Rent control is the name given to a broad class of ordinances or laws that seek to restrain rent increases according to a predetermined formula calculated by a government or non-profit rent control board. The motivation is to help low-income households remain in areas experiencing price increases.
Rent control was repealed in Cambridge in 1994, but some legislators want to bring it back. Contact your representatives and ask them to stop local control of housing policy.
Rent control was outlawed in Massachusetts in a 1994 referendum.
Current Session: 2021 - 2022 Session (192nd)
- Boston Stalls on Rent Stabilization Advisory Committee (RSAC) Public Records Request
- Talking Points: The Legislature Needs to Hear from You opposing Local Control of Housing Policy
2019 - 2020 Session (191st)
- H.1316 An Act relative to the stabilization of rents in towns and cities facing distress in the housing market. MassLandlords opposes.
- H.3924 An Act enabling local options for tenant protections. MassLandlords opposes.
What Rent Control Supporters Say
Advocates say that rent control is needed to help low income households remain in their communities. They say that keeping such families in their original communities tends to increase diversity of neighborhoods, stabilize families, and prevent gentrification.
- Related Article: Patricia Cantor, Shelterforce Online, March/April 1995, "The tenants lost the war to save rent control. How did it happen?"
What We Know About Rent Control
One survey of real econometric data was written in 2009 by the Massachusetts-based American Institute for Economic Research.
- Scholarly Article: Rent Control: Do Economists Agree?
This work focused on the effect of rent control in many areas:
- Allocation of units
- Availability of units
- Effect of controls on controlled rents
- Effect of controls on uncontrolled rents
- Administrative costs
Highlights of the survey:
Allocation of Units
Estimates of misallocation (meaning, living in a space too large or too small compared to the ideal one) ranged from 11% to 21% of renters in the case of first generation controls, meaning, absolute price locks. In these cases, tenants stayed on average 18 years longer than identical tenants in market rate apartments (p. 91 - 92). Correlation with age, race, and income level reduced the significance of this difference in one study.
Many researchers found that maintenance declined overall by single digit percentages, but the evidence did not seem to offer incontrovertible proof. In some locations and for some types of maintenance the effects were pronounced, in others not so. Pre-1947 buildings in Manhattan, for instance, were found to be 8.96% more likely to be unsound than their equivalent uncontrolled counterparts. New buildings showed no difference. One study found that an average 3% benefit in rent was offset by an average 2% penalty in reduced maintenance (p 95).
The clearest data here come from Cambridge and Boston during rent control and decontrol in the 70's and then 90's. Landlords converted rental housing into condominiums. Whereas 75% of units were renter-occupied in 1970, only 66% were in 1980. In the 90's, the end of rent control was "associated with a 6 percentage point increase in the probability of a unit being a rental." In Boston alone, a 6% loss would equate in today's terms to a loss of 16,000 rental units (based on the 2020 census 269,522 households in Boston).
Effect of Controls on Controlled Rents
In places with absolute price locks, there was a substantial subsidy that came from living in a controlled apartment, in one study, 27% of annual household income.
In places with rent stabilization (maximum increases), controls affected the timing but not the total amount of rent paid. Landlords set the initial rent level under a vacancy allowance and tenants mistakenly chose higher initial rent in exchange for smaller price increases. In fact they ended up paying the same total rent over time (p. 95 - 96).
In addition to this, even without vacancy allowances, the whole effect was "to shift the supply curve back," meaning to reduce unit availability.
According to one study, "The average estimated benefits are -$4 [a loss, in 1995 dollars] per month for households in ‘old style’ rent controlled housing and -$44 per month for households in rent stabilized apartments. This implies that, on average, households in regulated units would have been better off if rent regulations had never been established in New York City."
Effects of Controls on Uncontrolled Rents
Here there was mostly agreement that rent control increased the rent of uncontrolled apartments. The lowest data point was 13% immediately, diminishing over time. The highest data point was 46% after two years.
In some specific cases, uncontrolled buildings did experience reduced rents. This occurred when the building was near a rent-controlled building that was not being maintained.
- Related Data: Zumper High-End Apartments Priciest in San Francisco, New York, Cities with Rent Control
Some studies said rent control helps, others said it hurts. There was no clear signal.
These were negative. In the case of New York City rent-stabilized apartments, which approximated what the market was going to do anyway, the effect was pure waste. In the case of Cambridge in the 70's, the cost was $40 per year for each of the 18,000 apartments under control. In today's dollars, the taxpayer cost of the same program would be $4.4 million annually.
Our favorite quote from any economic review: "Measurements of administrative costs remind us that bureaucracies are a player and an interest group." Or as one cynic put it, "There's a lot of money in poverty."
Alignment with Low-Income Renters
There was strong evidence that targeting was poor. Whereas a Section 8 voucher could be assigned directly to a low-income household, rent controlled apartments were available to all. During Massachusetts' rent control years, 30% of rent-controlled apartments were occupied by households in the upper half of the income distribution. Landlord preference for less risky tenants played a role in the unfair distribution of benefits.
Paul Krugman, New York Times, Reckonings; A Rent Affair
The above survey did not address whether rent control helped or hurt racial equality. The Urban Institute ("Rent Control: What Does the Research Tell us about the Effectiveness of Local Action") has compiled some papers indicating that racial equality can be helped or harmed by rent control.
Sims 2007 showed that rent control in Massachusetts resulted in only 12% of renters of color occupying rent controlled units, even though 24% of the residents in those cities were residents of color, implying an adverse disparate impact against renters of color.
Likewise, the Economist provides a confirmatory dataset for Massachusetts ("Rent Control: The Morning After"). When rent control was repealed, the number of people of color in formerly controlled housing doubled to be equal to what you'd expect based on the city population.
Rent Control Talking Points
As a public policy, we believe rent control has several flaws:
- It leads to the decline of housing quality.
- It discourages good people from becoming landlords.
- It tends to increase prices in the very neighborhoods it was meant to help.
- It is regressive and causes disparate impact.
- It increases the tax burden of single family owners.
Flaw 1: Rent Control Leads to the Decline of Housing Quality
Owners of private property in a free market must be able to do four things that rent control outlaws or severely restricts:
- Set rent prices
- Deliver up for sale a vacant building
- Conduct major repairs or renovations
- Use the property in ways not expressly envisioned by the laws or ordinances (e.g., create an on-site office or storage space)
These rights are important to the workings of our free economy.
First, price negotiation must take place in the market, where participants are free to agree or not to agree based on the information available to them. Landlords may want higher rent to offset a history of being rough on units. Tenants may want lower rent to compensate for old cabinets. Setting prices or price increases in a Soviet-style central office doesn't work, and tends to err on the side of rents that are too low to maintain a building.
Second, real estate markets sometimes require buildings to be empty upon sale. This is partly because the new landlord doesn't trust the old landlord's screening and tenant selection. Other times it's because the building will be renovated or reworked somehow.
This brings us to the third right. Sometimes buildings require serious renovations. A collapsing floor, a new elevator, or efficiency upgrades may require units be empty for months. Buildings that are never emptied drift forward through time like little bubbles of the 1950's, 60's or whatever decade they were last refinished.
The fourth and final right is the most important, and is most severely abrogated in specific types of rent control called "just cause eviction." By specifically legislating what one can do with a property, such "just cause" restrictions eliminate all innovations and freedoms that are yet to be discovered. As a matter of principle, laws should be written as restraints, not as permissions.
- On average, older rent controlled buildings may be up to 8% more likely to become unsound.
- For every 3% reduction in rent, there is a 2% penalty for reduced maintenance.
Those four rights are essential to the operation and maintenance of properties. The effect of rent control is to push these properties into decay or obsolescence.
Flaw 2: Rent Control Reduces Housing Supply
Tenant advocates want "stability." Through "just cause eviction" or "rent control," they want to give moral, obedient tenants an indefinite claim on the property they rent. They aim to create a kind of indefinite lien, a tenancy-ad-infinitum.
The average market tenancy is about two years, whereas the average rent control tenancy is about 20 years. Once you get a rent controlled apartment, you don't want to leave and you cannot afford to leave. Those units are effectively off the market.
Furthermore, the loss of rights and economic opportunity for landlords is not lost on current owners and prospective owners. Unlike renters under rent control/just cause eviction, who have an indefinite claim on their housing, owners have no such claim. Owners can lose their home if they fail to pay increases to their taxes, insurance, utilities, or mortgage, none of which are themselves controlled against inflation. Owners have no permanent right to remain in their home if these expenses increase. The city will raise taxes, or water and sewer rates, and the owner must pay. The bank may issue an adjustable rate mortgage, and if the rate increases, the owner must pay. It is easy to create situations where a property is worth nothing as a going concern because the rents coming in do not cover the required expenses.
Under rent control, tenants would be insulated from all market forces. They would also be insulated from all legal forces not expressly contemplated in the rental agreement or approved by the rent control board. The smartest people would therefore choose to rent.
Rent control sends a clear message that smart people should not become landlords.
- Notable MassLandlords members have already shifted their portfolios out of Massachusetts just because of current laws, nevermind rent control.
- Under the unfunded eviction moratorium, a form of price setting, the number of units being held vacant for reasons other than renovation, rent, or sale has doubled.
Flaw 3: Surprisingly, Rent Control Tends to Increase Rent Levels
Basic supply and demand requires that as supply decreases, prices will increase for a given demand. Take any neighborhood, remove some of the units from the market, and the remaining units will command a higher rent.
As described above, rent controlled apartments are so desirable that few ever leave them. These units are effectively removed from the marketplace, and the remaining uncontrolled units are the only "supply" left to meet housing "demand."
- Reenacting rent control could be expected to remove 20,000 units of housing from the metro Boston market over the next ten years.
- Studies of rent control in other areas have shown average rent increases of between 13% and 46% for uncontrolled units.
Flaw 4: Rent Control is Regressive and has a Racist Disparate Impact on People of Color
Advocates of rent control argue correctly that passing rent control (especially with just cause eviction) will keep people of color in their apartments longer. But that's only true for people lucky enough to have housing when the law is enacted. Rent control hurts everyone else forever after, some of us more than others.
Under rent control in the 1970’s, one-third of rent controlled housing went to the top half of income earners. David Sims published a paper in 2007 that showed rent controled units in Massachusetts were occupied by renters of color only 12% of the time, even though 24% of the residents in those cities were residents of color. This implies an adverse disparate impact on the basis of race.
The adverse disparate impact is specifically because of rent control. When rent control was repealed, the number of non-white residents of formerly controlled housing doubled right back to where you'd expect it to be (The Economist, 1998). How can this be?
Normally, landlords can increase rent to offset perception of risk, including credit, income, and criminal history for marginal applicants. Under rent control, especially with just cause eviction, landlords hold units vacant longer waiting for applicants with high credit, high income, no history of minor criminal record, and no eviction history. But in Massachusetts no less than America, systemic racism disadvantages people of color on rental applications in all four metrics:
- The Economic Policy Institute shows 2018 median household income was $41,692 for black households and $70,642 for white households.
- ApartmentList shows black households are twice as likely to be evicted as white households.
- The Urban Institute shows 21 percent of black households have a FICO credit score above 700, whereas 50 percent of white households do.
- And a report from the Sentencing Project shows African Americans constitute 53 percent of drug convictions, despite representing 14 percent of drug users.
Despite strong protections in Massachusetts against personal discrimination, rent control and just cause eviction worsened systemic racism. This in fact was predicted in 1985 by a Finn economist Heikki Loikannen, whose seminal article "On Availability discrimination under rent control," provides the theoretical proof for the above data.
- In the 1970's, a third of rent controlled tenants were in the top 50% of household income.
- When rent-control was repealed, "the number of non-white tenants in formerly regulated units has actually doubled" (Economist)
- Rent controlled apartments went preferentially to the wealthy and well-to-do, including Cambridge Mayor Ken Reeves and SJC Judge Ruth Abrams.
Rent control will help every renter lucky enough to have an apartment when the law passes into effect, but will make it more difficult for all future renters moving to or within Massachusetts. People of color will tend to be unfairly and disproportionately impacted.
Flaw 5: It Increases the Tax Burden of Single Family Owners
Real estate taxes are levied on assessed value. Assessed value is driven by market prices from the last few years. Market prices for income properties are driven, in part, by rent levels. Lower rents therefore contribute to lower real estate tax revenue.
Municipalities that enact rent control and that also seek to balance the budget must eventually raise taxes on businesses and single family owners. This assumes all else remains equal. In communities with high percentages of residential owners, the tax burden would fall squarely on them.
- Related Page: Massachusetts Dual Tax Rates: A Case Study in Worcester
This again is something that few tenant advocates would want. Most would agree that landlords should have to pay according to the density and the people living in their units. But as rent control keeps rents artificially low, it shifts the municipal burden away from landlords. In most Massachusetts communities, this burden would fall heaviest, in terms of percentage increases, on single family owners.
- The Cambridge budget for 1970's rent control was $700,000 annually. In 2015 dollars that would be over $4 million annually in additional administrative costs to be carried by the tax base.
Rents are a Symptom, not the Cause
High rents are a symptom, not the cause of the problem. You might go to the doctor thinking something is wrong with your foot, but wouldn't you be surprised to learn that you have unmanaged diabetes. Economists have been trying to tell us for decades that we have unmanaged zoning problems. Or to use a different medical analogy:
Paul Krugman wrote in a June 7, 2000 opinion piece in the New York Times, Reckonings; A Rent Affair, "people literally don't want to know. A few months ago, when a San Francisco official proposed a study of the city's housing crisis, there was a firestorm of opposition from tenant-advocacy groups. They argued that even to study the situation was a step on the road to ending rent control -- and they may well have been right, because studying the issue might lead to a recognition of the obvious."
- California’s Prop 10 Fails, Rent Control Checked at Cost of $100 Million (November 2018)
- Related Article: Attorney Schrier Discusses the Tenant Protection Act aka Rent Control
- Related Article: Tenant Protection Act (Rent Control) Full Analysis: An Act Enabling Local Options for Tenant Protections, 191-H.3924-HD.1100
- Related Page: Just Cause Eviction
- Related Article: Rent Control Grows in San Francisco
- Related Article: Four cases of rent control abuse
- Related Article: California’s Prop 10 Fails, Rent Control Checked at Cost of $100 Million
- Related Article: Oregon Rent Control now Statewide: Full Analysis
- Related Article: Rent Control Redux? The $64,000 Question (aka the Bologna Story)
- The Economist, "Rent Control: The Morning After", April 30 1998
- NMHC, "The High Cost of Rent Control"
- In first months since passage of St. Paul’s rent-control ordinance, housing construction is way down, MinnPost, Bill Lindeke, March 10, 2022
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Webinar: Rent Control: Theory, History, and Talking Points for Massachusetts
Rent Control Theory History and Talking Points
Douglas Quattrochi - Doug
At this afternoon's webinar, we will be giving an introduction about what the purpose of rent control is, the history of rent control in the United States, and then we can share some data from Massachusetts’ own experience with rent control. I will leave the slides at approximately the 35- or 40-minute mark and we will show actual bill text and I’ll comment on that and then we'll deal with Q&A that have been submitted if there are any. All right, so let's get started.
The big idea with rent control is basically it's obvious, right? If the rent can only increase so much in a given year or per time then I can't be evicted for non-payment as a renter even if my wages or my pension or my retirement or whatever isn't increasing at the same rate as local market rents, so that's why a lot of folks want rent control. It seems to be just an intuitively obvious thing but was really difficult in the policy space with all kinds of things housing and climate and all kinds of stuff there are sometimes some really non-obvious consequences to a law or policy, and in Massachusetts we have a lot of data that show what those consequences are because we did have rent control for a period of about 20, 25 years, and so we'll explain all of that in this webinar.
First, let's just do a little basic economics. Economics 101 of supply and demand is a phrase i think most of us will be familiar with. The basic idea is that you can have changes in supply or changes in demand and either of those changes can impact prices so for instance, if you have everything else being held constant and you just add a bunch more apartments to the rental market you would expect rent to go down because availability is higher. That's just a supply and demand economics prediction and likewise if you were to take a bunch of apartments off the market, people would be willing to pay more and more to get access to the fewer and fewer apartments remaining so rent would go up. Supply isn't the only thing that can change of course.
Demand can change and you can have for instance an infusion of capital for tech, or healthcare, or something and now a lot of people need to move into an area and people are willing to pay more because they're getting compensated a lot to move. It would tend to increase the number of landlords, people who want to rent out their space. It would tend to make more units available for rentals. On the other hand, if an area is in economic decline, or there's something else happening where people are unwilling or unable to pay rent at the same levels as before, you would expect to see investors shift to other assets, you'd expect to see units change their use from rental housing to condos, or maybe from first floor housing to commercial or whatever the market is trying to provide.
You have these two different levers. Supply can change, demand can change, and in Massachusetts we've had adverse impacts for a long time going on 100 years since we first enacted zoning. That's the housing crisis background here. A lot of folks in Massachusetts don't realize the impact of zoning on rental prices because most Massachusetts residents own and live in their own home, and so except for certain phases of life where we may interact with rental housing we're not really aware about how few apartments there are, how incredibly expensive they can be in some areas, and the real cause of that which is a supply shortage.
Basically since the early 20th century, we've had zoning controls that restrict the ability of investors, housing providers, anyone to add new apartment housing or new multi-family housing or new units on a single lot and that has been chronicled not by MassLandlords but by many folks who put a lot more resources into it even than we have although we do study this quite a lot. For instance, here's a picture of the Greater Boston Housing Report Card from 2019: Supply, Demand, and the Challenge of Local Control authored by the Boston Foundation UMass Donahue Institute, among others. Basically we do not create nearly enough housing supply to keep pace with the demand that people have to live and work in Massachusetts, and as a number of people here has increased demand has increased and therefore price has increased.
That's really the background into which we entered the pandemic and it's gotten no better housing prices are unaffordable high. I don't have a slide to show it, but in general at the moment housing prices are up 30 percent over two years ago and rents are at a record highs for some unit types – three, four, five bedrooms and also record low vacancies since before the pandemic. A lot of people could be forgiven for thinking that Massachusetts is actually pretty dense in some parts. There may be existing structures that have a certain level of density to them, but more than half of the state is owned effectively single-family.
This is a screenshot from the Metropolitan Area Planning Council Zoning Atlas. It’s a fantastically powerful tool for not all of Massachusetts but a great many communities around Greater Boston and you can go there and you can look at not just whether a property is officially declared to be single-family, but you can look at the impact of lot size, frontage requirements, setback, floor error ratios parking and other factors, and see whether if the current building were God forbid to burn down or something to happen to it, it could we replace that with multi-family housing at all and the answer for most of the state is no.
A few communities like Concord and Wayland stand out as being generally permissive of multifamily housing if you ask. It’s not as of right, but you have to ask for it. But then you look at some other communities that you might think of as having a lot of rental housing like Waltham and this beige-shaded area are areas that are effectively single family, so even if there is a multifamily on a lot now if anything were to happen to it, it could not be rebuilt as it is. It could only be rebuilt as a single family.
What's really an important takeaway for policymakers and other folks who work in housing is even Boston itself, which you would think of as being quite dense is effectively half single family now, and that creates a whole lot of problems because there is attrition over time as structures weaken, the occasional tragic fire we've got to eliminate all of that right but even if we do have an opportunity to rebuild a lot, we can't. If a developer comes in and says, “I want to put in more housing,” typically they're going to use a bypass process to put in a huge number of units much more than what we've historically done in Massachusetts where we would add an in-law apartment here or turn this single family into a duplex or a three-decker or something like that.
You really have to understand the market context to understand the policy like rent control because when people say, “Well, you know rents are unaffordable and we have so many renters paying more than half of their income to rent,” that's true and you can point people to zoning because zoning does not allow us to build more units and the way landlords can be effective in the policy space is by talking about money because there's a stereotype of the greedy landlord so if you say I want to build more housing to collect more rent and make more money, people will believe a landlord and that hopefully will make people realize that zoning is really the issue here and it's not the landlords who are operating in this tightly constrained market. We cannot build more housing.
That's the policy backdrop here but we want to talk about rent control as a specific policy proposal, so let's just entertain for a minute the idea that this is worth thinking about and let's look at the history of price controls in America.
We first had housing price controls, rent control during the world wars. It was in World War One basically an informal social movement, a lot of volunteer organizations creating what they called anti-profiteering committees and applying a lot of public pressure to landlords to hold rents still. There were a few municipal eviction protections and rent-control laws created at that time.
That laid the groundwork basically a sense that we're all in this together that laid the groundwork for what became in World War II absolute price freezes. Nobody was allowed to change contract rents a penny until the war was over. When World War II ended, those price freezes mostly went away except in New York City.
New York City created what was then second-generation rent control, so first generation where the price freezes second generation is now a kind of vacancy decontrol, so prices can go up by a certain amount, but then if the apartment becomes vacant then it might reset to market and over time since ’43, 1943 the rent control laws in New York have been getting amended and adapted and increasingly complicated. They went through a major revision a couple years back.
New York at this time in the second-generation system invented the idea of a rent control board. In the first-generation scheme where you have an absolute price control, you had no need for complexity because it's clear to see if the rent has increased and if it has that's unlawful, but that's not going to work in a normal market, so after the world wars it was generally a concession that we have to allow rents to increase somewhat who decides, and so New York's solution was to have a rent control board.
Generally, American implementations of rent control these boards are unelected and volunteer and raise the question of why people participate on them. We can get to that later but basically this is a second-generation system, so you have a board that's going to decide what's fair and decide maybe on an apartment-by-apartment basis whether the rent can increase.
Now especially in states like Oregon, people are looking at a third-generation control system so this would be indexed to inflation. It’s not an absolute price freeze, but nor is it so complicated that it needs a rent control board, so typically there would be some econometric statistic like the Consumer Price Index, and then you would be able to increase rents faster than that to account for local market differences by some percent and that percentage may be set by law. The CPI is set by an independent third party that doesn't really care about rents in particular. They might be looking at a whole basket of consumer goods, so for instance you might have a law that says rents will increase no more than 1.5 times or 150 percent inflation.
Now it's worth noting how far Massachusetts has historically been from the third-generation system that we're talking about here because under our second-generation system, we had rent control boards and they prohibited raising the rents from anything close to inflation, 85 percent of CPI was the maximum. Some of the bills we have in Massachusetts today to propose to bring rent control back would likewise cram owners down, so they’re not even going to let you keep pace with inflation, taxes, insurance, repair costs. Your rents are going to go down over time in real terms. That's not what that's not what Oregon has or other states are looking at, but for some reason we're still looking at this in Massachusetts. Let’s look at the history here before we talk about what Massachusetts is still looking at. Let's look at the history here.
So Massachusetts had as I mentioned the second-generation system, and here's a couple pictures that we've been able to find in various website archives. Here’s a picture of a rent control committee rent control board hearing in Cambridge. I don't think it was a darkened room. I think the camera exposure was just inadequate and you have a person speaking to a microphone with some papers in front of them, and in general people not looking very happy. To me the most amazing thing is how many people packed shoulder to shoulder to hear the decisions that were coming out. We know from anecdotes and from stories of folks who lived through these years that the rent control boards were arbitrary and capricious and had a huge degree of power to order people to do things or not to do things and depending on whether you as a renter or you as a landlord prevailed before the board people's lives could change dramatically.
For instance, here's one example of a story that we've catalogued by looking through the archives and talking to people, the story of Helen and Peter Petrillo. September 9th, 1953, they started their family at the I believe it's this exact building, but it's certainly this corner of Chestnut and Magazine Street in Cambridge, and they had a daughter. She grew up and moved out, but then she had a house fire in 1989 and you know social services have advanced quite a long ways since then, but so nowadays you might be able to get a hotel or you might be able to get some shelter or something.
But at the time best decision was to bring the daughter into the basement, which is not livable space, but the Petrillos tried to make it livable space and tried to make it at least good enough for the daughter and her family to get there get back on their feet, so they converted it into a little kind of like fourth unit. In Cambridge, three units unless were exempt, but now as soon as you have the implication of a fourth unit, now that's subject to the rent control board and remember we talked about their authorities, we're going to talk about this again later. It’s not just authority to set rents it's complete plenary power.
A rent control board can do anything to contain housing prices so basically an unhappy neighbor complained. I’m a four-unit owner and I have to follow the rent control regs and here are the Petrillos and they apparently have someone living in the basement. You know you can see the lights at night or whatever, so they dropped the dime and they said that building needs to be subject to rent control.
The rent control board said yes it does need to be subject to rent control, but because the basement didn't have adequate height you know the sanitary code requires a certain amount of height, they ordered the Petrillos to jack up the building at their expense, and as a rent control board with plenary power to control housing costs, there is nothing that Petrillos could do short of pleading to get the rent control board to reverse that decision. It was so incredibly stressful actually Peter died of a heart attack a couple days after the order was issued, and that's why if you look closely at this sign you can see this intersection is named for the Petrillos as a small apology, a mea culpa to them for the rent control board which ultimately was prevailed upon to reverse its decision. That's an example of what plenary power will do with an unelected, unaccountable system, 25 and it's a real terrible idea.
It's unfortunately not the only story of abuse we have from Massachusetts rent control years. You could look at another family, the Bolognas. They restored this house at 310 Harvard Street in Cambridge. We're picking on Cambridge here because Cambridge, Boston, and Brookline were the three communities left standing with rent control when it was ultimately repealed in Massachusetts. Okay so the Bolognas, they hand restored this property—husband and wife. They rented to some tenants in 1987. Now back at that time there wasn't a MassLandlords with an educational mission to help people understand the laws and they made some mistakes and they didn't follow the rent control laws, and the Stowes who rented this house from the Bolognas they brought the matter to the rent control board, and you know they didn't mention that they had actually moved out and were subletting the space at uncontrolled rents themselves charging market rents for that space. It doesn't matter. Landlords have to follow the rent control rules absolutely.
The Bolognas lost their case. they were ordered to pay the stove $64,000 in damages plus $30,000 in attorney's fees in 1992 money. That's $172,000 today. That's a down payment for a house in many parts of the state, and the Bolognas basically couldn't do that, declared bankruptcy, gave up being a landlord. They're not landlords now.
We actually contacted the Stowes for a story. This is up on our site and they maintain that the Bolognas were wrong for breaking the rent control uh regulations and well I mean all right but does that look like justice for raising the rent too much on people who weren't even living there who are just subletting.
We'll see in a minute another important factor the plenary power of a rent control board is to prevent evictions. Once the Bolognas and the Stowes had decided they don't like each other anymore there's very little that any party could do to break the lease unless the Stowes willingly left and we'll see that in the proposals for rent control again.
That's basically an important feature of the Massachusetts experience, these rent control boards. You had to apply for anything with respect to your property. If you wanted to get a new fridge in, if you wanted to get an eviction certainly, you needed to get permission from the rent control board because they didn't want costs go up. They didn't want there to be an eviction if they could avoid it obviously, but they also didn't want refrigerators to be new or they would accuse landlords of so-called gold plating, trying to make the place too fancy to justify exorbitant rent increases.
In general it was an extremely difficult bureaucracy. We'll see in a minute that the rent control law is just half a dozen pages, but then actually there are eight feet of records at the city of Cambridge as a matter of fact that through public records requests we're getting access to and many more reams of documents and regulations, and so on, that are developed at the municipal level, so in general rent control is really not a workable system for the typical housing provider.
In the Cambridge case, an example uh in particular this five-member board they were not compensated, and so what purpose does it serve for someone to be on a rent control board? The answer is probably power, right? They think they can make a difference, either for renters or to correct injustice against landlords or something, but they're not doing it professionally. They're not in a professional capacity.
It's worth noting as well that during the rent control years, this certificate of eviction was worked as an eviction moratorium so we actually had two decades of eviction moratorium in the communities that had rent control, and this came into play during the pandemic because Brookline actually had a rent control ordinance that survived the 1994 ballot initiative to repeal it that we'll talk about, and that Brookline ordinance was important because it applied to a specific building and Brookline was found still to have authority to prevent evictions in that building.
That's really the Massachusetts experience and here's just a picture. It’s very hard to find pictures of that era. If you have any, you're welcome to email email@example.com with your pictures, but here's an example of a mostly boarded-up building or poorly maintained building. We've got anecdotes of landlords driving down the street, seeing frozen pipes and buildings that had caused water to just be pouring out the steps for days, all kinds of things.
You don't have to take a landlord's word for this. You can look yourself at the public records. The City of Cambridge itself wrote this extensive report, talking about the failings of rent control. A lot of people today say people in Cambridge wanted rent control and it was very unfair of the landlords in 1994 to get it repealed, but that's not entirely true. They weren't talking about repealing rent control in Cambridge, but they were talking about reform.
Here's a quote from the document, which is up on our site. If you follow that QR code, you will find it. “Many people remain unsatisfied with the present rent control system and often for good reason; it is with these good reasons in mind that the City Council Subcommittee On Rent Control worked to reform the rent control system. It is in that same spirit that this report is written.” This is February 25th, 1991, by Richard Thompson Ford for Ken Reeves, subcommittee chairperson. Ken was at one time the mayor of the City of Cambridge, so this is a municipal document.
We've got an infographic on our site that looks at the report's many problems. They identified all these problems, and I’ll just pick out a couple of them.
Enforcement of reported code violations woefully deficient. You know we've heard anecdotally that rent control reduces the ability of housing providers to maintain housing, and here you see a city that's overrun with neglect that the code enforcement officers cannot cover. There aren't enough people to do the job of correcting that city. They don't even know where all the deteriorating properties are. They proposed a city-wide survey of all rank-controlled buildings because a renter in rent control knew they wouldn't be able to find affordable housing elsewhere because the rent control was viewed as the solution right, so if they lost that apartment they would have nowhere to go and they didn't want the city to come in and condemn the unit, so people would not report conditions. They would not allow inspectors in, and the city couldn't know how bad the conditions were where people were living.
A whole bunch of issues to look at here, but basically the City of Cambridge recognized serious problems with the rent control regulations in 1991, and they were not able to do anything to reform the system, which is why starting in ’93, landlords got together and said, “We need to fix this in order to do our jobs and we need to get this rent control law repealed.”
There was Question 9 on the ballot for 1994, which basically said we're going to have a new law that says if you're going to have rent control in any community in Massachusetts, you must reimburse owners for the damage caused, in other words make it a rental subsidy. Reimburse owners for the difference between the market rent and what they're actually allowed to charge so they can maintain their properties and continue to provide housing.
This was a huge surprise to a lot of people who followed politics in Massachusetts because the landlords really made the case across the entire state, which as we mentioned typically isn't too concerned with rental housing and the way the landlords made the case in 1994 was by talking about the distribution system Massachusetts has to take money from wealthy communities and reallocate it to depressed communities. State aid formulas will help depressed communities have better schools and public services.
What the landlords showed at that time was that Cambridge was basically with rent control artificially reducing their prices and therefore assessed values and therefore tax revenue, and Cambridge had through this ordinance drastically increased the amount of state aid coming from other communities that didn't have rent control into Cambridge, so it was basically this pet policy that wasn't working and furthermore was costing others in Massachusetts tax revenue and state aid
The landlords got it repealed, 1 million to 980,000 pretty close vote. It's the closeness of this vote that makes a lot of rent control advocates think this vote was somehow unfair or incorrect. Now obviously in a democracy you'd like to see greater consensus from 46% to 44 %, right? But ultimately the same issues will still come up about supply and about state aid.
Furthermore, if you're interested in learning about rent control you can look at economic studies. Lots of folks have looked at Massachusetts the surprising nature of the 1994 ballot initiative means nobody anticipated rent control would be repealed, and therefore nobody reacted to it in advance, meaning that the signal from a rent control regime to a non-rent-controlled market in 1994 was very pronounced. There was about a year or two of extension for elderly households and households with a disability, but basically it was a very quick transition in economic terms.
Economists have looked at rent control and you know the impact that it has had in Massachusetts on the allocation of units, you know do people get them if they deserve rent controlled units, if they need help. The landlords maintain properties, are properties available, what's the effect of controls on controlled rents and is there an effect on externality on non-controlled rents because remember three units and less are typically exempt. They looked at the impact of homelessness, administration costs, alignment with low-income renters, and then racial equality. Here I can give you some sample statistics. This draws from Massachusetts and as other jurisdictions as well we've had data from New York, San Francisco, and others.
If you have an absolute price lock system like a generation control, renters will stay on average 18 years longer than the normal tenancy. That's because they know they're getting an impossibly good deal and so they will do everything. We would all reasonably, rationally do everything we could to keep a price-locked department.
Even with vacancy decontrol, however, renters are still saying on average two years longer. That's twice as long as the normal tenancy. The average tenancy is about 18 months so that's more than twice as long with a vacancy decontrolled apartment, a generation two style control.
You can see where code is able to enforce, they do enforce essentials, but rent control tends to reduce cosmetic improvements than any elective upgrades, so basically in the aggregate if a rent control saves a community three percent rents, then two percent maintenance comes off so you're really only getting a net benefit of one percent for all the trouble because landlords are not able to provide those cosmetic and elective upgrades anymore.
They also studied availability. This is a huge stat, and I should point out here this is the American Institute for Economic Research. We linked to this from our site. There's a six percent increase in likelihood the unit becomes rented when rent control disappears. You might not think that's a big deal, but if you were to extrapolate six percent just to the City of Boston, it would overnight restore or remove 40,000 rental units potentially, so that's a ton of housing, much more than the city or state can produce to compensate. When you apply that across the whole state, you see the number of units at risk from going back to rent control would be staggering.
Economists have looked at other factors, too. For instance, you can see the effect on controlled rents, and surprisingly there's competing factors here. You remember I said that there's a supply and there's a demand part of the equation. Well with rent control because tenants are staying so much longer and there's so few options, they actually don't save as much from the rent control as you'd expect because there's a basic whole market correction. Even the rent control boards have to acknowledge that housing is so scarce that rents do go up even under rent control with the rent control board's permission, so that supply effect outweighs any individual benefit you might see or expect to see on a renter's balance sheet.
Another way to look at that is to say well you know if maybe I’m only paying $1,500 a month for now, isn't that great? Well if there weren't rent control, there would be an apartment available for less than that on the market is what they're saying.
That's a little bit hard to wrap your head around, but this one's much easier. The effect of rent control on adjacent buildings that are not controlled is very bad. It increases rents 13 percent to 46 percent within two years. How can that be? It’s because the rent-controlled units are effectively removed from the market, so people cannot apply to live there because they're not for rent. There are still folks living in there from when rent control was first passed. That drives up prices everywhere else and you see that especially in New York and San Francisco. The two cities in the United States that have had rent control consistently for decades are also the most expensive if you happen to get an apartment there, and that is completely dwarfing the benefit to the folks who do have rent control apartments because those apartments never come on the market.
Here's another thing. Homelessness is not clearly helped or hurt by rent control. Homelessness is a very multifaceted problem. There are about 40 different reasons why someone might experience homelessness at some point in their life. It has to do a lot with mental illness, LGBT status. It does not get helped by rent control and that's going to matter. We'll show you the proposed bills everybody says, “Oh, we need to prevent homelessness.” No clear signal.
Two more things that economists have looked at. They looked at alignment so basically who gets a rent-controlled department. Is it the case that lower-income households get access to this great benefit of a rent-controlled apartment? Sometimes yes, but in general 30 percent of rent-controlled apartments in Massachusetts were actually occupied by the upper half of all households in terms of income in the city. We saw this very sharply in Cambridge where you had a judge, you had the mayor of Cambridge, Ken reeves, I mentioned earlier was in the rent-controlled apartment, you had a Harvard professor in a rent-controlled apartment.
Basically we'll talk about this in a minute, but landlords who can only make so much on an apartment hold the unit vacant, waiting for a well-qualified applicant and those applicants tend to be wealthier, so rent-controlled apartments tended to go to wealthy people.
Finally, this one is really a significant issue and we'll talk about this at length in just a minute, but even though Boston, Brookline, and Cambridge were 24 percent residents of color, only 12 percent of the rent-controlled apartments went to residents of color, and that's because of a disparate impact effect that we'll explain.
Rent control has been studied in Massachusetts, and the data are not good. Of course there is a major benefit. I mentioned it at the start if you happen to be renting an apartment the day rent control was enacted, you're set for life. Unfortunately, everybody else who wants to move into your community forever after will be worse off. This difference here explains the difference between renter advocacy, who are thinking about just the people who have an apartment today, and housing provider advocacy, who are thinking about what we have to do year after year, decade after decade to provide housing to everybody who wants to live and work in Massachusetts or live or work, I should say all right.
Here's the most important point that I really like to leave you with. Disparate impact is the number one reason we cannot return to rent control in Massachusetts. Remember I mentioned that only 12 percent of the renters in rent-controlled units were renters of color, and I mentioned that's because landlords were holding apartments vacant, waiting for the perfect applicant. That is as true now as it was 20 years ago.
We have a major problem in America and in Massachusetts no less with systemic racism where some of us are unable to participate in the rental market the same as others just because of where we're coming from. So for instance, the Economic Policy Institute showed in 2018 that median household income was $41,692 for black households but $70,642 for white households, so if you have a rental application and it's asking you to show three times your gross income to rent ratio, it's much easier to do that if you're white. It’s unfair and it's a disparate impact and it's wrong, but that's the statistic so we cannot make it more important to screen on income in rental housing.
That effect repeats for all the major categories on a rental application. Look at eviction records. You want to rent to a tenant who has never been evicted before. Well because of all this systemic racism in America and Massachusetts no less, households of color twice as likely to evicted as white households.
Urban Institute looks at credit scores. Only 21 percent of black households have a FICO credit score above 700 whereas 50 percent of white households do, so you can't screen on credit either.
Sentencing Project: African-Americans constitute 53 percent of drug convictions despite representing only 14 percent of drug users. African-Americans and people of color use drugs at the same rate as white people but get unfairly disproportionately busted for that just because of who they are, so that's all wrong and we cannot go back to a system that perpetuates and exacerbates systemic racism. It’s not just data.
Heikki Loikkanen in Finland wrote this paper. You don't need to understand the graph, but basically he's proved the theory of landlording, which is exactly what I’m saying landlords will just hold an apartment vacant longer, waiting for a more qualified applicant and he shows discrimination under price controls gets worse.
All that data we have that shows you know people of color didn't have the opportunity to rent rent-controlled apartments in Massachusetts, that's from David Sims who studied this in 2007 and the theory for it was predicted 1985, so there’s real clear data that we can't do this. We should be moving in the direction of giving people benefit of the doubt and giving people lots of ways to qualify and show that they qualify for rental housing rather than worsting these systemic problems which is exactly what rent control would do, so I hope we've made that case compellingly.
I’ll show you in a minute some of the some of the law, some of the proposals. All right so let's first look at what the law is in Massachusetts today. We have General Law Chapter 40P, the Rent Control Prohibition Act and it says, “No city or town may enact, maintain, or enforce rent control of any kind,” but then it says, “except,” so I wish it hadn't been named by the landlords. It should be called the Rent Control Standardization Act, “except any city or town that accepts this chapter may have rent control.”
Here it is, it's right in the law today. You can do this if you want. The only catch is you have to compensate, “compensate owners for the difference between the unit's fair market rent and the unit’s below market rent,” in other words enact a rental subsidy. Put your money where your mouth is, help people to afford housing that keeps pace with inflation, where repairs can be made, where taxes can be paid, where the water is included in the rent. Help people to live and there won't be a problem.
That's what we have in Massachusetts today. Any town or city could enact rent control under this chapter, but of course we're talking about this not because we're history buffs, but because people continually try to get rent control reenacted in Massachusetts despite all of its manifest failings, despite all the data, despite the theory that shows us no good and so that's what I'd like to review now.
I’ll exit the slides here and I’ll just pull up a PDF. We'll turn to the slides later. This is a sample bill. It is not the most flattering bill to show and a rent control—
Let me just make sure I’ve just got the right thing shared here. I’m sharing this screen. Yes, okay.
This House Number 1378 is not the best proposal from renter advocates to get rent control passed. Now we'll argue that any form of rent control will have a racist disparate impact, will reduce housing supply, will reduce housing quality, but we're going to look particularly at the front runner bill that gets the most traction and has the most cosponsors because it's also the most egregious and it's the least carefully thought through, so this is easy for us to explain why the rent control advocates don't know what they're doing and how we can potentially find a path forward together on other reforms like zoning that would be more meaningful.
So here's the bill we'll review it. All right this is An Act Enabling Local Options for Tenant Protections. This is the marketing du jour. This is what people are trying to say is a good idea. If you've got a sharp memory you might remember that Greater Boston Housing Scorecard showed in 2019 the challenge of local control because they were talking about zoning and that's exactly where MassLandlords stands on this issue. You cannot have housing policies set by local communities because ultimately every community will create some kind of exclusionary policy that says well you go live somewhere else and then there's nowhere else for you to live.
All right, so local options is what they're going for but we've explained that's not a good look, and despite the issues with rent control in general, I have managed to get a lot of cosponsors signed on to this bill.
Now I’m sure some of these folks we've spoken with them and they've already basically said I didn't realize how bad rent control was and I’m not going to support this, but people never delete their names, so here's the list of people at least when the bill was first filed who signed on to it.
All right so here we are looking at this petition, An Act Enabling Local Tenant Protections. Chapter 40P, that's the current law, is hereby amended by striking out its title. Instead of calling it Rent Control Prohibition, we'll call it Tenant Protection Act. Okay fine it's okay to change the title but then they strike out Sections 1 to 5 inclusive that provides the mechanism for a town or city to adopt rent control today.
Now I’ll just linger on that. I didn't show the full text but the rent control law specifically says, “Rent control systems cannot be implemented by a town or city if they would apply to units that cost more than so much money.” Unfortunately, the drafters of the bill did not put in a money per time and that's the way housing is sold, so we take the view that any apartment that charges less than that amount of money on a per payment basis regardless of how frequently payments are made would be possibly subject to rent control and it's up to a city or town with some bravery to go implement that. We certainly wouldn't challenge it because the idea of the current law is just reimburse people for the damage rent control does turn it into a rental subsidy. There's no one who disagree with that is what the landlord's got enacted. All right but they're deleting all of that, so forget the history just delete all of it and start over
They're talking here about a variety of flexible options. That's more language is commonly used. If you're going to provide housing to everybody, you cannot allow anyone to decide, which types of people get to live in the community. So again options are not good. You cannot allow systemic racism. You cannot allow anything like what we had with exclusionary zoning when it was first enacted, the reasons for it and you know the Green Book film and all of that there's just so much.
You cannot allow people to have this kind of control over housing policy. You can allow people to decide does a building go here you know, do we need this as green space, are we going to build a road here. But you can't have people deciding who gets to live here, how much money do they have to make, how much wealthy do they have to be? That can't stand, but okay they've written that into the law. Oh, well.
They're saying it's motivated by lots of things. Homelessness, here it is again. The economics are clear no impact on homelessness, right? If you knew what you're doing you would not write that but they are trying to address low-income households, which makes sense it's the right thing to do.
Hold that thought. We'll look at something else that they proposed further on.
The way this bill has been drafted, it's a buffet of regulation, so you can pick the ones you want, you can pile as many onto your plate as you please. A city or town may accept any of the sections in this chapter or of this chapter, so pick and choose all right.
What are the sections? Section 4: Plenary Power. This is, I’ve got my note there. You can see plenary means without limitations. Remember the Petrillos? Plenary power is the order to jack up a house, the power to demolish a house, to set rents, to lower rents to cause a tenant to leave, to not cause a tenant to leave, to cause a landlord to sell their property or not to sell. Plenary power is absolute, unregulated power.
All right that's how they start their bills, Section 4. Any city or town can adopt this and they can do anything they like including, this is the first definition of the term here, an anti-displacement zone, in which it has been determined that residential households of low, moderate, or middle income are at risk of displacement as further defined by the municipality. I didn't talk too much about it in our presentation, but we have a history in the United States of redlining, which is to say certain areas are considered risky, and so we're not going to invest there and that is terribly racist. The history has shown that it was put up basically to stop investment happening in neighborhoods of color, and for some reason that's totally beyond me, the sponsors of this bill want to reenact redlining by creating these anti-displacement zones where they can draw a little line around neighborhoods of color and say, “Well this is where we'll have rent control. This is where we'll reduce housing quality. This is where we're going to have racist disparate impact. we won't let people live here unless they're wealthy under the rent control system. That is not their intent clearly, but that is going to be their outcome and the language of being able to draw little lines around neighborhoods is not okay, but they're trying to make this politically palatable even for people who don't know the history. They're trying to divide and conquer, so split landlords.
Multifamily housing does not include three or less drilling units in an owner-occupied building. That's the long tail of members you know half of MassLandlords membership own fewer than 19 units and a good deal of us like myself we just have the one-three decker. Well that's what they're exempting and as we saw the exempt units are the ones that profit most so when all the other units are controlled and effectively off the market, the exempt units are the ones that charge the San Francisco and New York prices all of a sudden. Again, poorly conceived legislation.
If you are a city or town that adopts this section, you may impose income standards. Remember I mentioned the mayor of Cambridge, a judge, a Harvard professor lived in rent-controlled units? Well, they're trying to recognize that history and address it, but why they wrote the word “may” instead of “must” or shall is beyond me it again. It again reflects the lack of understanding about how this policy goes wrong and what you would have to do to actually make a type of rent control or subsidy work for people.
Last clause in the plenary power section is the ability to create a rent control board. It doesn't specify it must be elected. It doesn't specify it must be professionally compensated. There's no criteria on it. Pick your friends and rule people's lives. That's unfortunately what they've drafted. If you don't like Section 4 or if you do, you can enact it or you can leave.
There's Section 5, just cause eviction. This is an important part of all rent control regulation currently being proposed in Massachusetts because obviously if you could remove a renter from an apartment, there would be no enforcement for rent control. You just removed somebody every time you had to raise the rent, so they enact Just Cause Eviction Protection, which has been tried for many years here in Massachusetts. It has never gone anywhere, but basically it says you can't bring an eviction unless it's one of these pre-contemplated reasons like fail to pay the rent to which the landlord's entitled. That's fine all right so you can evict for that. Okay that makes sense.
Here are some things that are I’ll point out good, bad, or indifferent. They reference Chapter 93A. That's a very vague statute. Chapter 93A says anything that's unfair is unlawful, so basically you know if the lessee says that the lessor, if the tenant said the landlord is doing something unfair, then the landlord can't file for eviction.
The landlord could evict a tenant if the tenant is causing substantial damage. Why are they put in words like this? Substantial. That's just going to be litigated, you know. I mean if it's an oops, if accidental, that would be one thing. They could have written purposeful right, but it has to be substantial and so now what does substantial mean? If they only burn half the kitchen, is that substantial? Maybe that's an accident. Maybe if they're only destroying half the walls with the baseball bat, that's substantial or not? Unclear.
Obviously, they're not completely off their rockers. If you're doing something illegal you can still be evicted, so that makes sense. They allow the towns or city to use that CPI formula that we talked about earlier, which would be more objective. Unfortunately, they have not specified that it has to be greater than CPI. They've just said any percentage, so remember in the Cambridge years, we had 85 percent of inflation so over time prices went down.
They referenced the consumer price index but you know the Oregon laws, they you know define it a little bit more clearly, the Oregon laws like this as well, so that's nothing terribly wrong. It’s just this percentage. You know it could be lower or higher that's the problem.
If the tenant refuses reasonable access, again I don't really know why they put the word reasonable in it. It’s just going to be litigated. You know you could contemplate emergency situations where there's no notice required. The landlord has to enter to shut off a burst pipe or something like that.
If you've got a sub-lessee that's not approved by the lessor. Again that's not language we would have written in, but they're trying to make sure you know if this isn't the person you rented to you could evict. Maybe it needs to be improved but that's pretty reasonable.
Here you've got if the landlord wants to live in it for their own, okay they're trying to address more concerns but again they leave the landlords out in the cold here. You have to give 180 days’ notice if you're going to take the apartment for yourself and you have to pay the tenant at least three months’ rent in moving expenses, so God help you if you suddenly become sick or disabled you know 180 days could be a long time to wait. Then obviously if they don't leave after 180 days, it's a normal eviction process. It could be a year or so, so that's really not acceptable.
Then the lesser can evict for any other just cause. They put the word just in there because that also can be litigated. What does it mean to be just? You have to get the judge to agree or the clerk or someone like that.
All right that's just cause eviction, and then it includes other things. You've got to notify the clerk. If you do it wrong, you pay a fine of $5,000 for each separate offense and if you try to do anything wrong a tenant can defend absolutely against eviction. That's a separate section from the next one.
You can adopt tenancy preservation notices so if you're a city or town and you want to require landlords to notify tenants like we have done during the pandemic, you can do that. Basically it says this notice to quit is not an eviction you do not need to immediately. Maybe the wording could be clearer for people. “This notice to quit is the start of an eviction” might be clearer, might maybe make people take it seriously.
This is a little bit weird. I think this section probably would be struck down as unconstitutional because you're basically allowing a city or town to adopt this and then order the state to do stuff because the State Executive Office of Housing Economic Development has to develop the form for this, and it's not clear to me if the town or city can require the state to develop its own specific form, in which case you have over 300 separate forms being ordered at the state level.
I’m not a fan of that. Personally, I’m not a fan of the five most common languages you can see in Massachusetts here. We've got about 30 that are very commonly spoken, totaling a million people who do not speak English as their first language. If you enact this law, you maybe have covered people who speak Spanish, Portuguese, French, Chinese and French Creole, that's great. Italian, sorry to be the first one left off the list there. I didn't write this law that they put in five.
You've got to mail a copy of the notice to quit to the tenant and to the Executive Office Of Housing Economic Development and to the chief executive officer of the municipality. Good, I’m sure there are lots of mayors out there who wish they had more to do and more mail to read now they're going to get all these notices to quit.
They're not going to be a public record, so nobody will be able to see the notices or inspect them, or enforce them, but despite them not being a public record, the town or city can share that information with a regional administering agency or housing consumer education center for the purposes of providing housing stability resources. That sounds okay. If they actually mean rental assistance in particular, I don't think any landlord could really argue with that, but what if these particular groups start providing legal services. That was struck down during the pandemic. That would be a non-lawful unlawful notice, so we'll have to see. I don't think this would pass but we'll have to see what they actually mean. Of course the state is being ordered to issue regulations for each town or city that adopts this, so I think the whole section probably would have to go.
Here's one that's really draconian. If a town or city adopted rent control, they'd be allowed to roll back rents to the 12 months before they adopted rent control or if you've been in the middle of a kitchen renovation that's been going on for a year, the last time the apartment was occupied. That would be a real problem and certainly set off fireworks of litigation because lots of people are mid-renovation and they're doing that on the expectation of return on the investments. Now here the towner city comes in and says you have to charge your pre-renovation rents, so Section 7.
Section 8, for no reason related to rent control just a cost containment procedure a town or city could set a new security deposit law and require installment payments up to six consecutive equal monthly payments or four equal months depending on how long the tenancy is and the landlord basically has no ability to propose a payment, but the tenant does. That would totally balkanize housing laws in Massachusetts. Now you have to know for each town or city you're operating in what the security deposit statement has to say, which bank it has to be in, how frequently you have to notify tenants, whether you have to pay the five cents of interest et cetera, and of course landlords can't be reimbursed for any of this administrative work. A thousand dollar fine if you mess up the town or city security deposit law.
Then they just slip this in here Section G. Yes, you can ban all brokerages. That's really a serious thing and that's not talking about necessarily rental housing in particular. You have to find out what that definition means because there isn't a definition section but imagine what the brokers would say if they were put out of business like that overnight.
Lastly, here's the extent of the anti-displacement zone definition. It’s just basically the towner city can draw a line around any neighborhood it wants to subject to special regulations, drive investment out of that neighborhood, and then swoop in later just like the red liners did and condemn all those properties and you know put in a park for richer people or some BS like that.
There's just so much. There's just so much in this rent control bill you just think, “Gosh! These people couldn't have known what they were doing and that's really what it comes down to. Rent control proposals are a crisis of education, housing policy education in Massachusetts.
Is it terribly likely that any of these policies actually pass? Mistakes happen all the time. Some people have told me rent control is impossible, but I’ve seen so much blind faith and energy from renter advocates who don't stop to listen to webinars like this generally. If you're here, I credit you. Certainly, folks don't read economic papers as a general matter and to have so many legislators on that rent control bill is a concern for us because it means a lot of people can't be bothered to learn the history or talk about what would actually be better.
If you're a landlord the calls to action are to read about this stuff and call your representative and let them know you oppose this and what's better. Well, we need zoning reform. We need to make a ton more housing and of course as a landlord you can donate. You can join MassLandlords and if one of these bills were to pass, it would kick off both litigation for MassLandlords and a referendum to get the law repealed. We have lots of data to show the public why this can't be allowed to stand so you can volunteer to gather signatures. I hope it doesn't come to that, but if you're motivated we're laying the groundwork for that.
To recap, we legitimately do have a shared problem in Massachusetts. We have a housing crisis. Housing is unaffordable high for so many of us and it's really land use. It’s zoning that's driven us to this point, so that's where the answer is. We can't go back to rent control. We need rental subsidies short term because think about someone who can't afford a rent increase. There are so many of us who can't afford basic rent anymore so rental subsidies are needed and very economically effective and then long term we need to be working together on zoning reform and there should be a common ground except for the fact that people who like rent control tend not to understand how markets work and so we're constantly trying to educate folks about that.
Questions and Answers
All right so let me just flip over to the questions here and just see if there's anything I can address in the last couple minutes here. I see, yes.
“Can you give a percentage chance that this is likely to pass?”
I mean I would say it's slightly more than 50 percent that it would pass and I would say it's 10 percent that it would endure because MassLandlords sure we could get it fixed but we shouldn't be in the position of having this pass even, so that's a concern for us is why we're doing this webinar in part.
KC asked, “You know I own and live in a three family, but I have a barn in my property that I'd like to turn into housing.” Well that's great. “Would I still be considered the owner-occupant of a three family and possibly exempt from rent control?”
That's an answer I can't give because I don't know what the town or city will write. Remember we looked at the whole state law as it’s proposed just now in PDF, but the town or city is going to write a book of regulations and they're going to decide whether the structure has to be integral for you to be considered owner occupy or if a barn would be allowed or what. That's one of the findings from the rent control years. We just don't know until we read the municipal regs.
We have um a question from Alexis about landlords leaving the units vacant. Basically a landlord can only get so much for an apartment and it depends on whether they're able to increase at all at vacancy or they have to rent it the same rent as before, that depends on the town or city. But basically they would wait for the most qualified applicant to come along and that would disproportionately unfairly tend to be wealthy people and tend to be white people. That's why landlords would choose that it's better off to get somebody who's going to be able to pay the rent, who's not going to damage the place, and who passes a rental application with flying colors because I can't barely make money on this place or even keep up with inflation. I have to make sure my costs are kind of unnaturally low.
Yes, and so Alexis asks for the breakdown of income distribution. I don't have that exact income distribution, but David Sims and Chris Palmer are the researchers you want to search for they've studied a Massachusetts rent control. They may have that breakdown in a paper that shows you know what percent of people what income lived in these rent-controlled units.
Alexis also asked, “Has any town enacted rent control under the current compensation law?”
The answer is no. No town has attempted, but Boston has enacted its own rental subsidy program, but they haven't enacted it as a rent control law. I think it's because they're afraid about that it says something like it doesn't apply to apartments that are that cost more than $400, but I mean if you define that as $400 per day, I mean everything would be subject. I think they just they don't want to go there.
All right Jessica asked, “When is this being voted on?”
it's in committee now. It will be voted out by May 9th or it will be sent to study um so we have time. I wouldn't delay but make a note to talk to reps and senators next week if you can.
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Liz asks, “Do we foresee statewide zoning language to help guide communities for accessory dwelling units?”
A lot of pushback out there. Yes and we opposed the Housing Choice Bill a couple years back because it was basically papering over the dispute, so they lowered the threshold to get additional density, which means people who had concerns about student teacher ratios or traffic or parking, all those concerns thrown out the window. We don't have any solutions for those people we're just going to enact density and so that's where we really need to have a conversation with a whole lot of stakeholders, Mass, municipal and lots of other folks out there to really figure out how do we create gentle density without creating any of the externalities that people are worried about in their picture-perfect single-family neighborhoods. We can definitely do it but the point is everybody has to be part of the solution. We can't just be passing laws against one another so it's going to take a lot of work to answer your question, Liz.
We have a couple questions from anonymous. “Are people holding off on purchases to wait and see whether rent control happens?”
Absolutely! I’ve had lots of people talk to me and say I don't want to invest in this. We've lost folks to Florida and Ohio and other states that are perceived to be easier to invest in, and uh this is exactly this is your question about the mayor of Boston's rent stabilization advisory committee this is exactly what the mayor is attempting to do and the fact that there are no landlord advocacy organizations or economists really who are going to take an opposing view of rent control indicates that the mayor's committee is going to recommend rent control despite all this history that we have here. Yes, and I have not been invited to testify but of course you should know MassLandlords will be filing public records requests on an ongoing basis for lots of things and the rent stabilization advisory committee is just one of those so we're going to keep tabs on him.
All right, Jim suggests, “Yeah, it's a 23-person board to investigate housing and has no from the landlord's side. They do have someone who's got the label of a landlord but my understanding is they're more of a pizza shop owner/attorney than an actual landlord so yeah it looks like astroturfing, trying to make it look like there's a groundswell of support for rent control when really there's a whole lot of people opposed to it and the more learn more learn about it the more oppose it.
Dave asked, “do we know anything about Attorney General Maura Healey's stance on rent control?”
The answer is, no I do not. We’ll have to see what happens with politics.
All right talking points. Yes, Tony's question. If you follow that link on the QR code here. I’ll just put it back up on the slide here. You put your phone up to that or you follow the MassLandlords blog to find that, you'll find bill numbers, talking points and much more to be able to engage with your rep and senator in a meaningful way on rent control.
So we're after 1 o'clock. I think we should conclude our webinar and I’ll end by saying thank you so much for your attention to this, and if you have any follow up questions you can email us at firstname.lastname@example.org. We'll definitely be in touch with you point you in the right direction, and if you have suggestions for improvement about how we could make this webinar more meaningful, any suggestions at all or if you liked it, visit masslandlords.net/yellow leave us a yellow feedback card. We'll be back in in-person meetings someday, but for now thank you so much for your participation on this webinar. We'll end there.
Take care and stay safe.
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