The Joint Housing Committee of the Massachusetts Legislature recently held a virtual hearing on House Bill H.1378, a proposal to grant cities and towns the right to establish rent control. As a person who lived in a rent control apartment, then owned rent-controlled apartments, and now owns unregulated apartments, I have broad experience of the issue. This series explores the potential, and pitfalls, of rent-control as a mechanism to address our housing supply and affordability crisis.
Can Rent Control Help to Address our Housing Crisis?
Social assistance programs transfer resources from one group in society to another. Our reasoning for these transfers falls into two basic camps. First: all humans are entitled to basic food, shelter, and healthcare (thus: food stamps and Medicaid). Second: we attempt to balance opportunity and access in an inherently inequitable society (thus: higher education Pell Grants and set-asides for minority businesses). Ultimately, every social program debate can be reduced to whether something ought to be taken from Peter to benefit Paul. Since I believe everyone is entitled to the basic requirements of life, and that we should attempt to balance the inequities of our world, I support both approaches.
There are also two fundamental ways in which resources are redistributed. They’re either ‘targeted’ by need (again, food stamps and Medicaid) or ‘universal,’ equally distributed across the entire population (the recent Economic Impact Payments). Both forms of redistribution are valid, though each achieves different purposes.
To assess whether rent control is a worthwhile social program, let’s consider whether it helps fulfill a basic human need and/or balances inequities of our society; and whether it’s ‘targeted’ or ‘universal.’ The studies and statistics I reference are from, “Rent Control: What Does the Research Tell us about the Effectiveness of Local Action,” a white paper published by the Urban Institute (January 2019) and “America’s Rental Housing 2020,” by the Joint Center for Housing Studies.
Does rent control help fulfill a basic human need?
At first glance, the answer to this question is yes: rent control provides secure housing because it remains affordable to tenants over time. However, evidence indicates that rent control dampens the development of new housing. Thus, while it provides security for residents of rent-controlled units, it hinders the total amount of housing available.
Does rent control help to balance the inequities of our society?
In 1994, when Cambridge lost the ability to enforce rent control, 26% of people living in rent-controlled units were in the bottom quartile of income; while 30% of rent control residents were in the top half. At first glance, it appears beneficiaries of rent control at least parallel economic strata.
However, lower income people are more likely to rent than own. Over 40% of families in the bottom quartile rent, so if they claim only 26% of rent-controlled units, they are actually underrepresented. Since rent control doesn’t include income guidelines, and since most landlords will be predisposed to higher income tenants (as I am), logic follows that proportionately fewer low-income families will benefit.
If we include income guidelines into rent control, the program could better balance inequity. Unfortunately, this would usher in a new set of challenges. How would we monitor income eligibility? If a family’s income rose above a certain threshold, would they have to move out? Would this be reverse discrimination against people whose income exceeds the guidelines, as they would have less access to the pool of available rental units? Providing means tests to rent control would enhance the claim that rent control provides more affordable housing for those who need it. But the means are thorny.
Is Rent Control ‘targeted’ to a particular group?
As long as rent control does not include a means test, the only group it targets is renters as opposed to owner-occupants. Although renters, in aggregate, are less affluent than home owners, there are plenty of renters who don’t fall within most governmental definitions of ‘need.’ In fact, people who live in rent control apartments are statistically older, single, and childless when compared to renters overall. Again, the beneficiaries of rent control do not neatly align with groups in need of assistance.
Can Rent Control be applied universally?
The answer to this is: definitely not. Rent Control is limited by the number of units available to control, not the number of people who could benefit. It creates a new category of division in our cities: those who receive rent control, versus those who do not. A recent study in San Francisco estimated the economic ‘transfer’ of those living in unregulated units to those living in rent-controlled units is $2.7 billion per year. That’s a mighty big transfer to people who very likely landed their rent-controlled apartment through luck or connection rather than need.
If rent control does not meet the basic requirements of an effective social service program, why is Massachusetts considering enabling it (once again)? The answer is easy as it is illogical. Politics.
Enabling cities to establish rent control provides the illusion of doing something about our housing crisis at no direct cost. It costs the state nothing to pass the legislation. Cities who implement rent control bear only the cost of their operating boards. Politicians can say, “We made over 50,000 units in Cambridge more affordable,” without adding a single residential unit to our city.
Rent control is a politically expedient means to claim progress in our housing crisis, and a demonstrated path to creating a secure voting block among the lucky folks who wind up occupying rent-controlled units. State Senators, Representatives, and City Councilors know that the unlucky ones, who cannot find an apartment in Cambridge, won’t be voting in their district!
If rent control isn’t a panacea, how can we address the crisis of housing availability and affordability in Cambridge and beyond?
Tune in next week for…Better Options to Address Our Housing Crisis.