On Rent Control: Part One—Legal History

The Joint Housing Committee of the Massachusetts Legislature recently held a virtual hearing on House Bill H.1378, a proposal to grant cities and towns the right to establish rent control. As a person who lived in a rent control apartment, then owned rent-controlled apartments, and now owns unregulated apartments, I have broad experience of the issue. This series explores the potential, and pitfalls, of rent-control as a mechanism to address our housing supply and affordability crisis.

A Brief History of Rent Control

The first rent control laws in the US were adopted in the 1920’s. They expanded in the wake of World War II, with a desire to ensure affordable housing for returning vets, primarily in large, coastal cities. The salient feature of rent control was establishing a maximum allowable rent for any dwelling. Across-the-board adjustments were indexed annually (similar to a COLA: Cost of Living Adjustment). The maximum allowable rent for a particular unit could also be increased when local rent control boards approved landlord petitions supported by capital improvements to their property.

The 1950’s economic boom created unprecedented construction and suburban expansion; rent control fell out of favor. The general perception was that people who lived in rent-controlled units enjoyed unfair advantage. Meanwhile housing stock deteriorated as owners of rent-controlled buildings, put off from battling rent control boards for meager increases, provided minimal maintenance.

In the 1970’s most cities with rent control shifted to a second-generation system: rent stabilization. Rent stabilization varies from rent control in one important way; the landlord can ‘reset’ the base rent when a tenant moves out. This offers financial incentives for landlords to maintain their property, while encouraging tenants to remain in place. An upside of rent stabilization was promoting more stable neighborhoods; a corresponding negative was landlords trying to get rid of long-term tenants. Many landlord/tenant relationships got ugly.

As economic theory swung from Keynesian to free-market in the 1990’s, both rent control and rent stabilization were denounced as proto-socialist relics that impeded real estate development in a supply-side world. By definition, those evaluations…