State and Local Issues

Moving Away From Rent Controls

After Cambridge, Mass., lifted rent controls on apartments in 1995, the city enjoyed sizable and sustained economic growth. Thousands of wealthier tenants moved into the city -- sparking a construction boom and a renaissance in new restaurants and retail stores, while generating more tax dollars for city coffers.

Average rents went from $500 a month in 1994 under controls to $1,050 in fiscal 1998. Over the same period, building permits rose from 1,488 to 2,100. New housing and construction increased by 50 percent -- with tax revenue from construction permits alone rising almost threefold.

  • Nationally, only four states -- New York, New Jersey, Maryland and California -- plus the District of Columbia still have laws on the books that limit the amount of money landlords can charge for an apartment.

  • So destructive are rent controls perceived that 31 states have passed laws prohibiting their local communities from even trying to enact them.

  • Experts say that even when new construction is exempted from rent controls -- as it had been in Cambridge -- the threat that they may someday be applied puts a chilling effect on new development.

  • Critics charge that while rent controls are usually justified in terms of helping the poor, they more often benefit the rich, the smart, the lucky and the well-connected.

In the debate on lifting controls in Cambridge, a compromise was reached that protected low-income families from eviction for up to two years. As it turned out, only 9.4 percent of all tenants were poor enough to qualify.

Source: Judith Havemann, "Mass. City Gets a New Lease on Life," Washington Post, September 19, 1998.


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