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Legislators are debating a range of bills, some controversial, others not, aimed at aiding renters in ways big and small.
The pandemic has cast a spotlight on the precious living situation of so many people in Renter Nation, from surging rents to evictions.
Now, many of those long-standing issues are coming to boil at the State House amid an array of bills that have the potential to reshape the apartment market in large ways and small.
As we head deeper into 2022, Bay State lawmakers are debating proposals that range from giving housing activists a seat at the table in disciplining wayward real estate agents to efforts to bring back rent control.
Fair Housing, Broker Fees Regulated
The legislature’s consumer protection and licensure committee voted to favorably report out a trio of bills that will beef up protections for renters.
The additional safeguards are needed for renters as some large apartment owners take unfair advantage of a tight market, said Rep. Tackey Chan, House chair of the committee.
“It’s really about addressing practices in the industry that have come about as a result of the housing shortage,” the Quincy Democrat said.
A bill sponsored by state Sen. Pat Jehlen has raised for-profit landlords’ hackles by giving tenants – and, effectively, community development corporations – right of first refusal in any apartment building sale.
A key part of the new renter protections is an effort stamp out a dubious practice, popular among some larger apartment building owners in Boston and beyond, of offloading their broker fees onto prospective tenants.
Landlords have taken to calling it a “fourth month’s rent,” adding it to first and last month’s rent and security deposit that is standard in the market – money that already weighs heavily on many renters.
Another proposal in the bills that won the consumer protection and licensure committee’s nod would give housing advocates a seat on the state’s real estate Board of Registration for the first time.
The board, among other things, oversees disciplinary actions against agents and brokers who break the rules.
In addition, brokers and agents would have to undergo fair housing and anti-discrimination training as part of the licensing process, under the proposals the committee waved through.
Debate Continues on Key Bills
Still, even as renter protections advance, the future looks less certain for what are possibly two of the most controversial bills under consideration right now on Beacon Hill on any issue.
Amid a deadline last week to either move bills forward or effectively can them, the Joint Committee on Housing was forced to ask for an extension to continue deliberations on a proposal to let towns and cities bring back local rent controls and another bill dubbed “rent control lite.”
That second proposal, bill S.890 and sometimes called the Tennant Opportunity to Purchase Act, would give tenants first crack at buying apartment properties when they hit the market – a right that would effectively pass directly to nonprofit community developers.
Championed by state Sen. Pat Jehlen, the proposal would address a surge in speculative buying of smaller rental properties, both in hotspots like Cambridge and Somerville and in Gateway Cities like Lowell and Springfield, by cash-laden investors.
Two-thirds of all sales of small rental properties in 15 of the state’s Gateway Cities involved cash buyers of one sort or another, according to statistics compiled Mathew Thall, a community development expert with the TOPA Coalition.
In another red flag, roughly 10 percent of these smaller rental properties, which ranged from four to 20 apartments, had changed hands within the previous three years, often for big gains, according Thall.
Over 80 percent of the sales of smaller rental properties involving cash buyers Fall River and Gardner/Leominster/Fitchburg. In New Bedford and Taunton, that number was 90 percent.
The concern? The motivation for cash investors is to get in, do whatever work needs to be done, jack rents and resell for a big gain.
Along the way, that often means pushing out the existing tenants in favor of people who can pay higher rents to meet the new pro forma.
Little Ground for Compromise
By contrast, giving community development corporations and other nonprofit housing developers a first crack at these properties could help keep a roof the head of tenants while reining in big rent increases brought on by speculative sales.
Scott Van Voorhis
But it’s not clear that even with more time, that the Somerville Democrat and other lawmakers on the Housing Committee will be hammer over their differences on the bill.
Landlords, nonprofit housing developers and tenants are lobbying fiercely on both sides of the issue, with little middle ground.
In particular, rental property owners contend the proposal would, in reality, delay every sale by several months while nonprofit housing groups to line up financing and make an offer.
In the meantime, they will be stuck sitting on an apartment building or a small rental property they could have sold in a matter of few weeks or even days to an investor with all-cash offer under the current rules.
Irreconcilable differences? We’ll see – stay tuned.
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
