Demand-side programs like rental vouchers and direct subsidies more effective at stabilizing low-income households
BOSTON–(BUSINESS WIRE)–#housing–A new Pioneer Institute study finds that while rent control can lower rental housing costs and help vulnerable tenants remain in their homes, it also carries steep long-term consequences—including reduced housing quality, lower property values, fewer new housing units, and higher rents for non-controlled apartments.
“Public debates over rent control policies reflect a trade-off between the short-term need to provide housing stability to vulnerable families and the long-term need to build enough housing to meet overall demand,” said Andrew Mikula, co-author of “Stability, Affordability, and Urgency: The Potential Risks and Benefits of 21st Century Rent Control in Massachusetts” with Aidan Enright.
Rent control—typically defined as limits on residential rents or annual rent increases—was eliminated in Massachusetts through a 1994 initiative petition. But with the growing housing affordability crisis, particularly in Greater Boston, interest in rent control has returned. Today, over three-quarters of Greater Boston households earning less than $75,000 per year spend more than 30 percent of their income on housing. Only Washington, D.C. and Chicago have lower rental vacancy rates among U.S. metropolitan areas.
In 2021, Boston Mayor Michelle Wu proposed a “rent stabilization” policy that passed the City Council but has since stalled in the Massachusetts Legislature. Wu’s plan would cap annual rent increases at the lower of 10 percent or 6 percent plus CPI, with exemptions for new construction under 15 years old and owner-occupied buildings of six or fewer units. Under this policy, landlords may reset market rates between tenants.
Wu’s proposal is similar to several “next generation” rent stabilization programs in place elsewhere in the country. Oregon, for example, caps rent increases at 7 percent plus CPI (10 percent in 2025) and similarly exempts new construction.
Most academic research shows that rent stabilization policies reduce housing quality and property values and often result in higher rents for units that remain unregulated.
A plurality of studies also find that rent stabilization policies reduce overall housing supply. In a 2022 national survey of multi-family housing developers, 87.5 percent said they would avoid building in jurisdictions with rent control policies.
Mikula and Enright conclude that demand-side programs—such as rental vouchers and direct rent subsidies—are more effective in helping low-income renters. These programs provide greater housing stability and increase opportunities for upward mobility without discouraging landlords from maintaining or offering rental units.
Massachusetts is one of just four states that operate its own rental voucher program in addition to the federal Housing Choice Voucher Program.
“Long-term, the solution to our housing problem lies in producing enough housing to meet demand,” Enright said. “That means streamlined permitting procedures and more flexible zoning laws and building codes.”
Andrew Mikula is a Senior Fellow in Housing at Pioneer Institute. Beyond housing, Andrew’s research areas of interest include urban planning, economic development, and regulatory reform. He holds a Master’s Degree in Urban Planning from the Harvard Graduate School of Design.
Aidan Enright is Pioneer’s Economic Research Associate. He previously served as a congressional intern with Senator Jack Reed and was a tutor in a Providence city school. Mr. Enright received a B.S. in Political Science and Economics from the College of Wooster.
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