Myth of rent control must be put to rest

27 October 2004

I'm getting so tired of rent control.

Massachusetts voters thought they killed it in a 1994 referendum. But the idea has never really died and every few years another one of those broad and diverse coalitions of do-gooder groups tries to resurrect it. Two years ago, they successfully enlisted the support of Boston Mayor Tom Menino; the City Council narrowly defeated it. Last year, Cambridge voters turned down a city referendum to reimpose it.

But rent control is like a cockroach. No matter what you do, it keeps crawling around and, sure enough, it's back yet again. This time five Boston city councilors have signed on to a "Community Stabilization" bill pushed by the Boston Tenants Coalition, which boasts 70 community groups as its members. (Hey, George Bush, that's even more than the Coalition of the Willing!)

Look, it won't become law. Local initiatives like this need the approval of the Legislature and the governor, an unlikely proposition. Moreover, pretty much everyone except five city councilors and 70 community groups knows rent control is a stupid idea. Most mainstream economists denounce it. Rent control has the pernicious effect of decreasing supply and worsening the quality of housing. In addition, this latest proposal comes at a time when rents in Boston are actually falling - from a monthly average of $1,500 to $1,400, according to the city - while vacancy rates are climbing.

So why, if all of this is true, do rent control proposals have such remarkable staying power?

I think there are two reasons. One is their deceptive simplicity; another is that they strike back at landlords, a group we love to hate.

Rent control is like a magic wand. For years politicians have been hearing from constituents angered by rising rents. Boston's surging popularity as a residential city has driven all real estate prices upward, squeezing many longer-term residents. They want a solution and they want it now.

Rent control fits the bill. A simple law - Thou shalt not increase rents - and, poof!, one can claim the problem is solved.

If only life were so simple. The sources of Boston's high housing costs are many. One, as noted early, is rising demand. That's hard to change. (Indeed, since demand has risen because the city has become an increasingly safe place in which to live, the only way to dampen it would be to take the perverse step of letting the crime rate climb back up to the levels of 20 years ago). But other causes - more related to supply - are within politicians' grasp. For instance, it is estimated that construction costs in Massachusetts are between 20 percent and 40 percent higher because of the state's insistence on its own, often needlessly complex, building code. Simplifying that, or even better just adopting the national code, would help dramatically.

Similarly, building in Boston is expensive because, as much as local politicians claim they love housing, they are even more responsive to constituents who don't want a particular housing project next door. Consider the case of David Fromm, whose proposal for 22 affordably-priced townhouses in Roxbury met with five years of vociferous opposition from the Boston Redevelopment Authority. Courts have finally come to Fromm's rescue, but meanwhile the units, once projected to sell for $150,000, will now cost more than twice as much. Multiply that many times over, and you can see why Boston has so many luxury developments - their developers are the only ones with the resources to overcome the obstacles placed in their way.

Of course, changing building codes or supporting new housing projects is politically difficult, requiring pols to challenge entrenched and often vocal interests. That just adds to rent control's appeal. It's simple and easy. Best of all, it takes on an enemy no one likes: the landlord.

Face it. In our mind's eye, all landlords wear black top hats, have thin waxed mustaches and go by the name of Simon LeGreed. Rent control feeds into a populist image of the world: Us vs. them, needy vs. greedy, weak vs. powerful. It is a world where all landlords are villains, all rent increases are unconscionable and every tenant is a saint.

What politician wouldn't like to take on a group like that? Against such a foe, the economic merits of rent control are irrelevant - it's a kind of vengeance, a way to hurt THEMwhere it hurts most (that is, in their pocketbooks).

In 2002, led by Council President Michael Flaherty, enough city councilors had the sense not to fall into the trap of such thinking. Flaherty harbors ambitions of becoming mayor and this time too will be a test of his leadership. The easy course is to placate tenant groups by supporting a rent-control proposal they promise is innocuous while, nudge-nudge, assuring landlords the thing will never really become law. The harder - and right - approach is to reject this bad idea altogether.