The latest on the rent control debate in Boston.
On February 13, 2023, Boston Mayor Michelle Wu sent a home rule petition to the City Council urging their approval of her plan “Authorizing the City of Boston to Implement Rent Stabilization and Tenant Eviction Protections.” The City Council held an initial hearing on February 22.
Mayor Wu’s plan would:
- Cap annual rent increases to 6% plus the change in the local inflation rate with a maximum increase of 10%;
- (Owner-occupied homes with six or fewer units, certain residential properties that were created within the previous 15 years and some units that use federal and state assistance programs would be exempted from the rent control ordinance.)
- Establish just-cause eviction protections for renters in the city, specifying that a housing provider cannot recover possession of a leased unit unless the Housing Court finds the renter failed to pay rent or engaged in one of the defined activities in the proposal, effectively eliminating non-renewals of a lease;
- Require housing providers to pay relocation fees to residents who are displaced when a unit is recovered for family use, also known as a “no fault” eviction;
- Empower the City of Boston to regulate the conversion of rental units into condominiums or cooperatives and require notification, plans and payments to residents when an owner seeks to demolish or substantially renovate their property.
This home rule petition is contingent on the Massachusetts legislature eliminating the state’s preemption law, which prevents local governments from enacting laws that regulate rents. The preemption law has been in effect since the 1990s when Bay Staters overturned destructive rent control policies by ballot measure.
The Greater Boston Real Estate Board (GBREB), the National Apartment Association's (NAA) affiliate partner in Massachusetts, has launched a campaign to appeal directly to Boston voters and to warn them of rent control’s negative consequences. “Rent control is a failed policy proven to decrease housing production, discourage upkeep and maintenance, and drive up overall housing costs in the region,” said Greg Vasil, CEO of GBREB. “We will do whatever we can to convince Boston and state leaders that this policy will reduce housing opportunities in Boston and do nothing to impact the real solution, which is to create more housing.”
Between the late 1960s and early 1990s, Boston, Brookline and Cambridge regulated the rents of privately owned property and continued to pile regulations on to property owners throughout the next decades; Cambridge, for example, prohibited certain condominium owners from selling their property if it was being rented.
A coalition of homeowners, rental property owners, realtors, the Chamber of Commerce and GBREB were ultimately able to put a rent control preemption on the ballot, buoyed by a key flaw in the policy. State funding to localities was based on a formula that factored in the value of real estate which showed rent control policies significantly lowered residential property values. This meant that taxpayers across the state were subsidizing Boston, Brookline and Cambridge and their willingness to depress their own property values. For example, rent control in Cambridge depressed property values of all residential units by 16%, non-rent-controlled property included.
In 1994, proponents for the statewide preemption prevailed and voters prohibited local rent control by a vote of 51-49 percent, and the effects were immediate. In a post-mortem review of rent control’s effects in the three cities over the three decades, one researcher found that rent control disproportionately benefited white, wealthy households and that the policy artificially kept some units from entering the rental market.
These results track with more recent analysis of St. Paul, Minn.—where rent control was shown most likely to benefit high-income, white renters and harm low-income, minority property owners—and San Francisco where rental unit supply was decreased by 15 percent and renters across the city lost $2.9 billions because of the impact on supply and the corresponding increase in market rents.