Greg Vasil
Massachusetts’s affordability crisis has gotten worse over the decades. The Bay State remains one of the most expensive states for homeownership, with a median home price well over half a million dollars. We must implement solutions to keep residents from leaving the state and ensure individuals who call Massachusetts home can prosper. Rent control is not that solution.
Massachusetts rent control proponents are working to put the decision in voters’ hands by placing the country’s strictest rent control policy on the November ballot.
If this initiative passes, rent increases would be capped at the level of inflation or lower when inflation exceeds 5 percent, landlords would be prohibited from resetting rents when a unit became vacant, exemptions would only apply to buildings of four units or fewer that are owner-occupied, and cities and towns could not opt out.
This short-sighted, misguided proposal fails to account for the severe long-term effects that will harm every municipality. The Tufts Center for State Policy Analysis recently released “Untold Threat: Rent Control Ballot Question Will Imperil Municipal Budgets,” a report analyzing the impact of rent control on both short-term and long-term tax bases in every municipality in the commonwealth.
Rent control would trigger a permanent decline in residential tax collections because property values would decrease. A rental property is only as valuable as its ability to generate revenue; limiting a landlord’s ability to increase rent in line with costs ultimately decreases property values. The ballot question at issue would also apply to the rental of non-owner-occupied single-family homes. Restrictions on the ability of a landlord to rent out a single-family house at a price that would cover costs decrease the value of the house.
How the Math Works
The math is simple. Lower property values equal less residential tax collections. Lower residential tax collections equal less money for already-strained municipal budgets. In the short term, municipal budgets would see a 6 percent to 8 percent shortfall and eventually an 8 percent to 18 percent shortfall.
Municipalities will be put in the difficult position of choosing between accepting a permanent decline and making substantial cuts to municipal services, or raising tax rates to compensate for the shortfall.
In Boston alone, the average property owner would see a reduction in property value of 9 percent in three years. The shortfall for the city would be devastating: a loss of $160 million in residential taxes by 2029.
Some Greater Boston cities will be hit even harder. Property owners in Chelsea, Everett and Revere can expect a loss of 15 percent to 27 percent over 10 years and would require an increase of 18 percent to 37 percent in taxes to break even.
$300B Hit to Residents
Statewide, losses would grow over time. Within 10 years, all Massachusetts property values would decrease by an average of 13 percent, costing home and property owners roughly $300 billion.
The proposed ballot question is a one-size-fits-all solution for an incredibly diverse state that desperately needs to build more housing. Other rent control systems in place loosen over time; this question lacks any sort of release. The effects of this question would be permanent and severely harm homeowners’ investments, while jeopardizing essential municipal services like police, fire departments and schools.
Massachusetts needs a real change that will cut red tape, attract developers and get shovels in the ground. The Healey-Driscoll administration’s approval of accessory dwelling units across the state was a simple solution for property owners who were interested in adding another living space. The administration’s policies to fast-track housing density, like the MBTA Communities Act, has been another important step.
When supply increases, prices decrease. We can chip away at the state’s affordability crisis by building more. Rent control, which will harm municipalities and property owners and make the states completely unattractive to developers, is not the solution.
Greg Vasil is CEO of the Greater Boston Real Estate Board
