Digging Rent Control Up from Its Grave, Boston Welcomes Disaster Instead of Innovation
When Boston Mayor Michelle Wu announced the formation of a 25-member Rent Stabilization Advisory Committee in March 2022, the Small Property Owners Association (SPOA) questioned the exclusion of organizations representing small property owners from this committee, which has tried to rebrand rent control as “rent stabilization,” even though it is the same idea that died historically in Boston and surrounding cities — before it was appropriately buried in the graveyard of failed ideas. It was later apparent that city officials made a point of excluding any groups that oppose rent control from this committee according to various reports. The city then proceeded to orchestrate the first of its rent control “listening sessions” in the month of May.
The gravediggers stumble
The initial listening session was canceled just before it was scheduled to begin on Tuesday, May 10. It took over two hours for the city to issue a statement that the cancellation was caused by the absence of only one translator. The city further announced that the listening session would be rescheduled for May 24, which it said was just “one week” away, when it was actually two weeks away. This disjointed flurry happened to coincide with a large group of property owners indicating that they would register for the May 10 event just two days before it was scheduled to commence. It also happened to coincide with reports that city officials were conducting a “listening session” just to hear from people with whom they already agree, rather than including all members of the community, especially the many others who have grave concerns about rent control for well founded reasons.
The echo chamber shudders
On the same evening of the hasty cancellation, State Representative Mike Connolly took to Twitter[1] to attack the Greater Boston Real Estate Board (GBREB) for voicing legitimate concerns against rent control. The representative claimed that the group’s well researched criticism of rent control, pertaining to its negative effects on St. Paul’s housing market[2], was too “narrow” in scope and that rent control has historically been a part of the “fabric” of this nation.
But the rest of us know better
However, the rest of us outside of that small echo chamber know better. We know that small property owners—and all who disagree with rent control—were excluded from the city’s rent control advisory committee deliberately. We know that rent control has failed wherever it has been implemented, including the United States and Europe, among other places. If it was ever a part of our nation’s “fabric,” per Representative Connolly, the fabric was clearly stained and torn.
We know that rent control violates the rights of property owners by making it more difficult to collect their hard earned rental income, which would be subject to artificial price controls. The policy would create additional challenges in removing noncompliant tenants for nonpayment and other disturbances, including vandalism, to the detriment of not only the owners, but the many good tenants who rely on housing providers to bestow them with safe, maintained places that they can call home.
We also know that rent control leads to displacement, gentrification, and stagnation, as well as the disrepair and devaluation of property—all of which harm tenants, owners, and the housing stock itself. Likewise, the policy would negatively impact the property tax revenues for cities and towns, likely triggering tax increases on the general public to compensate for those lost revenues. Tenants will be left with decaying buildings, along with reduced options in the housing market, due to less construction and reduced housing supply, as well as dwindling turn-over in units that are already rented. Meanwhile, tenants who already live in rent controlled units, including wealthier ones who are more affluent than their landlords, will typically remain in those units, while the tenants from lower socioeconomic backgrounds looking to rent will be displaced.
In the process of taking miles after seizing inches, the radical tenant activists will likely push to mandate that all property owners guarantee lease renewals, even if an owner wishes not to a renew a lease after its expiration. This outrageous restriction defies the very purpose of forming a contract— which should be mutual—with anyone, while impeding the autonomy of the property owner. Consequently, the owner would have no recourse when confronted with difficult or abusive tenants. It would amount to giving away property, rather than renting it, with the tenant owning the housing provider. Tenant activists are reportedly pressing for this additional provision in New York, which passed the harshest version of rent control yet, statewide, in 2019.
Hence, there is no doubt that rent control is “the best way to destroy a city, other than bombing,” per Assar Lindbeck, the world-renowned economist. Others have furthered this point by indicating that rent control devastates housing to the same degree that climate change endangers the environment and COVID-19 imperils the human body.
Encouraging systemic extortion
During the previous rent control era from the 1970s thru the mid 90s, property owners in Cambridge were persecuted by a spiteful and unelected rent control tribunal that routinely denied their requests for reasonable rent increases and repairs to their properties -- and even dispensed legal advice to tenants on avoiding rent payments. It was also known to hand down extreme and inappropriate orders for “repairs” which, in one instance, included raising the entire foundation of a home to correct a minor code issue. This led to the owner of that specific property dying from a heart attack days later.
In Boston, meanwhile, tenant activists and rent control attorneys encouraged tenants to give property owners trouble by not paying rent, in addition to damaging property and calling in building inspectors under false pretenses, among other tactics. There were cases where tenants sued their housing providers for damages that the tenants created themselves, amounting to tens of thousands of dollars, per the advice of their attorneys and representatives. Some owners grew so desperate, they considered fire-selling their properties at significantly reduced prices that were even lower than the artificially depressed values imposed by rent control. The people who ultimately “bought” those buildings in the end included the same rent control attorneys and tenant activists who started all the trouble from the beginning. This amounted to an insidious form of theft in all aspects.
Distorting the definition of a small property owner
Furthermore, with regard to the claims of exempting small property owners from rent control, we know that Representative Connolly and other tenant activists define small property owners in a manner that is truly narrow in scope, limiting them to one home that is owner-occupied with a small number of units. This definition is truly absurd, considering that most small property owners, who provide over 60 percent of the rental housing in Boston and Massachusetts, do not fall in that category. Our status as small property owners is determined not by how many units we own or whether our buildings are owner-occupied, but by the degree to which we oversee management activities directly versus adopting complex corporate structures. Most small property owners also own and manage their properties through LLCs and trusts, which conveniently fall outside of the “exemption” criteria of tenant activists, who wish to lump us together with large owners as much as possible to further their false narrative, while condemning more owners—and more buildings—to the death grip of their destructive policies.
Why are property owners blamed for the housing crisis?
Moreover, why are property owners blamed for a housing crisis that we did not create? Even though rents have increased, the costs associated with running and repairing our properties have also risen. In fact, only nine cents on the dollar paid in rent is capitalized by the property owner, while the remainder of it is spent on the expenses of the property, as revealed in the image below.
Despite this fact, the small property owners, who typically keep their rents lower and who often avoid raising them for years, are the first targets in the cross hairs of the rent control threat, along with other dangerous proposals put forth by tenant activists. Therefore, how can we afford to manage our properties if our income is restricted, or even denied? Who are these legislators, who know nothing about the business, to determine how much rental income is “fair?”And why are other industries not subject to the consideration of controls?
What will happen to all of the other businesses that small property owners support when we are run out of business first? These include the tradespeople from the carpenters, electricians, and plumbers to the people who work in the banking, insurance, and brokerage industries—not to mention the local governments that collect property tax revenue.
Where are the broader solutions that are supposed to help the entire community—as opposed to the proposals that scapegoat and victimize property owners?
Many property owners rely upon their rental income to support their families and their personal lives, along with their businesses. Rent control will victimize these owners, who put their savings on the line to provide people with housing and to improve their communities. Why can’t the government give rental property owners credit and support as housing providers, instead of treating them like the enemy with punitive measures?
While they acknowledge the vital need to increase housing production, tenant activists persist in recommending policies that will destroy housing production counterproductively. How will this help the situation?
Sadly, the proponents of rent control ignore appeals for reason. Instead, they are radically committed to unearthing a long buried corpse only to put lipstick on it, before forcing it onto the masses in the name of “innovation.”
But we can do better than that—and we have the truth on our side!
The success of May 24—and the importance of July 21—for property owners
We were very pleased to see so many property owners attend the rent control session that was re-scheduled for May 24. Everyone noticed that housing providers turned out in full force—and we have YOU to thank for that. Please do not underestimate your voice or the importance of it. It has already made a difference. Since then, the city has scheduled different meetings exclusively for tenants and property owners.
The session for tenants only was held on June 25. Afterwards, the session for property owners commenced on July 21. Housing providers turned out significantly once again to oppose rent control. In response, the committee displayed its true colors by attempting to restrict any argument against rent control in order to focus on how it should be implemented instead, as if rent control is already a done deal. This validated the doubts about the authenticity of the so-called “listening sessions,” prompting reporter Scott Van Voorhis of Banker & Tradesman to question whether the Wu rent control panel was actually listening. It appears that the city’s diversionary tactic is based on the false premise that Wu’s election victory signified a mandate for rent control, even though less than one-third of Boston voters cast a ballot. Among other lapses in logic, rent control activists would have us believe that most people are single-issue voters. The city also indicated that another session for tenants would occur later. Despite allotting multiple sessions to tenants and only one to housing providers, the owners persisted in making their voice heard — and this must continue going forward.
Regardless of whether the Wu administration intends to listen to us in good faith, we are her constituents and voters as well. Property taxes paid by housing providers fund approximately 70 percent of Boston’s budget.
We would be remiss in not informing you that this battle will be ongoing—and that we need your advocacy. So please continue to support this ongoing effort!
Moving ahead with more supply and a greater diversity of housing options
If property owners and like-minded people stick together, we can win this fight. Otherwise, the victors will be those who seek to harm you, while using deceptively sweet language to take what is yours. Please join us in standing up to them before they “pressure” the state legislature to unearth disaster upon us and our communities. Innovative solutions can only be found when those who provide the housing and keep it affordable are heard and respected.
We should turn our attention to increasing the supply of housing, as well as a greater diversity of housing options, instead. As supported by Governor Charlie Baker and the Massachusetts legislature, the SOLUTION is to pass zoning reform to encourage more housing and to construct both new and affordable housing units, instead of disrupting the operation of existing buildings. The availability of these new units will create more competition, which will then stabilize, and reduce, the rent prices in Massachusetts. Furthermore, other solutions that are truly original and worthy of the term “innovation” may present themselves when property owners, who know the business, are actually heard for a change.
Rent control does not get new housing built and it prevents the owners of existing properties from maintaining them. This failed policy should be illegal, as it devastates tenants, property owners, and the housing market itself. The government must resolve to create an environment of mutual respect, security, and cooperation between housing providers and tenants, where both parties can prosper, rather than favoring one side over another to the detriment of the community.
Please contact your representatives at the city and state levels to voice your opposition to rent control and all policy proposals that violate our property rights. We have the right to run our properties safely and with dignity, as we provide for our tenants.
It is therefore time, once and for all, to move forward in the spirit of true innovation — and to let dead policies, like rent control, remain buried in the cemetery of failed ideas.
by Amir Shahsavari
