Here’s what the rental housing industry can expect from the new, divided U.S. government.
December 15, 2022 |
Updated January 3, 2023
While Republicans, as predicted, will take over control of the House of Representatives in 2023, no one foresaw a razor-thin four-seat majority (222–213). In the Senate, Republicans were only given a roughly 50/50 chance of taking the chamber, but few expected them to not only pick up zero seats but lose an incumbent seat when Pennsylvania Lt. Governor and Senator-elect John Fetterman defeated Mehmet Oz to replace retiring GOP Senator Pat Toomey. This pick-up gave the Democrats their majority, which was further padded with the Georgia runoff when Senator Raphael Warnock (D) won re-election over challenger Herschel Walker (R). The widely assumed red wave never reached shore, but it only takes 218 seats in the House to secure a majority, so despite the narrow margin, a divided government returns to Washington next year.
Much work remains to be done – maybe – before sine die adjournment. Chief among that work is funding for the federal government. Without an end-of-the-year budget bill, Congress will have to pass a temporary “continuing resolution” that only extends current funding for all departments, including Defense, State, HUD, etc., into some point next year. Other “must-pass” items are the National Defense Authorization Act, the National Flood Insurance Program, domestic disaster relief and support for the Ukrainian war effort.
While it is not a sure thing, chances seem high that all of these items as well as some expiring tax provisions could be combined into one “omnibus” legislative package and sent to the President before the end of the year. Should a deal be in the offing, the National Apartment Association (NAA) is pressing Congress to attach key proposals to address housing affordability, including reforms to Section 8 in the Choice in Affordable Housing Act as well as removing local barriers to development.
What can we expect from a divided government?
Is this good or bad for providers of rental housing? No surprise, the proverbial bag is mixed. Controversial legislation will have a hard time passing either chamber, which could block bad bills, but also make the pathway harder for legislation NAA supports. Depending on how the end of the year shakes out, NAA could continue its quest for reforms to Section 8, an end to the CARES Act notice to vacate requirement and more federal intervention to reduce development barriers.
As it has been discussed before, divided government means that federal regulatory activity is ascendant. And, based on recent activity by the White House, we can expect the Biden Administration to pursue its agenda via HUD, the Federal Housing Finance Agency, the Consumer Financial Protection Bureau, the Federal Trade Commission and the Department of Justice on matters like fair housing, resident screening, evictions, anti-price fixing or even, anti-price gouging regulations and more. Be assured, however, that the new Republican majority in the House will be conducting aggressive oversight of regulatory activity by the administration.
What the industry is doing
Speaking of the Biden Administration’s agenda, NAA, alongside a wide coalition of rental housing advocacy organizations, continues to speak directly to White House policy leaders about the impacts of imposing federal landlord and tenant protections. NAA Chair of the Board Don Brunner, NAA President and CEO Bob Pinnegar and members of the NAA government affairs team have participated in two calls organized by the Domestic Policy Council and including representatives of HUD, FHFA and other regulators.
The goal of these discussions is to address housing instability through so-called “resident-centered property management practices.” NAA is helping the Administration understand how rental housing functions and the real-world impacts of proposals like extended notice periods on the operational and financial stability of these communities. We expect the discussions to continue with some proposal to come from the White House in the not-too-distant future.
There are still many unknowns about how the 118th Congress will function with such stark differences between the new GOP majority in the House and the Democratic majority in the Senate. As well, we only presently have clues as to where and how the Biden Administration will seek to execute its policy agenda for housing. In both arenas, NAA will navigate these unchartered waters using all of its assets to ensure the perspective of rental housing providers is clear in the minds of policymakers.
As always, your participation in that effort is crucial. There are myriad options for any member of this industry to contribute and do their part. To learn more, contact [email protected], NAA’s Senior Manager of Grassroots Advocacy & Stakeholder Engagement.
Greg Brown is NAA SVP, Government Affairs & Nicole Upano is NAA AVP, Public Policy & Regulatory Affairs