Why the Rent Control Fight Reaches Your Property Taxes

Rent control isn’t coming to Massachusetts this November. But don’t mistake that for the end of the conversation.

The Supreme Judicial Court knocked the ballot question off the November ballot on a technicality. The measure exempted housing in facilities operated solely for religious purposes, and the state constitution doesn’t allow ballot initiatives that relate to religion. That’s the whole ruling.

The court didn’t decide rent control was a bad idea. It decided this question couldn’t be written this way. If it had drawn a clean line between for-profit and nonprofit landlords and left religion out entirely, it would have gone to voters. So I think we see this again.

Supporters aren’t treating this as a defeat either. They’re urging lawmakers to pass rent control directly, rather than wait for another ballot cycle.

What the measure would have done. This wasn’t a bill the legislature negotiated. It was a ballot question, with signatures collected, headed for a straight yes-or-no vote in November. It would have applied to the entire state, capping annual rent increases at the Consumer Price Index or 5%, whichever was lower. And here’s the part most coverage skipped. Between tenants, landlords couldn’t have reset to the market rate. The cap followed the unit, not the lease. That’s what made this one of the strictest rent-control proposals anyone has proposed anywhere in the country.

What the analysis said. Ahead of the vote, the Greater Boston Real Estate Board commissioned the Center for State Policy Analysis at Tufts to model what would happen if it passed. Worth knowing that GBREB opposes rent control, so read it with that in mind. Their finding was that it would “shrink the residential property tax base by 6 to 9%” across the Commonwealth, and that property values would decline enough over a decade to cost home and property owners roughly $300 billion.

Whatever you think of who paid for that study, the underlying logic isn’t complicated. A property you can do whatever you want with is worth more than a property you can’t. Same principle as rent control. A property you can rent at whatever the market will pay is worth more than one where you’re restricted.

It’s not just about landlords. Every town in Massachusetts collects property taxes assessed on the value of the property. If a property is worth $500,000 and the rate is 8%, that’s what you’re taxing. Property values drop, assessed values drop, and tax revenue drops. Towns can raise rates, and there are rules about how much, but if you pass a measure that reduces property values, you reduce the tax base across the entire Commonwealth.

We’re already seeing budget shortfalls across the state, not just in the towns you’d expect. Marblehead was looking to close its library. Lexington is laying off more than 60 full-time teachers. I don’t want to dive into why that’s happening, but it’s an important part of this conversation. It’s not as simple as passing rent control and watching the cost of living go down.

Anything you do here has ripple effects. It’s the law of unintended consequences. You solve one problem and create another, and there are countless examples of it. Most of what I’ve read about rent control, especially a version this restrictive, points in the same direction.

Generally, in the real estate community, we think you fix a cost-of-living crisis by increasing supply. Part of why it’s so expensive here is that demand outruns supply. In the Boston area, everything is packed tight; there aren’t many places to build, and the zoning rules are fairly restrictive. Cambridge is getting a little better since it got rid of exclusionary single-family zoning last year, though plenty of people there think that helped developers more than it helped anyone worried about affordability.

All of that is worth considering when you’re weighing whether rent control solves the state’s problems, or whether you fix one thing and create something worse, where now you’re cutting services, laying off town employees, or figuring out where to find the taxes you just lost.

If you’d like to talk about this or anything else affecting the Commonwealth, especially real estate, I’d love to have that conversation. I’m Lou Gordon with Century 21 Revolution. Call or text me at (857) 210-9925, email me at lou@c21revolution.com, or visit lousellscambridge.com.