Why rent control would deepen inequality

The only real answer is the production of more housing

THE CITY OF BOSTON’S attempt to return to the failed policy of rent control was not unexpected, but residents of Massachusetts – especially people of color – should understand that this policy is a path toward a deeper inequality that is hiding in plain sight.

As a Latina business owner and someone who grew up in subsidized housing, I’m shocked that this proposal completely ignores the segregated history of rent control and tears down the opportunity for generational wealth for communities of color and immigrant populations.

Although Black and Brown residents accounted for a quarter of the population in Massachusetts cities with rent control, they made up just 12 percent of the population in rent-controlled units. Boston’s proposal is purposely silent on who should be first in line for rent-controlled apartments and, once again, clearly advantages those who are wealthy and well-connected, just like it did in the 1980s and 1990s.

The pro-rent control advocates claiming that this policy will be an advantage to people of color are only offering us the hand-me-downs. They will take care of their well-connected friends first and our communities of color will be left with the scraps. If this weren’t the case, Boston would have added a means test to their rent control proposal to prevent this from happening, but to date, none of the pro-rent control advocates have come forward to solve this problem.

The inequity inherent in rent control is so large, you can see it from space. However, the more pernicious danger of this policy on social equity is perhaps not as obvious.

Up to just a few years ago, property ownership was relegated to forward-thinking White families who understood that having a source of income outside of their salaries would help pay for college tuition for their children, or smooth the financial challenges in their retirement years.

Now that the real estate market has proven to be a solid investment in Massachusetts, many families of color are seeking that opportunity for a nest egg of their own. My work is dedicated to guiding those families to take advantage of this opportunity that has not been available to them in the past.

Property ownership is a path toward closing the wealth gap for many people of color. The 2022 State of Hispanic Wealth Report showed that while net worth for Latino households is climbing, the wealth gap between Latinos and their non-Hispanic White counterparts remains substantial. The report also found homeownership plays an important role in the growth of Latino household wealth – a conclusion no one is surprised to hear.

The one-dimensional appeal of rent control (that capping rents can give people more financial flexibility) is a compelling idea to those who intentionally refuse to see that creating more housing is the single most important policymaking tool we have to solve our housing crisis and create wealth-building opportunities for people of color.

To make matters worse, rent control policies have been shown to protect the current supply of housing and disincentivize developers from building apartments that could be affordable for residents not ready to buy a home. A Stanford study found that rent control accelerates gentrification by encouraging landlords to convert rental housing to high-end condominiums or cooperatives. This is already what we are seeing in numerous areas throughout Massachusetts and rent control would reinforce this move toward unaffordable, and gentrified, neighborhoods.

In fact, San Francisco found that existing rental properties were deliberately converted to luxury condominium housing and high-end rentals after the passage of rent control. This led to housing stock that only served higher income individuals and San Francisco is now one of the most expensive cities in the world as a result.

Massachusetts, like many states, struggles to repair the social, racial, and economic segregation that outdated housing policies like rent control have created. More luxury homes mean a far more limited supply of affordable apartments, creating fierce competition for housing. For people of color suffering under decades of wealth inequality, this makes home ownership simply unattainable all over again.

When supply is limited and rents are restricted by the government, property owners will seek the most reliable evidence that a prospective tenant can pay their rent on time. What does that mean for tenants? Credit scores, and the inequality associated with these scores, become vastly more important for property owners when making rental application decisions.

As we’ve seen in a recently filed lawsuit, credit scores are often used as a proxy for discriminatory practices in Massachusetts, in order to limit access to housing to those who may be economically disadvantaged or to people of color.

This was especially true during the era of rent control here in the Commonwealth. Innumerable press stories illuminate the widespread advantages that high-income earners (no doubt with great credit scores) maintained over their struggling peers to secure a rent-controlled apartment. Namely, the Crown Prince of Denmark, and a Justice of the Supreme Judicial Court at the time.

Meet the Author

Neily Soto

Chairman of the board, Massachusetts Housing Coalition
Perhaps the aim of Boston’s resurrecting rent control was to enliven those who whistled past the obvious inequality it created and attempt to rebrand the outrageous practice into a more palatable “rent stabilization” to paper over its discriminatory history. This might be laudable to a limited circle of those who have never lived through the dismal era of rent control in Massachusetts. But it is a frightening prospect for people of color and hardworking property owners – while doing nothing to solve our housing crisis.

Neily Soto is the president of the board of directors of the Massachusetts Housing Coalition and a real estate broker with a long career serving people of color as first-time home buyers and entry level investors in local real estate.