Rent Control Risk in Boston - Thoughts?!

[Lea C.]

Hi All,
I have started investing in real estate in the Boston area, and am curious what you think and have heard about the risk of the government officials renewing rent control in Boston. I know it was banned in the 90s on the state level, but I keep reading about attempts to reinstate it on a city or municipality level. What is the risk that this will happen? If it happens, will it only likely happen in certain areas, like Cambridge and Sommerville? Thanks!

[Adam Sankowski]

@Lea C.  Totally just my opinion here but the threat of rent control is no reason to not invest in the area if you can afford to get in.  The quality of the tenant base, historic appreciation, job growth, etc is just too good to be worried about grumblings of rent control.  Mass landlords is def active in this area and are fighting against it.  Also, I don't know what the percentage of the housing stock is rental in the Boston metro area but I'd say its a majority or at least a huge chunk of it, so if this really does become a possible issue I think you would see a lot of landlords coming out of the woodwork to fight it just because of how many of us there are.

@Josue Velney brings up an excellent point with the 2% tax and that developers need to make a certain percentage of their projects affordable housing based.  I think that this is actually a very politically savvy move by Joe Curitone the mayor of Somerville.  On one hand he has a city filled of progressive artists and liberals (myself included) who love affordable housing.  On the other hand he's sitting in some of the fastest appreciating real estate of all time and has developers throwing crazy crazy money around Somerville.  He has to balance both or if one gets pissed off he's gone. I think that he knows that rent control would cause a landlord uprising so his compromise is to push this 2% sales tax on RE sales for affordable housing and to push developers a bit to have to create affordable units.  I think that this is for him to show that he's doing something but that he would never consider formal rent control.  That's my take.  Also keep in mind developers have to create affordable units... not units that have rent control.  They can increase in rent its just tied to the median income levels for the area. 

Here's further evidence of this theory:  There is a building code change that should be voted on in July in Somerville.  Lots of things in this change but one of them is that home owners with enough of a lot size will be able to build an "accessory dwelling" on their property which currently isn't allowed: basically a single family home behind what is already on there.  I've been dreaming of this as I'm currently in a 2 family house-hack and will be able to create a single family for myself while also another rental unit (our current one that we will move out of).  Mayor Joe was actually going door to door the other week cause he need signatures for his reelection campaign.  I brought this up to him directly as there seems to be a bit of push back about this accessory dwelling proposal from some people because of worries about the housing density in the city.   His answer was that he is going to fight for it, and that he believes its a great idea,  but that they would probably be only allowed for owner occupied or if they became rentals they would be capped at an affordable level.  And like I said, that's way different than rent control... it means that the rent can increase it just has to stay in relation to what the median lower income levels of the area are.  But in my case, if I moved into in as an owner occupied unit, the unit that I moved out of wouldn't have any affordable rent controls on it though once it turned back into a rental.  So you have to play the game but there is a lot of flexibility.  

My point being is that you'll see a lot of this... brand new construction that comes with rental rate limits tied into income levels.  But whatever... if that's the price of admission to allow me to build a new home in Somerville where I couldn't before then so be it.  I don't think you'll ever see full on rent control in Boston/ Cambridge/ Somerville.  The mayor(s) know the firestorm that would bring, but you will see lots of talk around creating "affordable units" so that their progressive voting base is also appeased.  Just my thoughts! :)