Disaster didn't strike - issue on rent control

Reason, Oct, 1997 by Helen Gao

Last summer, in-fighting among Republicans prevented New York City's World War II-vintage rent controls from being abolished. By contrast, Massachusetts did away with rent control in a statewide referendum in 1994. And despite tenant activists' dire predictions of wholesale evictions of poor families, the disabled, and the elderly, disaster has yet to strike the state.

One reason, suggests a recent Manhattan Institute study by Henry Pollakowski of MIT's Center for Real Estate, is that few beneficiaries of rent control were poor. Pollakowski found that about half the population who paid below-market rents in Cambridge were white-collar professionals in their prime earning years. A mere one in 10 beneficiaries of below-market rents was elderly. And only 7 percent of tenants applied and qualified for a transitional assistance provision that kept rent control for low-income renters in place for as long as two years.

Contrary to common claims, ending rent control didn't initiate an inflationary spiral. In Boston, the average rent increased 9 percent, from $825 in 1994 to $900 a year later, where it has stabilized.

If anything, the end of rent control promises to produce dividends for local treasuries and new housing for tenants. Pollakowski predicts that Cambridge alone will collect an additional $4.5 million in annual property taxes as rental properties are reassessed at market values. And as the end of price controls lures potential landlords into the marketplace, an anticipated construction boom should add 2,500 housing units to Cambridge and Boston, almost a 1 percent increase of the existing stock.

Tenant activists dispute the rosy post-deregulation picture but offer no statistical evidence of a harsher reality. When asked about the effects of rent deregulation, Cambridge tenant activist Bill Cavellini simply said, "It has been a disaster for the people and the city," and hung up the phone.