Deep Dive: Rent Control Didn’t Work in the ‘70s and It Won’t Work Now

As housing costs continue to rise in Massachusetts, some say rent control – a government-mandated cap on rent increases  –will make housing more affordable. But Massachusetts has tried this solution before; far from helping, it shrunk housing supply, reduced the quality of housing, and locked low-income residents out of the market.

With a new rent control measure potentially headed to the 2026 ballot, it’s worth asking whether repeating the same failed experiment will only make Massachusetts’ housing crisis worse.

Massachusetts’ Failed Rent Control Experiment

In 1970, Massachusetts allowed larger cities to institute their own caps on rent increases. Five cities – Boston, Cambridge, Somerville, Brookline, and Lynn – adopted rent control laws. The consequences were catastrophic.

• An MIT study found that across several cities, the number of rental units declined between 8% and 12%, while property values dropped significantly.
• Rent controlled buildings fell into disrepair as landlords were unable to keep up with maintenance costs.
• New construction ground to a near halt. By the mid-1980s under rent control, there were more than ten thousand vacant properties in Boston.

For those units that remained, many were not occupied by low-income households but by higher-earning tenants – including Cambridge’s own mayor Kenneth Reeves and even the Prince of Denmark while he studied at Harvard. In fact, the state later found that less than 10% of rent-controlled tenants qualified as low income.

After examining rent control in Massachusetts cities during the 1970s and 1980s, MIT researcher Rolf Goetze concluded that the policies not only “failed” to help lower-income, elderly, and minority households, but actually “reduced diversity and accelerated gentrification.”

Massachusetts voters had enough of the rent control experiment: As a result of the economic consequences and the high-profile tenant scandal, voters repealed the law on the ballot in 1994, prohibiting localities from creating their own rent control policies.

Why doesn’t rent control accomplish its stated goal of helping low-income residents? Let’s look at several reasons. 

Rent Control Means Fewer Homes

Researchers have consistently found rent control discourages new investment in housing, resulting in reduced housing supply.

• When developers and landlords know future rents will be capped, they have little incentive to keep rental units on the market or build new ones. The result is fewer vacancies and more competition for the limited units that remain.
• A Stanford study of San Francisco found that when rent control was expanded, the supply of rental housing fell by about 15% as many owners converted their buildings for other uses.
• A Journal of Urban Economics study on Cambridge, MA found that after rent control was repealed, the share of rental properties grew by about six percentage points.

Rent Control Hurts Housing Quality

While rent control affects supply, it also has damaging effects on housing quality. With rental income capped, landlords are less-able to afford maintenance costs and more likely to cut back on upgrades. In some cases, landlords may be forced to abandon rental properties if they are unable to maintain them. This inevitably leaves tenants with lower-quality housing.

• Miami University economists studying New York City found that rent-controlled units were more likely to suffer from utility damage, external building damage, and pest infestations compared to non-controlled units. Another MIT economist found that rent deregulation in Cambridge led to a 20% increase in repair-related investment in formerly rent-controlled buildings.

The combination of declining housing quality and capped rental income can ultimately translate into lower property values, driving down incentives to maintain and create new housing.

• A Notre Dame and University of Southern California study on St. Paul, MN found that the city’s new rent control law caused property values to fall by as much as 12%, eliminating an estimated $1.6 billion in housing wealth and reducing tax revenue for schools and local services.

Rent Control Fails To Help Renters Most In Need

Decades of studies consistently find that rent control reduces renters’ mobility and ultimately limits affordable options for renters most in need.

• Tenants who secure a rent-controlled apartment are far less likely to move, even when their housing no longer fits their needs. An American Economic Review study of New York City shows that rent-controlled households often occupy units that are mismatched to their size and needs, while other families are left searching for space.
• In San Francisco, rent control policies reduced renters’ mobility by about 20%, increasing the likelihood that long-term tenants stayed in place while new renters faced higher costs and fewer options.
• Researchers studying St. Paul’s rent control policies found they had a “regressive” effect, meaning those with higher incomes see greater rental cost reductions than those with lower incomes.

Several studies also have found that rent control may even drive overall rents up. In San Francisco, researchers found the loss of housing supply due to rent control policies likely contributed to overall rental prices rising. Another analysis of various local rent control laws in California found that compared to cities without rent control, cities like Los Angeles experienced a 6 percentage point higher increase in overall rent prices over roughly a decade.

Better Ways to Address Housing Issues

Massachusetts has some of the highest housing costs in the country, which are cause for concern for many voters. Rather than reducing the incentive to build housing through rent control, we should create new incentives to build.

One proposed ballot measure that voters could see in 2026 would prevent cities and towns from requiring large minimum lot sizes for single-family homes, opening the door to creating new housing on smaller, more affordable lots.

Recent MOA polling shows that two-thirds of Massachusetts voters, and a majority of voters in all income brackets, support this idea. For residents of the state’s urban centers, that support rises to nearly three-quarters of voters.

Conclusion

Massachusetts has a cost of living problem, in part driven by some of the most expensive housing costs in the country.

Yet quick fix mandates like rent control are unlikely to solve the problem, and could in fact exacerbate existing housing supply issues and even make rents worse in the long run. It could have a snowball effect on the state’s economy as a whole, driving out workers who can’t afford to live here, disincentivizing businesses from coming and expanding here, and driving up costs for the residents who are left.

A CommonWealth Beacon write up notes that as of last year, Massachusetts ranked among the states with the lowest rate of housing construction permits per capita in the country. Lawmakers and voters should pay attention to proposals that encourage construction of new housing and ensure quality of existing housing to keep Massachusetts competitive.