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Rent con­trol would hurt the people it intends to help

Jonah Karafiol is a stu­dent at Har­vard Col­lege. Jef­frey Miron is dir­ector of gradu­ate and under­gradu­ate stud­ies in eco­nom­ics at Har­vard Uni­versity and vice pres­id­ent for research at the Cato Insti­tute.

Much has been made about this Novem­ber’s bal­lot meas­ure to decide whether to repeal the state’s 1994 ban on local rent con­trol and impose a bind­ing statewide cap on rents. Law­makers have also pro­posed, as a back­door form of rent con­trol, that the Legis­lature restrict the use of algorithmic pri­cing soft­ware that helps land­lords determ­ine what their prop­er­ties are worth.

Rent con­trol in any form would ulti­mately hurt the very people it intends to help.

The Mas­sachu­setts bal­lot meas­ure would cap annual rent increases to either 5 per­cent or the annual increase in the con­sumer price index, whichever is lower. But this bench­mark has his­tor­ic­ally failed to track the actual costs of main­tain­ing older hous­ing stock.

Between 2000 and 2024, rent infla­tion aver­aged about a full per­cent­age point per year above head­line CPI — 3.6 per­cent versus 2.6 per­cent — exceed­ing CPI in 18 of those 25 years, and grow­ing by a cumu­lat­ive 140 per­cent against CPI’S 88 per­cent. Land­lord oper­at­ing costs have grown faster still: the National Mul­ti­fam­ily Hous­ing Coun­cil repor­ted that prop­erty insur­ance alone rose 26 per­cent in 2023. A cap pegged to the CPI or 5 per­cent, whichever is lower, would force rents to grow more slowly than his­tor­ic­ally — and more slowly than the costs they must cover.

A build­ing whose rents can­not keep pace with rising costs is a build­ing whose owner will defer repairs, skip renov­a­tions, and even­tu­ally con­vert the prop­erty to con­domin­i­ums or other uses that escape the cap. The pat­tern is doc­u­mented across rent-con­trolled cit­ies from New York to San Fran­cisco, where dec­ades of reg­u­la­tion left a dis­pro­por­tion­ate share of the con­trolled stock in poor phys­ical con­di­tion rel­at­ive to com­par­able mar­ket-rate units.

Rent con­trols gen­er­ate arbit­rary redis­tri­bu­tion of resources. The Mas­sachu­setts cap would apply regard­less of ten­ant income or need: A high-earn­ing Back Bay ten­ant would receive the same pro­tec­tion as a low-income fam­ily in Chelsea, and — in dol­lar terms — a lar­ger bene­fit, because the cap is a per­cent­age of a higher base rent. The trans­fer of resources would run from land­lords to incum­bent ten­ants — not from land­lords to whomever is most in need.

The bal­lot meas­ure would exempt new con­struc­tion for its first 10 years, as well as owner-occu­pied build­ings of four units or fewer. But for all other rental hous­ing, there would be no vacancy decon­trol: When a ten­ant moves out, the new ten­ant would inherit the old rent rather than pay­ing mar­ket rate, offer­ing land­lords no relief from the unit’s arti­fi­cially dis­coun­ted price.

The costs of rent con­trol would also spill bey­ond the con­trolled sec­tor. Deteri­or­at­ing rent-con­trolled build­ings would impose costs on sur­round­ing prop­erty, mak­ing the neigh­bor­hood less attract­ive and drag­ging down val­ues for uncon­trolled units in the area.

A study found that end­ing Cam­bridge’s rent con­trol in 1995 added about $1.8 bil­lion to the value of the city’s hous­ing stock over the fol­low­ing dec­ade — and that more than half of that gain con­sisted of spillover effects for never-con­trolled units. In other words, the major­ity of the cost of rent con­trol had been borne by prop­erty own­ers that the reg­u­la­tion had never dir­ectly touched.

Sup­port­ers of the Mas­sachu­setts bal­lot meas­ure argue that its 10-year new-con­struc­tion exemp­tion would pre­serve the incent­ive to build new rental hous­ing. It would not. Mul­ti­fam­ily developers under­write build­ings on hori­zons of 20 to 40 years. That is why Gov­ernor Maura Healey has repor­ted that six developers lost their fund­ing after the bal­lot ques­tion cleared its sig­na­ture threshold to move for­ward, with thou­sands of poten­tial units at stake.

If Mas­sachu­setts wants to lower rents, the most import­ant policy ques­tion is how to build more hous­ing, not how to ration the hous­ing the state already has. The tools to accom­plish this are famil­iar and well-stud­ied: Loosen zon­ing restric­tions, raise allow­able floor-to-area ratios, end single­fam­ily-only dis­tricts, leg­al­ize access­ory dwell­ing units, and shorten per­mit­ting. Healey’s hous­ing agenda already points in this dir­ec­tion, and the exper­i­ence of cit­ies like Aus­tin — where per­missive zon­ing enabled a surge of new con­struc­tion and a mean­ing­ful drop in rents — sug­gests that these policies work.

Mas­sachu­setts voters rejec­ted rent con­trol in 1994. They should reject it again.