The Biden administration is poised to introduce a new rule that will cap rent increases at 10 percent per year for specific federally subsidized affordable housing units as part of a tax credit program to aid low-income households. 

This policy is expected to impact over a million homes. While tenant advocates have celebrated the measure for providing protection against steep rent hikes, it has also sparked debate among housing experts who fear it may deter developers from adding more affordable units to the housing market.

Critics argue that the rent cap could further complicate the already challenging landscape for building affordable housing, especially considering rising construction and insurance costs. However, supporters see it as a crucial step towards integrating federal funding with tenant protections, potentially stabilizing millions of tenants in their homes. 

Despite the mixed reactions, the administration maintains that the new cap will not hinder the supply of new affordable housing, pointing to historical evidence and ongoing evaluations of income and housing data by the Department of Housing and Urban Development (HUD). 

Nonetheless, some industry leaders caution against relying too heavily on past trends, given the current economic volatility and the critical housing shortage in the U.S. The move comes amid broader housing initiatives proposed by Biden and ongoing concerns over the impact of high rents on inflation and the affordability crisis facing lower-income Americans.