Massachusetts Rent-Control Push Could Chill Housing Investment, Exempt New Builds

A proposal for the strictest statewide rent control policy in the U.S. is on track to make it onto the 2026 ballot in Massachusetts according to Bloomberg. Supporters have collected more than enough signatures to advance a ballot initiative that would limit apartment rent increases to 5%, or the annual gain in the Consumer Price Index, whichever is lower according to Bloomberg. Wednesday is a key deadline for signature submissions on proposals for the November 2026 election according to Bloomberg.

Boston Mayor Michelle Wu, one of the biggest champions of rent control policies in the state, has expressed caution about the proposal and isn't yet throwing her support behind it according to Bloomberg. Affordability concerns have dominated the political landscape, with the topic featuring prominently in statewide and local elections according to Bloomberg. New York City Mayor-elect Zohran Mamdani scored a seismic victory this month after campaigning on freezing rents in about 1 million stabilized units according to Bloomberg.

The Los Angeles City Council voted Nov. 12 to amend its rent control policy for the first time in forty years, limiting annual increases to a maximum of 4%, or 90% of the CPI gain, whichever is lower according to Bloomberg. California allows cities to set stricter restrictions than the state according to Bloomberg. Boston has among the highest rents of any major U.S. city according to Bloomberg. Effective rents per unit in the region have jumped by 18% since the end of 2019, to almost $2,900 per month, according to CoStar data according to Bloomberg.

Why the Standoff Happened

The 5% ceiling is significantly below caps in Oregon, Washington and California, the three places with statewide rent control according to Bloomberg. It's so strict that even Boston Mayor Michelle Wu, one of the biggest champions of rent control policies in the state, has expressed caution about the proposal and isn't yet throwing her support behind it according to Bloomberg. High housing costs are a competitive liability for Massachusetts according to Bloomberg. Each city's specific needs and conditions require nuanced and specific solutions, according to a spokesperson for Wu according to Bloomberg.

Rent control was effectively banned in Massachusetts through a 1994 voter referendum according to Bloomberg. Progressives like Wu have pushed to resurrect the policy as housing costs have soared, even as the state legislature has balked according to Bloomberg. Wu campaigned on rent control when she first ran for mayor in 2021 according to Bloomberg. She has advocated for a less-restrictive proposal that would limit rent increases to the change in CPI plus 6%, with a maximum of 10% in a given year according to Bloomberg. This is more in line with the California, Oregon and Washington policies according to Bloomberg.

Risks to the Outlook

Boston's real estate leaders are already organizing against the proposal, warning it would chill investment and slow already-sluggish housing production according to Bloomberg. Just the prospect of rent control is already hurting interest in building apartment properties in Massachusetts, even though the proposal would exempt new developments for their first decade of operation, said Tamara Small, CEO at the real estate trade group NAIOP Massachusetts according to Bloomberg. The proposal includes exemptions for owner-occupied buildings of four or fewer units according to Bloomberg. Properties "operated solely for educational, religious or nonprofit purposes," and short-term rental properties as long as guest stays are fewer than 14 days are also exempt according to Bloomberg.

It's not clear what the implications would be for Massachusetts' beach destinations, including Nantucket, Cape Cod and Martha's Vineyard, where monthlong or summer-long stays are common according to Bloomberg. The tenant advocacy coalition has also endorsed bills before the state legislature that would enable cities and towns to enact their own versions of rent control, rather than impose a statewide requirement as the referendum would according to Bloomberg. "We are ready to continue conversations with the legislature about how to get something done that really meets the needs of tenants," Chou said according to Bloomberg.

What This Means for Investors

Several of the state's most powerful labor unions, including the Massachusetts Teachers Association, support the ballot proposal according to Bloomberg. Unions have powered several successful ballot initiatives in Massachusetts recently, including a millionaire's tax, by contributing manpower for signature gathering and millions of dollars for advertisements according to Bloomberg. Boston's real estate leaders are already organizing against the proposal, warning it would chill investment and slow already-sluggish housing production according to Bloomberg. Just the prospect of rent control is already hurting interest in building apartment properties in Massachusetts, even though the proposal would exempt new developments for their first decade of operation, said Tamara Small, CEO at the real estate trade group NAIOP Massachusetts according to Bloomberg.

The proposal includes exemptions for owner-occupied buildings of four or fewer units according to Bloomberg. Properties "operated solely for educational, religious or nonprofit purposes," and short-term rental properties as long as guest stays are fewer than 14 days are also exempt according to Bloomberg. It's not clear what the implications would be for Massachusetts' beach destinations, including Nantucket, Cape Cod and Martha's Vineyard, where monthlong or summer-long stays are common according to Bloomberg. The tenant advocacy coalition has also endorsed bills before the state legislature that would enable cities and towns to enact their own versions of rent control, rather than impose a statewide requirement as the referendum would according to Bloomberg.