Small Landlord Letter
Defending the rights & interests of small landlords,
small property owners & small business owners everywhere
Lenore Monello Schloming M.A.
Skip Schloming Ph.D.
On this page
Rent control on President Biden's agenda?
Rent control's impacts hurt everyone
Facts about rent control & Boston's petition
Rent control's impacts on each residential owner group
Rent control in Cambridge: An experiment in socialism
Rent control on President Biden’s agenda?
On March 13, 2023, President Biden announced a new government program: “Lowering costs for American families.” The official description is broad and abstract. But surely, one of its components will be nationwide rent control, which Biden has already mentioned.
One strategy the Biden administration might use is price controls more broadly. Rent control will be one of the price controls. The others will be temporary, but in the end, rent control will remain.
The idea of the government lowering the costs of anything is surely a guarantee that it will cost some people far more than the amount of lowering. It’s socialism once again. The government takes money from some people, runs it through a government bureaucracy that skims off its own generous share, and then gives the remainder to some other people, to get their vote. It will not solve problems; it will create them.
We have been warned!
From one of our followers, a Boston small landlord:
“I think, if Boston wakes up and boots Mayor Wu to the curb, it will be too late for me and my real estate. Before then, I expect her to usher in a crushing form of rent control we’ve never seen before, with the help of a ballot question in 2024 – a full return to rent control that the housing activists will never let be removed.
“That’s why moderates like Boston councilors Mike Flaherty and Ed Flynn voted for it. Because that’s where our electorate in the city of Boston stands. And it’s going to get worse now. Not better.
“People who can, will continue to flee the insanity that is now Boston.” – A Boston small landlord
Rent control in Boston? Next: Somerville, other cities
RENT CONTROL's impacts hurt everyone!
ATTENTION: All Massachusetts residential owners
● SINGLE-FAMILY owners ● CONDO owners ● MULTI-FAMILY owners ●
Boston Mayor Michelle Wu proposes “rent stabilization” for Boston
● It’s RENT CONTROL! ●
Rent control only hurts landlords, right?? Wrong! Everyone pays for rent control!
Call it “stabilization,” call it rent control, it will devalue a major sector of rental housing in Boston and push property tax bills UP for everyone else.
Please read on to understand rent control's impacts broadly and on each specific residential owner group
The Mayor’s people only talk about her proposal’s generous annual rent increases, capped at 6% plus CPI, to a max of 10%. Tenant activists hated this generous annual rent increases. So they got two dangerous provisions added, which allow these “permissible rent increases” TO BE CHANGED!!! Changed to what? Whatever the authorized Rent Board considers “fair” rent increases.
The LOWER those “permissible rent increases” go, the HIGHER will go the property tax bills for all NON-controlled owners.
It’s all about POWER. Politicians always listen to rent-controlled tenants, who vote in droves to protect and expand their “entitlements” to OTHER PEOPLE’S property.
WHAT YOU CAN DO:
● Read this webpage to learn more about the Mayor’s proposal and its dangerous impacts.
● The Mayor’s proposal, a home-rule petition to allow Boston to impose rent control, was approved by the Boston City Council. It is now at the State Legislature for debate and a vote.
● TELL all your State Lawmakers:
YOU ABSOLUTELY DO NOT WANT RENT CONTROL! YOU WILL VOTE ACCORDINGLY!
● See CONTACT INFO for all lawmakers on the "Contact Lawmakers" page.
We can DEFEAT rent control – if we ALL take action!
►OUR STRATEGY By word of mouth, by circulating this Letter and this website widely, by telling our lawmakers: NO to rent control!
Please, send this web address to all your neighbors and friends, and talk to them about rent control. Get them to send this web address on to all THEIR friends and neighbors.
Permission is hereby granted to copy & reproduce any material on this website and to distribute it freely by any means to all neighbors, friends & family. Our success depends on everyone spreading the word!
Facts about rent control & Boston’s “rent stabilization” proposal
It’s all about political power, not affordable housing Below-market rents drive tenants to the polls to elect – and RE-elect – pro-rent-control politicians. In turn, politicians vote to put more properties under rent control, including rented condos and rented single families. And, under pressure from tenant activists, they vote for policies that push rents lower and lower – all to grow the tenant voter base and stay in power. Just get the camel’s nose in the tenant, and the power of the tenant voting bloc will do the rest!
Every lowering of rents DEVALUES all the controlled properties – and pushes PROPERTY TAXES UP even further on everyone else – otherwise, the city could not maintain city services.
Generous annual rent increases? But fine print says the city can CHANGE them! What are they hiding? All the Mayor’s people talk only about the generous 6% + CPI annual rent increases (up to a max of 10%). They carefully do NOT mention the fine print in Section 2 (e), which says: “The City may provide for fair return standards for the regulation of rent, which may include…changes to permissible rental rates…” Whoa! Those generous 6% + CPI are the “permissible rental rates.” The fine print says THEY CAN BE CHANGED!! People who don’t tell the truth about what they sell are called con artists.
Read the Mayor's “rent stabilization” proposal: CLICK HERE
“Fair return standards…for regulation of rent”? These never-discussed words, also in the Boston petition, refer to how much profit (net income or “return”) can be allowed on top of all a landlord’s expenses: 2%, 1%, 0.5% profit? The authorized rent board (that’s explicitly mentioned in the proposal, too) gets to decide “fair.” `And watch out! Tenants can challenge expenses and get them removed. That new kitchen? Too fancy, not code-minimum, throw it out. That porch repair? “Sloppy workmanship,” throw it out. The tenants’ word is believed. Such challenges happened all the time during rent control in Cambridge, the gold standard for tenant activists.
Every expense thrown out lowers the allowed 2% or 1% return on the remaining expenses. Mortgage payments will NOT count as expenses, that’s history, too.
Every reduction in rental income devalues properties and pushes property taxes UP.
For an excellent discussion of Boston's petition, watch this 11-minute video by Doug Quatrochi, CEO of MassLandlords.net. He discusses the above ways that turn Mayor Wu's proposal into full-scale rent control. WATCH IT NOW
Existing housing supply shrinks, no new construction With low rents and expenses for bigger repairs never reimbursed through higher rents, landlords stop doing repairs. The housing steadily deteriorates and loses value, some so badly it cannot be rented. Some landlords refuse to rent. All this reduces tax revenue. Another problem: Wu’s proposal exempts new construction for only 15 years. Developers and banks will NOT construct or lend knowing their assets will be devalued in 15 years. Result: No new construction to build up the property tax base or ease the tight housing supply. Rent control makes itself the only option.
$1.8 billion in DEvaluation An MIT study found that Cambridge gained $1.8 billion in assessed property values over the decade following 25 years of rent control, attributed to formerly rent-controlled properties as well as properties devalued by being adjacent to all the “rent control wrecks.” Boston is 5.5 times bigger than Cambridge. When a sector of properties is devalued, the property tax burden shifts automatically to all non-devalued properties.
Increased crime Another MIT study found more crime in Cambridge neighborhoods with more rent-controlled properties. (Source: https://mit.edu › cjpalmer › www › APP-crime.pdf)
Rent control gentrifies! Proponents claim the opposite, and they are wrong. When rents are low, owners choose tenants who will reliably pay their low rents. The well-off and the privileged search for and get the cheap units; the poor, minorities, and immigrants get pushed out.
When rent control was outlawed in 1994, households of low- and moderate-income, elderly, or disabled occupants got up to two more years of controlled rents. In the three cities with rent control (Boston, Cambridge, Brookline), only 6% of all rent-controlled tenants qualified for it! Studies showed that rent-controlled tenants were largely single occupants, white, middle-class, and well-educated. This is what so-called “progressives” want? They are regressives, going back to a known failed policy.
Massachusetts has rejected rent control 5 times In 1994, Massachusetts ended rent control by popular vote. Efforts to bring it back began in Boston, three years in a row in the late 1990s. All three were defeated by the Boston Council. In Cambridge, a 2003 citywide referendum to restore rent control was soundly defeated. Small property owners had educated the public on rent control’s terrible impacts, as we are doing once again now.
Economists give all-but-unanimous assent to the proposition that “a ceiling on rents reduces the quantity and quality of housing available.” From Principles of Economics, by Harvard professor N. Gregory Mankiw
Rent control’s impacts on each residential owner group
• Single-family owners – higher property taxes, can’t rent your home
You get much higher property tax bills to compensate for lost tax revenue from the many deteriorating, rent-restricted properties devalued by rent control. The property tax burden shifts automatically, just to keep city funding going. But warning! If you want to move and keep your single-family home as a rental investment (a popular new rental option), your home, being non-owner-occupied, could be rent-controlled and severely devalued! See below on what happened to condos in Cambridge.
Want to keep and RENT your single-family, condo, or two- and three-family when you move out? ANY NON-owner-occupied property could or will become rent-controlled. Tenant unions always demand more.
• Condo owners – could be required to rent, at controlled rents!
Higher property taxes for condo owners, too – unless you rent your condo. Then, it could be rent-controlled! Under the old rent control in Cambridge, the city council passed an ordinance that required all future condo sales to be tenant-occupied ONLY and permanently rent-controlled! – yes, believe it or not, a huge loss of value and choice to all condo owners. The Cambridge city council, always 8-to-1 pro-rent-control through rent control’s 25 years, did it to grow the tenant voter base.
• Two- up to six-unit properties, IF owner-occupied – higher taxes & more
IF owner-occupied as your primary residence, you are likely exempt from rent control. But you, too, would receive higher property tax bills. MUCH WORSE: If you want to move and keep your multifamily property as an investment – a very attractive option for many owners – it would be non-owner-occupied and rent-controlled! An important path to higher income would be taken from you.
• All non-owner-occupied multifamily owners – the nightmare of rent control
All of you owners are rent-controlled. Your rents keep getting lower and lower compared to market value. Your tenants fight you viciously against all rent increases. After all, taxpayers are not paying for tenants’ lower rents; it is you and other landlords. All friendly landlord-tenant relationships become vicious conflicts. Gradually, your property turns into a “rent control wreck,” and the easiest path is to sell at a loss (to a corporate developer) and forget you ever owned rental property.
HOW WE WILL WIN Everyone – no exceptions! – who comes to this website or receives Special Issue of the Small Landlord Letter needs to forward it by email or copy it and give it to all your neighbors & friends – and talk to them! Everyone must call, email, or write your lawmakers!
Rent control in Cambridge: An experiment in socialism
Landlords – large and small alike – must be alarmed at the shift to far-left policies in many parts of the country. How this big-government socialist agenda will turn out is unclear.
But we do have an “experiment” in socialism, the 25 years of rent control in Cambridge that ended in 1994. The city centralized control of rents, evictions, and larger repairs on a substantial portion of Cambridge’s multifamily housing. It took away a landlord’s most important decisions and reduced them to janitors and small-repair persons. It attacked private property.
The city soon had one of the most stringent rent control systems in the country. But it went off its rails, resisted all change, and crashed in a statewide referendum that outlawed rent control – by popular vote in one of the nation’s most liberal states, birthplace of the American Revolution and of the world’s oldest constitutional democracy.
This socialist experiment developed in the hub of the nation’s cultural elites, the home of Harvard, MIT, research laboratories, and politically progressive professors, scientists, artists, and other high-salaried professionals. They dominated city politics through the Cambridge Civic Association (CCA), associated with West Cambridge, the city’s wealthiest sector. The CCA began in the 1940s as a “good government” group – but took up the cause of rent control. For every election, it produced a slate of pro-rent-control city council candidates. Tenant activists openly called themselves socialists, as they still do. For Democratic Socialists of America, a top agenda item today is nationwide rent control.
Cambridge’s cultural elites allied with the city’s tenants, a “rich-poor” alliance against middle-class small landlords (though the tenants were seldom truly poor). As the city’s tight rent control took hold, news stories soon spread across the state of grievously harmed small landlords. Stories also circulated about well-placed, high-income tenants living in rent-controlled apartments: for example, the city’s mayor-attorney, a Supreme Judicial Court judge, and a real estate mogul who used his rent-controlled apartments for guests. The socialist experiment was doomed.
Cambridge’s small landlords formed the Small Property Owners Association, asked for reforms, got none, tried a lawsuit claiming rent control was unconstitutional but a judge dismissed it. Then they launched the 1994 statewide referendum that ended rent control. Ten years later, the Cambridge Civic Association was dead.
The parallels: rent control and socialism
Like other forms of socialism, the foundation of Cambridge’s rent control was an ideology of oppression. The oppressed were poor tenants forced to pay high rents for low-quality apartments. Their oppressors were “greedy corporate” landlords. But ideology is not reality. The only corporate ones were large landlords who, with lawyers, easily got rent increases at the rent board. Small landlords, however, could not afford lawyers and failed.
These small landlords were middle-class and working-class families, often new immigrants or descendants of immigrants, many of them minorities. They ranged from liberal Democrats to conservative Republicans and everything in between – but not the hard left or hard right. Demonized as the oppressors, small landlords suffered most – yet were completely ignored.
Like other forms of socialism, Cambridge’s rent control aimed to transfer wealth. Cleverly, it did not have high-income taxpayers – those West Cambridge cultural elites – pay for it. Instead, small landlords – middle-class, working-class – paid for it as the city forced a chunk of their market-rate income to go directly to their tenants in below-market rents. A fundamentally cooperative relationship – rent in exchange for maintained housing – was turned into hate and fights.
Like other forms of socialism, rent control aimed to micromanage a significant sector of the economy. It controlled rents, evictions, and larger repairs in all the city’s rental housing except owner-occupied two- and three-family properties. It utterly failed to manage the properties well. The main tool was keeping rents low, which degraded every aspect of how the housing was managed. When landlords sought rent increases for larger repairs and improvements, the hearings pitted landlords against their own tenants. Hearing examiners, always tenants, heard tenant complaints of “shoddy workmanship” or “gold-plating” (more than code-minimum) and found the complaints “credible” with no physical inspection. Thus, many of the landlord’s receipts documenting repairs were tossed. When word spread that small landlords never got even their out-of-pocket expenses reimbursed, larger repairs stopped everywhere. And rent-controlled properties steadily deteriorated into what were affectionately called “rent control wrecks” – easily spotted.
The assessed valuation of rent-controlled properties dropped by $1.9 billion, including non-controlled properties devalued by proximity to the “wrecks” [MIT study*]. To recover the lost property tax revenue, the city socked all the city’s non-controlled property owners with higher tax bills. At the same time, crime increased in heavily rent-controlled areas.
[*Based on two MIT studies: “Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts,” 2014, and “Ending Rent Control Reduced Crime in Cambridge, Massachusetts,” 2019.]
Like other forms of socialism, rent control failed to help the target population that justified it – the poor and minorities, the elderly and disabled. To the contrary, rent control kicked them out. When rent control ended on January 1, 1995, the state legislature gave one or two extra years of rent control to moderate- and low-income, elderly, or disabled households. But in the state’s three rent-control cities (Boston, Cambridge, Brookline), only 6% of all rent-controlled tenants qualified for it (based on city data).
Studies showed that most Cambridge rent-controlled tenants were white, middle-class, well-educated, and often single-person households (space was cheap), the sons and daughters of cultural elites. This outcome happened because landlords with low rents chose tenants who would most reliably pay the rent and because middle-class tenants could afford the finder’s fees paid to departing tenants to get prized rent-controlled apartments.
Despite a stated goal of stopping gentrification, then, rent control gentrified to the max. When anyone suggested that rent control should end, the quick reply was always: “Where will the poor go?” But the poor were long gone!
Like other forms of socialism, rent control was, above all, a way to get power and stay in power, using one way only – give people money or free services to get them to vote favorably. In rent control’s case, for pro-rent-control officials. Over rent control’s 25-year duration, the Cambridge city council was always 8-to-1 pro-rent-control.
Towards rent control’s end, Cambridge made another power move. The city council enacted an ordinance that required condos, after their next sale, to be tenant-occupied only and rent-controlled. The loss of value for condo owners was steep – but its obvious goal was to expand the tenant voter base. Today, single-family owners could face a similar danger if they want to move and rent their home in the new sub-industry of single-family rentals. Being non-owner-occupied, however, single-family rentals could easily get put under rent control.
Recently, Boston’s new mayor Michelle Wu was against rent control as a city councilor but switched to supporting “rent stabilization” to win the mayoral race, as she did last November. “Rent stabilization” suggests a mild form of rent control. But beware! Rent control’s irresistible power dynamic is to grow and strengthen the tenant voter base. Tenant activists will push hard to expand rent stabilization, and city councilors, to keep their seats, will vote for it. So, keeping rent control mild, as in mayor Wu’s “rent stabilization” idea, would be difficult or impossible.
Like other forms of socialism, rent control did not solve any problems, it only created them. It never addressed the real cause of high rents – not enough housing and lack of new construction. To the contrary, it stopped all new rental construction – no one builds housing in rent-controlled areas. It pushed very-low-rent housing off the market from deterioration. And the existing supply shrank when single persons, instead of families, rented whole apartments for themselves.
But, if rent control had really solved the problem of high rents, the city’s elected officials would have put themselves out of power. This problem is potentially widespread – that government officials have an interest in NOT solving the problems for which they were elected or appointed. Their personal interest, their job security, depends on keeping problems in existence. All government bodies need regular, independent, objective measures of their success or failure that are made public.
Like other forms of socialism, rent control fails by any reasonable measures.
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