The failure of rental housing policy
in Massachusetts and nationwide
NOTE: We present here the basic reasons why rental housing policy fails,
and why this failure is occurring across the country -- or will soon be coming to other states
Small landlords are ignored
Utterly ignored.
Small landlords provide the housing for most of America’s moderate- and low-income renter households and for many middle-class renters as well. Yet they are ignored.
Small landlords are the predominant owners in America’s two- and three-story, multifamily neighborhoods, a significant socio-economic sector in every city and town. Yet they are ignored.
Small landlords are America’s most efficient rental housing providers. How they operate keeps costs and rents down. They are families who do their own management and repairs from their homes – no separate offices, no employees with benefits. The number of units they can manage this way, whether part-time or full-time, is limited. Yet they are completely ignored.
Small landlords are half of the equation in each one of their landlord-tenant relationships. Yet they are ignored.
Small landlords, especially those with lower rents, are being driven out of business. In three decades since 1990, America has lost a substantial amount – 4 million units – of low-rent housing, a tragedy for low-income tenants. Yet small landlords are still ignored.
To be a small landlord, starting part-time, is an easy way for families at many income levels to add an income source, for husbands and wives or partners to work together. More small landlords mean more people with a stake in multifamily neighborhoods, to watch for problems and resolve them. Yet, small landlords are ignored, and we are losing this ladder of opportunity.
Stated policy says that all stakeholders shall be involved in policymaking that affects them. Yet small landlords are consistently left out and ignored by lawmakers, regulators, and those who draft landlord-tenant laws.
How can small landlords be so ignored?
The answer lies in who drafts the laws, so-called “legal aid lawyers” or “legal services lawyers.” They appear to have expertise, but they come with an agenda. These specialized lawyers are funded by federal and state tax dollars and by charitable donations. They come to the defense of tenants, not landlords, at no cost to the tenants.
Since at least 1974 when the U.S. Congress established the Legal Services Corporation, these free lawyers for tenants have existed in all 50 states and all U.S. territories. They are pro-tenant. They are united by a socialist ideology. They draft landlord-tenant laws on the urging of tenant activist groups and on request from pro-tenant state and local lawmakers. Their presence across America is why landlord-tenant laws everywhere are often the same or very similar. Using tax dollars to implement a legislative agenda on behalf of one side in the landlord-tenant relationship is, well, outrageous.
An ideology of oppression
The key problem with landlord-tenant law is that it is based on ideology, not reality. This ideology claims that poor tenants are forced to pay high rents for low-quality apartments and are thus oppressed. Their oppressors are “greedy, corporate landlords” who raise rents on a whim and put profits above all else – or so they are portrayed.
This ideology is assumed to be reality, but it does not square with reality. Not all tenants are poor. Rents range widely and are not nearly as high as claimed (as we discussed in "What are the REAL rents?" on the How Rental Market Works page). Low-quality apartments usually have low rents. Small landlords are seldom wealthy and are not corporate. Their incomes are often just a notch or two above the incomes of their tenants. Landlords do not have a “greed” gene that no one else has. We are all humans, landlords and tenants alike, facing this world together.
This ideology of oppression justifies ignoring small landlords, and all landlords, when drafting landlord-tenant laws. Why talk to the landlords if they are the enemy, the wrongdoers with greedy goals? Did Russian revolutionaries ask factory owners how to dismantle capitalism? Did Southern officials ask African Americans to help decide on segregation? Are prisoners asked to help decide sentences and jail conditions? Of course not. Not talking to the regulated community – the landlords – is a clear sign that they are marginalized, demonized, considered second-class citizens (or worse), and do not deserve to have the same rights as everyone else.
Yet, based on this ideology and cries about high rents, a whole industry of nonprofit organizations has sprung up to build so-called “affordable housing.” It costs $1 million per unit to build it and subsidize the rent for 30 years, funded entirely by taxpayer dollars from every level of government. It is clearly Unaffordable. It can never meet the demand for lower-rent apartments. But it produces a huge class of people – the nonprofit employees who administer it, the construction trades that build it, and the subsidized tenants who live in it – all dependent on tax dollars and ready to vote for every form of public assistance and more tenant protections. Perhaps saddest, the tenants on subsidies easily get trapped in poverty.
Negative impacts of laws based on ideology
As a result, without input from the owners, without checking ideology against reality, landlord-tenant laws have serious negative impacts not just on small landlords personally but on the rental housing they own – even on their tenants. The worst impacts occur in lower-income neighborhoods, where rents are substantially lower (the real rents are discussed in Chapter X).
Small landlords who own a few rental units with lower rents are especially vulnerable. When tenants use “rights” or “protections” in the laws to stop eviction or live rent-free for an extended time, small landlords can easily go bankrupt or be forced to sell at a loss – or they simply abandon their properties.
Even when small landlords survive such battles, the lost rental income hurts not only the landlords, it robs the housing of income needed to maintain it well and for the long run. The lost income also undercuts the services and housing conditions of the landlord’s other lower-income tenants!
These impacts occur most often in lower-income neighborhoods, so the harm falls on the poor and on minorities – the very groups that activists claim they are protecting. Throughout this work, we give examples of extensive abandoned housing, increased crime from the laws, and fraudulent, destructive tenant behavior on a large scale – all encouraged and tolerated by the laws.
The ideology of legal services lawyers and tenant advocates, as we said, is fundamentally socialist. “The private rental housing market has failed,” they conclude. They do not believe in private ownership of property. They want to destroy the private rental housing market and replace it with “socially owned housing” (their words). So, the outcomes we see are not that surprising after all.
Massachusetts: A case study for the nation
We authors have had long and intense involvement in landlord-tenant issues in Massachusetts (see “Who We Are” on Home page). This politically liberal state has some of the strongest and most harmful landlord-tenant laws. We know these laws inside and out, and we share our analysis and experience in this work.
Massachusetts, then, is our case study, a close examination of the workings of landlord-tenant laws in one jurisdiction. Given the nationwide presence of legal services lawyers who draft landlord-tenant laws, other states often have similar laws with similar impacts. Where similar laws do not exist, our Massachusetts experience can serve as a warning about laws that likely will be proposed in other states and why, all too often, they will fail to work and cause harm.
Changing laws through education
Massachusetts is also a case study for the nation in how to repeal an especially bad law – rent control – and prevent its return. The city of Cambridge, home to major universities and a hub of cultural elites, had an especially stringent system of rent control. In 1994, a group of small landlords rose in opposition to it. After numerous unsuccessful efforts, the group launched a statewide referendum and won it, ending rent control in the three cities of Boston, Cambridge, and Brookline.
The key to this surprising success in a very liberal state was the “horror stories” of grievously harmed small landlords that circulated around the state by the news media along with stories of well-placed, high-income professionals living in rent-controlled apartments. Rent control’s abysmal history was its downfall. Educating the electorate was key to its overthrow.
After this defeat, tenant activists made four attempts to bring rent control back in Boston and Cambridge. Small landlords, now headed by this work’s authors, defeated all four attempts, in each case mailing all residential owners, informing them how rent control would impact them. These owners flooded Boston city councilors in opposition. In Cambridge, a citywide referendum in the city that once loved rent control was defeated in a landslide vote.
Another Massachusetts law – rent withholding for code violations – has had very harmful, even catastrophic, impacts. The small-landlord group’s monthly newsletter reported case after case of its egregious harms. This work’s authors won a think-tank prize for an essay on the law’s catastrophic impact on one city’s low-income neighborhoods. Two major efforts to reform it came close to success. At this writing, it still remains law as drafted but is close to proper reform.
As these experiences show, the power of information about how the laws work is undeniable. Reality defeats ideology. Chapter XX tells the story about rent control, especially in Cambridge. Chapter XX discusses the rent-withholding law.
Reforms to increase supply and create lower rents
In this work, we also suggest reforms to preserve lower-rent housing so vulnerable to bad laws and to produce a substantial new supply of lower-rent apartments. In these reforms, we prioritize using the private rental housing market, with the least recourse to tax dollars for subsidies, simply with reform of existing laws to let private rental property owners – mostly small landlords – do what they naturally want to do.
We also discuss the problem with section 8 rental vouchers and all subsidies, that they disincentivize households from earning more income and trap them in poverty. We also suggest a solution.