support for rent caps in the past — sponsoring a bill in 2020 that proposed capping rent increases from landlords with 50 or more units at 5 percent. The plan may score political points in the short term, but it ultimately represents a policy bridge to nowhere.

The problem facing renters is real. National rents are more than 30 percent higher than just four years ago, according to Zillow. However, this statistic masks important nuances. From 2016 until the onset of the pandemic, rents increased at an average annual rate of 4 percent. 

This trend was significantly disrupted during the pandemic, with rents spiking by an average of 13 percent in 2022. While rent increases recently moderated to around 3.5 percent, they remain at levels that strain household budgets — especially given that income growth has not kept pace.

Understanding these trends hints at the root causes of the problem. It is not corporate greed, but rather misguided policies enacted during the pandemic that are to blame. These include the Biden administration’s expansive unemployment benefits, stimulus checks, and student loan forgiveness, along with the Fed’s zero interest rate policy and its purchasing of trillions of dollars in government-backed home loans. 

All of these policies led to widespread inflation, particularly in home prices, which are almost 50 percent higher than four years ago. Given that homes serve owner-occupants or renters interchangeably, rising home prices naturally drove up rents as well.

The housing market, like any other market, operates under the laws of supply and demand. For decades, America has underbuilt housing, resulting in a shortfall of millions of units. Pandemic stimulus measures increased demand in this already supply-constrained market, driving rents even higher.

The Biden-Harris rent cap proposal seeks to address the effects of past policy mistakes with new ones. This proposal overlooks well-established economic principles. Research has consistently shown that rent control exacerbates housing shortages, a point on which most economists, including those left of center, agree. 

In a 1992 poll from the American Economic Association, 93 percent of members agreed that rent ceilings reduce the quality and quantity of housing. A former economic advisor to President Obama, Jason Furman, stated after the proposal’s release: “Rent control has been about as disgraced as any economic policy in the tool kit. The idea we’d be reviving and expanding it will ultimately make our housing supply problems worse, not better.”

The proposal is just another plank of the Biden-Sanders Unity Agenda. The administration already introduced federal rules to curb evictions in public housing, capped rent hikes for properties built with federal tax credits, and initiated expanded tenant protections for rental properties with federally backed mortgages. 

Rent control creates distortions in the rental market and leads to inefficiencies, such as tenants being unwilling to move or downsize due to the benefits of a rent-controlled unit. Importantly, rent control also negatively affects property maintenance, as landlords may have less incentive or financial ability to keep up and improve their properties.

The administration claims the rent caps will be targeted, with new construction exempt and the program being temporary. However, programs like these rarely fade away once established; instead, they often expand. 

Mr. Biden’s student loan debt forgiveness program, say, has grown to more than $400 billion. As President Reagan famously quipped, “The closest thing to eternal life on Earth is a government program.” This suggests that temporary measures can quickly become permanent fixtures in policy.

Ultimately, the solution to stabilizing rents lies not in more regulations, but less. Government actions at all levels — federal, state, and local — have constrained the market’s ability to build more housing. While Mr. Biden’s proposal to open up some federal land for development is a step in the right direction, it is limited to a few affordable housing units, which tends to constrain rather than expand development.

Instead, the federal government should auction off more land for market-rate development, reduce building costs by lowering tariffs on lumber, ease energy standards for new appliances, and reform labor regulations. With his real estate background, President Trump should understand the detrimental effect such policies can have on the construction sector and support market-based policy solutions to address the housing crisis.

For skeptics, consider the differences in the approach and outcomes between the twin cities, St. Paul and Minneapolis. When St. Paul voters enacted rent control in 2021, the city saw a significant drop in new housing permits, forcing the city council to reconsider its policy. Conversely, Minneapolis liberalized land use regulations in 2020, allowing more housing to be built, which has led to declining rents.

The Biden-Harris rent cap proposal risks worsening the housing crisis. A more effective solution lies in enabling market mechanisms to increase housing supply and implementing targeted regulatory reforms to reduce the cost of new construction. 

State and local governments must lead the way, undeterred by federal policies that threaten to undermine their efforts. By focusing on reducing barriers to development and encouraging private investment, we can create a more sustainable and affordable housing market for all.

This op-ed was co-authored with Edward J. Pinto, an American Enterprise Institute senior fellow and co-director of the institute’s Housing Center.