NEW BEDFORD — When the City Council decided to ask voters about rent control last month, it started a debate.
Councilor Shane Burgo, who introduced a ballot question on rent control, says the city needs a way to control drastic rent increases. Meanwhile, business and real estate leaders have come out against the proposal — they say similar policies have failed in other cities, only making the housing crisis worse.
So, The Light reviewed decades of research on cities that have tried some form of rent control to find out how it might affect New Bedford’s housing market.
The term “rent control” refers to laws that limit what landlords can charge their tenants. When these laws allow for minimal rent increases, they are sometimes called “rent stabilization.”
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Research shows that rent control can reduce the supply and quality of rental housing, depending on how landlords react. It could also cost the city in revenue and resources, while benefiting renters who don’t need assistance. But there’s evidence that tenants could save money and avoid displacement.
The question potentially headed for the November ballot will ask: “Should the City of New Bedford adopt an Ordinance stabilizing rents, in order to prevent displacement in the local housing rental market?”
The ballot question is non-binding, so even if a majority of voters check “yes,” the city won’t have to do anything. And state law bans cities from enacting their own rent control laws, so New Bedford would need to get permission from the state Legislature through a home rule petition. Boston has submitted a petition, and Somerville is moving toward doing the same.
There is a chance that Boston’s home rule petition for rent control will fail, putting New Bedford in the awkward position of asking the Legislature for something that lawmakers already denied the capital city. But the risk doesn’t deter Burgo. In fact, he thinks that if Boston’s petition fails it will be even more important that New Bedford joins with other cities pushing for rent control, so legislators will be pressured to allow it.
“They need to see the political will to push for this,” Burgo said. “They need to be able to see that this is something that’s going to be popular among voters.”
Last month, New Bedford Mayor Jon Mitchell vetoed the City Council’s move to put the question on the ballot. He thinks rent control would only make the city’s housing crisis worse. In a letter to the council, he said that the less profit landlords can make, the less they will want to build and rent out properties here. That will reduce the supply of rental housing, the very problem that sparked the housing crisis.
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Mitchell said his office has already received calls from developers who are concerned about the ballot question.
Councilors originally approved the ballot question with a 9-1 margin, so they could override the mayor’s veto. That could happen as soon as April 27, at their next meeting.
Burgo said he introduced the ballot question after hearing of cases where people’s rent doubled, for example going from $800 to $1,600 a month. He sees that as price gouging, which rent stabilization could address.
“Developers are here to make money, and I understand that,” he said. “But at the same time too, I want my residents — our residents — to be protected.”
The question itself is vague, and that’s on purpose, Burgo said. He hopes that the question will spark conversations about whether rent control is right for New Bedford, and what such a policy should look like.
Burgo wants to make it clear that he isn’t seeking a law that would put a hard cap on how much landlords can charge. He envisions a rent stabilization policy that would limit the amount landlords can raise the rent within a given time period. He hasn’t given a target or range of how much that should be because he doesn’t want voters to feel like they’re voting on a particular plan, he said.
Burgo may be at odds with the mayor on rent control, but the councilor still supports the comprehensive housing strategy that the administration announced last month. The 22-point plan includes initiatives to attract developers, revamp vacant housing, and provide aid to homeowners and renters. Burgo sees rent control as just one more way to combat the city’s housing crisis.
“It’s definitely not a silver bullet,” he said. “It’s really just another tool to be able to help keep people in their homes and keep rents affordable for people who have lived here all their lives.”
Most economists aren’t big fans of rent control.
“The experience of Cambridge and other cities suggests the results of those policies can have unintended consequences,” said Mike Goodman, a public policy professor at UMass Dartmouth. “Regulating the prices is an understandable instinct, but any step in that direction should be carefully considered.”
Greater Boston’s rent control policies were enacted in the 1970s and lasted until the state Legislature repealed them in 1994, providing researchers with years of data. Economists have also studied rent control in San Francisco, Washington, D.C., New Jersey and other places.
Here’s what the research tells us about what could happen if New Bedford tries to regulate rents.
Rent control keeps rents low and prevents displacement.
Multiple studies in various cities have shown that rent control did successfully keep rents low in regulated units.
“What’s the huge benefit of rent control for the renter? It’s certainty where they’re going to live, it’s certainty in price,” said Christopher Palmer, an economist at MIT. “People might really really value that.”
Tenants tend to move less often under these policies. A 2019 study of San Francisco showed that people living in rent-controlled apartments were more likely to stay at their address, and even if they did move, they were more likely to stay in the city.
This suggests that people weren’t being displaced by rising rents. Housing advocates say that’s important because there are benefits to long-term housing stability. When you live in the same neighborhood for a long time, you have relationships with your neighbors. You have steady access to educational and professional opportunities. Those factors aren’t easy to take into account when you’re just analyzing dollars and cents.
But there’s a flipside to people moving less. Economists have pointed out that artificially low rents could incentivize people to stay in an apartment that doesn’t fit their needs. For example, a married couple might hold onto a three-bedroom apartment after their kids move out because it’s just so cheap. Meanwhile, a young, growing family might find themselves cramped in a one-bedroom because older couples are taking up the larger apartments.
Rent control might make landlords less likely to maintain and improve their properties, but local policies could help.
Rent control limits cash flow for landlords, which means they have less money on hand to repaint walls or fix faulty plumbing. In Cambridge, this was a problem.
“Rent control clearly reduces maintenance,” said David P. Sims, an economist at Brigham Young University who has studied rent control in the Boston area.
One of Sims’ studies found that apartments were more likely to have maintenance issues under rent control. The policy didn’t seem to have an effect on heating or electrical problems (landlords can be fined for those), but aesthetic issues like holes in the wall or loose railings did go unaddressed more often.
Palmer, the MIT economist, said that even simple improvements like installing new countertops were a challenge. Landlords wanted to raise the rent to pay for them, but they had to go through the city first.
“If you were doing a renovation, you could apply for a special allowance, but it was going to be hard for you to do that paperwork and go to the hearing and make the case,” he said. “The bureaucratic hurdle was high.”
The 2014 study Palmer co-authored showed that permits for major building improvements in formerly rent-controlled buildings jumped when the policy was repealed, a sign that landlords were putting off that work.
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But studies of other cities didn’t find the same issues. Rent-controlled apartments in Washington, D.C. were actually less likely to have maintenance problems than non-controlled apartments, a 1990 report found. The proportion of rental units in the district that had maintenance issues actually decreased after rent control was implemented there, according to the report.
A 2007 analysis of cities in New Jersey also found that rent control didn’t have a significant impact on maintenance. The study included 76 cities that had implemented rent control and looked at plumbing problems as an indicator of delayed maintenance.
One difference between Cambridge and the other cities is the restrictiveness of their policies. Cambridge kept rent increases well below inflation and only made special exceptions, but researchers described the New Jersey and D.C. policies as more moderate and noted that they even included incentives to keep up with maintenance.
Other researchers have suggested that local policies bolstering code enforcement and allowing landlords to increase rent for property improvements could address maintenance issues.
Rent control could reduce the supply of rental housing, though local restrictions can limit the losses.
When landlords feel like the profitability of their rental properties is threatened, they might choose to stop renting them out. That would reduce the number of apartments on the market and make it even harder for tenants to find a place.
“People actually try to remove rental units from the housing market,” Sims said. “They try to make them condos, they try to put family members in, anything to take them off the market.”
The 2019 San Francisco study found that rent-controlled buildings were more likely to be converted into condominiums or redeveloped to get around the regulations. That contributed to a 15% drop in the amount of rental housing. The researchers say that the scarcity this caused likely increased rents in the long-run.
Landlords also tried to convert rentals to condos in Cambridge, but the city had restrictions that made it hard to do. Palmer found that conversions increased during periods when the restrictions were temporarily lifted, a sign that the rules were able to stop landlords who otherwise would have taken their units off the rental market.
It’s not clear whether rent control will scare developers away.
One of Mayor Mitchell’s main concerns about rent control is the potential that it will deter developers from building more much-needed housing in New Bedford.
But so far, studies on real-world rent control policies haven’t been able to show that they lead to a decrease in new development. Studies of Cambridge, D.C., and New Jersey couldn’t find a direct link.
Burgo isn’t afraid of scaring off developers. He points out that the city’s new comprehensive housing plan will help streamline the permitting process to make it easier for them to build here.
“What was stopping development before, when developers could double the rents if they wanted?” he said. “The real problem was the bureaucracy that was hogtying developers.”
Rent control will cost the city, and some benefits will go to people who don’t really need them.
Unlike other housing policies, rent control doesn’t target the people who need it most.
Tenants have to meet certain income requirements to qualify for housing vouchers or get into subsidized apartments. But all you need to do to get into a rent controlled apartment is convince the landlord to rent to you, so even people with high incomes can benefit from rent control — and studies show that they do.
“Many, many of the benefits tend to be captured by people that no targeted housing policy would award benefits to,” Sims said.
Meanwhile, implementing rent control isn’t free. Cities face costs for enforcing their policies. And if rent control decreases the value of rental properties by limiting their cash flow, that could put a dent in tax revenue.
The bottom line: Rent control has unintended consequences.
Even though rent control can keep rents low, the evidence shows that New Bedford might have to mitigate a drop in the supply and quality of rental housing. Economists say the city should keep those factors in mind.
“That’s the question for New Bedford to think about: How likely the unintended consequences will be?” Palmer said. “You might make the problem worse.”
When rent control was enacted in Greater Boston, the area was facing high demand for a low supply of housing — just like New Bedford is now. The research shows that rent control couldn’t fix that.
“The real problem was the cities were really attractive places to live and hard places to build housing in,” Sims said. “And rent control didn’t solve those problems; it just made the problems worse by taking rental units off the rental market.”
Rising rents may be hard on locals, Sims said, but they also attract developers to come and build more housing.
“It’s hard because in some sense, there’s this trade off,” Sims said. “Keeping things the same is great for the people there. In the long run, it’s hard for the community.”
Email Grace Ferguson at gferguson@newbedfordlight.org
What’s better than rent control? A market in which landlords have to compete against each other for tenants, instead of the other way around. How do you get that sort of market? Not by making it less attractive to supply accommodation (as rent control does), but by making it less attractive NOT to—by imposing a tax on vacant lots and unoccupied buildings. The “vacancy tax”, as it is sometimes called, is not limited to what real-estate agents call vacancies, i.e. properties advertised for rent; it also applies to unoccupied properties that are not on the rental market (preferably including vacant land, so as not to encourage demolition or deter construction), and prompts the owners to find occupants in order to avoid the tax.
Yes, a vacant-property tax is meant to be AVOIDED, not paid. Moreover, avoidance of it would generate economic activity, expanding the bases of other taxes and allowing their rates to be reduced, so that everyone else—including tenants, home owners, and landlords with tenants—would pay LESS tax!
Landlords are not altruistic. Profit is their only concern. Rents are out of control in many of the cities cited. The gap between haves and have nots is huge. What is New Bedford going to do with the displaced poor?
Dr. Dorsey: your statements about landlords are over-generalizations and not helpful in furthering constructive thought about the housing problem.
Rent control is immoral theft of property. Govt should not have that power.
Well written fair and balanced piece discussing the pros and cons of an important issue and a good basis for further discussion.
Rent stabilization can be an effective way to address housing affordability issues and prevent displacement in New Bedford’s housing rental market. Although some business and real estate leaders have come out against rent control, it is important to review the evidence and research on the topic to determine how it might affect the local housing market. Studies show that rent control can reduce the supply and quality of rental housing, but there is also evidence that tenants could save money and avoid displacement.
The ballot question that will ask voters if the city should adopt an ordinance stabilizing rents is a step in the right direction. Although the question is non-binding, it can still spark conversations about whether rent control is right for New Bedford and what such a policy should look like. Rent stabilization policy can limit the amount landlords can raise the rent within a given time period, and it is not seeking a law that would put a hard cap on how much landlords can charge. Therefore, it can be one more tool to combat the city’s housing crisis.
It is understood that some capitalist economists are not fans of rent stabilization; Some economists also were not fans of regulations of the trains and just look at Palestine for example of the impact deregulated markets can have on our communities. Rent stabilization is one step in that direction that should be carefully considered. Multiple studies in various cities have shown that rent stabilization did successfully keep rents low in regulated units and prevent displacement. People need and value relative certainty in where they’re going to live and what they’ll pay, especially during a housing crisis.
It is important to consider the benefits of rent stabilization and to tailor policy options in a manner that better meets the needs of our community. We must understand that our city has the ability to tailor our potential rent stabilization ordinance towards directly addressing and balancing the needs of our communities tenants and property owners. We could create an ordinance that improves upon the examples of past rent stabilization in other cities. The first planes created were not always 100% successful at meeting their goals however with time and continued evolution the airline industry has improved dramatically. The same can be true of renter protections such as rent stabilization.
“Rent stabilization ensures that hardworking families can afford to keep a roof over their heads and live in the communities they call home.” – Mayor Bill de Blasio, New York City
“Rent stabilization is a critical tool to prevent displacement and maintain affordable housing for low- and moderate-income families.” – California Governor Gavin Newsom
“Rent stabilization is the most effective way to protect tenants from unscrupulous landlords who would otherwise raise rents to exorbitant levels.” – Tenant Rights Advocate, Diane Yentel
“Rent stabilization provides an essential safeguard against rising housing costs and allows low-income families to live in safe and stable homes.” – New York State Senator Brian Kavanagh
“Rent stabilization ensures that people are not priced out of the communities they call home, and that they have a stable and affordable place to live.” – Massachusetts State Senator Sal DiDomenico
“Rent stabilization is a necessary policy to protect renters from the rising costs of living in urban areas, and to ensure that everyone has access to safe and affordable housing.” – Economist Richard Florida
“Rent stabilization is a critical component of any comprehensive housing policy, as it helps to mitigate the impact of rising housing costs on low-income and marginalized communities.” – Urban Planning Expert, Karen Chapple
“Rent stabilization is an important tool to address the affordable housing crisis, and helps to ensure that everyone has access to safe and affordable housing.” – Housing Policy Expert, Ingrid Gould Ellen
“Rent stabilization provides a crucial safety net for renters who might otherwise be at risk of eviction or homelessness due to skyrocketing rents.” – Tenant Advocate, Randy Shaw
“Rent stabilization is a proven policy that helps to keep housing affordable and ensures that renters are not forced to choose between paying rent and putting food on the table.” – Housing Justice Advocate, Mia Lehrer
“Rent stabilization is an essential policy for ensuring that low-income renters have access to stable and affordable housing, which is critical for their overall health and well-being.” – Public Health Expert, David Williams
“Rent stabilization is an important tool for promoting economic stability and reducing inequality, as it helps to ensure that all members of a community have access to safe and affordable housing.” – Economist Joseph Stiglitz
“Rent stabilization helps to promote community stability and prevent displacement, as it ensures that renters can continue to live in their homes and neighborhoods even as property values rise.” – Community Development Expert, Angela Glover Blackwell
“Rent stabilization is a necessary policy for preventing gentrification and displacement, and for ensuring that low-income families have access to stable and affordable housing.” – Civil Rights Advocate, Vanita Gupta
“Rent stabilization is a common-sense policy that helps to ensure that everyone has access to safe and affordable housing, and that renters are not at the mercy of market forces beyond their control.” – Housing Policy Expert, Rachel Bratt
I’d like to see some data on the rents are being charged now in New Bedford. And what the profit margin is for property owners. When I worked for the Federal Home Loan Bank of San Francisco many years ago, the economists I talked to were against rent control for the reasons you cite in your article. I realize people will feel that’s coming from the “elite” who don’t need affordable housing, but it came from economic studies, too. I think in general government involvement in housing hasn’t really helped that much. There are too many opportunities for abuse, like providing the apartments to people who know people rather than people who really need help. I’d prefer to see more use of old mills, former schools, and new building, with an emphasis not on 40Bs but on new rental properties that are 100 percent affordable — and geared mostly for people with disabilities or with very low income. The 40B law has only provided a small percentage of so-called affordable units and they are generally not really affordable. What struck me one time reading a New York Times article was that an elderly couple who’d emigrated from Russia had been living at minimal rent in a lovely rent controlled apartment for about 30 years where their rent only rose minimally. Is that fair to people who can’t find a situation like that? I’ve seen media coverage exposing that relatives of public officials (I think up by Boston) were able to live in rent subsidized housing or rent controlled units. And as you pointed out, property owners find ways to make money or avoid rent control by turning units into condos or not providing maintenance. I’m afraid I don’t trust local politicians to maintain oversight. Let’s see a review of public housing since the 1960s and its effect on New Bedford in years past. Sometimes it seems that cities tear down historic buildings and create a dismal new development that erases the soul or character of the old neighborhood. Whatever housing is created should be done in a way that raises people up and provides more opportunities for a fulfilling life. That requires a broader approach that includes a better environment overall for people to live in with library branches, good schools, a river walk, an art scene, plus parks and outdoor space like the proposed river walk. And clean up the PCBs. I think some public officials, maybe including the mayor, are focusing on that. Rent control seems like an idea from the 1960s that has had mixed results at best.
I don’t even own income properties.
Government should be smaller, not bigger. The government should not tell any property owner what they can charge for rent. Private property, right?
Families facing eviction often incur significant moving costs, lose personal possessions, and may struggle to secure new housing due to eviction records.
I’d like to point out a reality to New Bedford City Councilors, and others who are in favor of rent control, or “rent stabilization” as some prefer to call it.
Example: A person, or a couple want to buy a home, and because of the residency requirement imposed by the city, or city council for certain city employees in certain positions must live in New Bedford or forfeit at least 10% of the annual salary for one of the people who want to purchase a home, so they’re forced to buy a home in New Bedford, and due to the current extremely high home prices, they decide purchase a three family home, live in one apartment, and renting the other two apartments to make it affordable. Listed below are the costs of buying, and owning that home,
Price of the home =$500,000
20% down payment =$100,000
30 year mortgage@ 7.0% APR+
closing costs = $30,000
MONTHLY COSTS
Mort.+ interest +closing costs=
$3,527.75
property insurance $333.35
property taxes $400.00
water & sewer $250.00
Total Monthly Cost =$4,511.10
Now please tell me what I should charge for rent per month for each of the two apartments I’ll be renting out?