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What Should Rent Control Accomplish?

Boston Mayor Michelle Wu is backing a return of rent control, decades after it was banned in a state referendum. But disappointment among tenant activists raises questions about what rent control is supposed to achieve.

Boston Mayor Michelle Wu, who pledged to back rent control during her campaign, has faced criticism for not going far enough in her proposal to hold down rising rents.
(Allison Dinner/Getty Images/TNS)
People like Mike Leyba have spent years working to make it possible for rent control to return to Boston.

Always an expensive city to live, Boston has become one of the costliest places in the country in the years since rent control was banned statewide in the mid-1990s. Advocates like Leyba, the co-executive director of the social justice group City Life/Vida Urbana, have worked to build momentum at both the state and local levels for overturning the ban and reinstating a policy they say is urgently needed amid a roiling crisis of displacement and unaffordability.

The movement has picked up key supporters along the way, including Mayor Michelle Wu, who pledged to back rent control during her campaign. Last year, City Life/Vida Urbana joined an advisory council convened by Wu to study rent stabilization policies and make recommendations.

But when the outlines of a proposal leaked to the press a few weeks before Wu’s scheduled State of the City address, Leyba says his group was dismayed. The proposal, if implemented, would allow landlords to raise rents as much as 10 percent every year. For a $2,000-a-month apartment, a 10 percent increase would add $200 a month to the cost of housing — like adding a 13th month of rent. When the group told the tenants in its network about the details of the plan, Leyba says they suggested protesting outside of City Hall. Their reaction illustrates the broad array of perspectives on what “rent control” is supposed to mean — and what it’s meant to accomplish.

“For me, the key thing is, does it provide the immediate anti-displacement impact of curtailing rent increases that would displace people?” Leyba says. “And how does it impact those costs over time?”

Fighting Housing Instability in Boston

Support for rent control was a “key differentiator” between Michelle Wu and other candidates in the 2021 Boston mayor’s race, Leyba says. Even though rent control is a policy that can’t be implemented by the city alone, it’s important to have a strong local champion if the governor and state Legislature are going to be convinced to overturn the statewide ban, which was narrowly approved by voters in 1994.

But as Wu said in a recent radio interview, “the words ‘rent control’ mean very different things to very different people.” Her proposal reportedly caps annual rent increases at the rate of inflation, pegged to the consumer price index (CPI), plus 6 percent — with a maximum cap at 10 percent regardless of inflation.

“This is the type of proposal that I have been talking about throughout the campaign,” Wu said on WBUR. “The purpose of rent control or rent stabilization is very specific. It is to stop the harm that is happening when we have too few affordable housing units to match the number of people.”

But for Leyba and other advocates, rent control shouldn’t just prevent the most egregious forms of price gouging. It should also help keep rents affordable over time. Capping annual increases at 10 percent won’t accomplish that, they say; instead, the rent control cap should be the same as CPI. With exemptions for property owners with just a few rented units, and potentially a public fund to help cover the costs of major repairs, there’s no reason why the cost of a rent-controlled apartment should rise faster than inflation, Leyba says.

“We’re not trying to put small landlords out of business. We’re not trying to take anybody’s nest egg away. We’re trying to provide maximum protection for tenants,” he says.

A Varied Trend

Rent control spent many decades as the quintessential bad idea in economics 101, under the theory that it would prevent landlords from fixing their apartments and prevent developers from building new housing, thereby making housing markets worse over time. But in the years leading up to the COVID-19 pandemic, as tenants’ movements gained steam and the housing crisis worsened, it began to catch on again.

In 2019, Oregon became the first state with a statewide rent stabilization ordinance, capping annual increases at inflation plus 7 percent. California soon followed suit with a similar policy. Those policies prevent dramatic single-year rent hikes, but they still give property owners lots of leeway to raise rents.
The map shows states with rent control; with preemptions that prevent rent control policies; states with no rent control or preemptions; and states that have previously been listed as having preemptions, but where no statute or case law could be found. (National Multifamily Housing Council)
Gary Fisher, deputy executive director of Multifamily Northwest, an Oregon-based landlords’ association, says that under Oregon’s law, landlords could have raised rents by 9.9 percent last year. But a survey of the group’s members showed most landlords increased rents by about 5 percent, Fisher says. The group opposed the 2019 law because it felt it could prevent landlords from keeping up with rising costs for maintenance, staff and amenities. But it’s not actively seeking to have the law changed. The maximum allowable increase in Oregon for 2023 is 14.6 percent.

Also in 2019, New York passed a state law allowing cities to enact rent control if they declare a housing emergency. More cities have begun adopting new rent control policies as well. One of the strictest laws in the country was approved by voters in St. Paul in 2021 and enacted last year, imposing rent control and setting the annual cap at 3 percent. Local leaders there have already begun amending the law after some developers said they were pausing projects because of the policy, as the Minnesota Reformer reported.

It’s Not Just About Rent

New York City has had rent control for decades, but the 2019 law that allowed all the cities in the state to create rent control policies was partly the result of a growing statewide tenant movement. Cea Weaver, the campaign coordinator for Housing Justice for All, which led the charge for the 2019 law, says rent control can be thought of as a basic “consumer protection” against price gouging, the likes of which society imposes on all types of goods. It’s meant to promote housing stability for renters, and that spills over into other areas of civic life, like improved educational outcomes and democratic participation, Weaver says.

“Rent control is really doing two things: it’s controlling rents but it’s also controlling evictions too,” she says. “It allows tenants to organize as a group of people. It has these dual goals of affordability and power-building, which not all housing interventions have.”

While opponents of rent control often argue that it will prevent landlords from making improvements, it’s not the case that big rent increases typically correlate with costly renovations, says Manuel Pastor, an economist and director of the Dornsife Equity Research Institute at the University of Southern California. Instead, landlords tend to raise rents when a neighborhood becomes more attractive to renters and there’s more demand for housing — in other words, simply because they can.

“The classic economic meaning of rent is when somebody who’s got a fixed asset sees its worth go up through no contribution of their own,” Pastor says.

Rent control and stabilization policies can help existing tenants avoid being displaced. But improving affordability in places like California and Boston also requires more housing supply, Pastor says. Rent control debates tend to be heated because, “like many issues, it’s a stand-in for a bunch of other issues,” from the housing crisis generally to overall beliefs about the role of free markets.

“It is a signal of the relative strength of landlords and tenants,” Pastor says.

Rocky Road Ahead in Boston 

In Boston, any rent control proposal that Wu introduces will need to be approved by the City Council, the state Legislature and the governor. In her radio interview, Wu acknowledged that’s far from a sure thing, even though Massachusetts’ new governor, Maura Healey, has signaled more openness to considering rent control than other recent state leaders.

Leyba says that even if a policy passes at the local level, it’s not going to get far in the state Legislature without enthusiastic advocacy from groups like his. The advisory committee that Wu convened included developers and landlords in addition to tenants’ groups and others. Leyba says it makes a certain sense to include the real estate industry in discussions about housing policy. But he believes most of the industry was always going to be opposed to any form of rent control — a sentiment which some real estate groups have already expressed. But Leyba says he doesn’t foresee a critical mass of tenants going to bat for a policy that would allow their rent to go up as much as 10 percent a year.

“The line that we were taking was, people deserve to be able to not be displaced out of Boston — especially if they’ve lived here for a long time,” Leyba says. “And the real estate industry was basically like, ‘We don’t want you to do anything that’s going to infringe on the money that we’re currently making.’ So it’s like irreconcilable interests. We believe in the right to housing, and those people believe in the right to make money off people’s housing. There’s no middle ground that’s really possible.”
Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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