Allen Hebert takes pride in being a good landlord.
He owns several small apartment buildings in the Boston area, and keeps his rents low, below market rate. He raises them only occasionally to account for his own rising costs.
Even in a year like this one, when fuel and maintenance costs are putting pressure on his bottom line, Hebert said he can’t imagine hiking his tenants’ rent more than 3 or 4 percent. If he can, he’d like to avoid increases altogether.
“I have good relationships with my tenants,” said Hebert. “I know their financial situations, and that money is tight. There’s no reason for me to raise rents and harm those relationships. It doesn’t do anyone any good.”
But there’s only one way he knows how to describe Mayor Michelle Wu’s rent control proposal: “A disaster.”
That’s not because of the proposal itself, which would allow landlords like Hebert to raise rents by as much as 10 percent a year, depending on inflation. But rather, it’s what Hebert fears — knows, he said — will follow: the kind of blunt force rent control regime that squeezed landlords in Boston and neighboring cities decades ago.
Hebert is among many landlords who remember those days — in the early 1990s he owned buildings in Cambridge, where a powerful rent control board set rent caps and determined allowable renovations — and worries they would inevitably return. Any form of rent control, he and his peers argue, is a “slippery slope” to something worse. And that fear is fueling a visceral revolt in the real estate industry, which has poured hundreds of thousands of dollars into a campaign to defeat Wu’s proposal on Beacon Hill.
“Landlords are going to get crushed,” said Douglas Quattrochi, executive director of MassLandlords, an advocacy group representing property owners. “And when you crush landlords, all you’re doing is making our housing issues worse.”
But proponents of the proposal are quick to point out that Wu’s policy is not the same brand of rent control that was law here decades ago. In fact, her administration designed its more lenient provisions with the adverse effects of those past laws, as well as more stringent policies like those in New York and San Francisco, very much in mind.
The plan that overwhelmingly passed the City Council earlier this month allows for rent increases of 6 percent plus the consumer price index — a key barometer of inflation — with a maximum of 10 percent in any given year.
It would mean that for an apartment that rents at $2,000, roughly the median for a one-bedroom in Boston, the landlord could hike rent by $200 in a high-inflation year like 2023. If the CPI were at 1 percent, the owner could raise the rent by 7 percent, or $140.
The real estate industry also argues that rent control will drive housing production into the ground, worsening Greater Boston’s already dire housing shortage. Rent caps, they say, would limit landlords’ ability to recoup regular maintenance and upkeep costs, squeeze their bottom line, and discourage new construction.
But Wu’s proposed caps, in theory at least, may be high enough to help offset those concerns.
For renters, an 8 or 10 percent increase is significant. It is for property owners, too. Landlords who spoke with the Globe — their rental portfolios ranging from a few units to thousands — said that they seldom raise rents by that much, and that it’s generally frowned upon to do so outside of extreme cases. Hebert, for example, said he’s never hiked his tenants’ rents by 10 percent.
And city rental data indicate that the vast majority of landlords take a similar approach. Between 2010 and 2020, a decade in which housing costs in Boston ballooned, median gross rents rose by an average of 4.1 percent a year, according to city data. Of course, there are outliers, like when an investor purchases an apartment building and hikes rents, or a landlord makes a big renovation and builds the cost into rents. Those are the kind of hikes Wu wants to eliminate.
But generally, “the actual rent limit isn’t necessarily untenable for property owners,” said Amir Shahsavari, vice president of the Small Property Owners Association, which led the campaign to end rent control in Massachusetts in 1994 and is lobbying against Wu’s policy.
It also helps that, under Wu’s plan, a little fewer than half of the apartment units in Boston — smaller owner-occupied rental properties like triple-deckers — would be exempt from the rent caps entirely, according to city estimates.
And while Shahsavari, himself a Boston property owner, said it is important for landlords to know they can raise rents by whatever amount they choose in case of unexpected maintenance costs, he, like Hebert, is more concerned with what might come next.
“We know it doesn’t stop here,” he said. “In two years, we’ll have a lower cap that starts bleeding landlords, and soon no one will want to own properties in Boston anymore.”
But it’s not clear how that might happen. Wu’s policy has been sent to the Legislature in the form of a home rule petition, meaning it would permit rent control only in Boston and only under the exact terms of the proposal. If officials in Boston ever wanted to lower the cap, they would have to go back to Beacon Hill, according to the Mayor’s Office of Housing.
The proposal would create a rent control board, but it would be tasked with approving rent increases that exceed the cap when a property owner seeks a one-time exemption, city housing officials have said. It would not have the power to push the cap lower.
Beyond dollars and cents, there’s the politics. State lawmakers have been solicitous of propertied interests and thus deeply skeptical of rent control in years past. Knowing that history, Wu tried to stake a moderate course that might stand a fighting chance on Beacon Hill. The lower the cap, the harder the sell — and the sell promises to be very hard. A future return to the Hill to lower the cap would almost certainly be a very steep climb.
“To say that the cap is just going to be lowered immediately feels like a bad faith argument,” said Michael Kane, director of the Mass. Alliance of HUD Tenants, an advocacy group that supports rent control. “We’ve been fighting for rent control for years. It feels unlikely that the Legislature would turn around and be open to a lower cap.”
Regardless, the momentum behind rent control now is sending ripples of anxiety through the real estate industry. While landlords are upset by the policy, some developers are seriously reconsidering future projects in Boston, said Bruce Percelay, chairman of the Mount Vernon Co., a prominent apartment owner and developer.
He, too, worries about the proposal leading to something more stringent, and cautioned that landlords may start jacking up their rents now in anticipation of rent control. Percelay said his firm is putting a pause on future developments until the Legislature votes. If it’s passed, he said, “we may very well head for greener pastures.”
“I’m deeply invested in this city and want to be a part of its growth,” said Percelay, whose firm owns thousands of apartments here. “But at a certain point, the numbers stop adding up.”
Barry Bluestone, a Northeastern University professor who has studied rent control, said those warnings from developers are concerning, but may be overblown. A cornerstone of Wu’s policy is a 15-year carve-out for new construction, which should give plenty of time for developers to recoup their costs on projects and then some.
“They can still make a profit, they just won’t be able to maximize that profit,” said Bluestone. “There are plenty of developers I know who may be spooked by what’s been proposed, but are willing to wait it out and see. They’ll figure out that the cap is high enough to not adversely affect them.”
Wu’s policy, he said, is a good step toward addressing the city’s housing crisis. But if it passes, keeping close tabs on housing production and getting developers to continue building will be crucial.
“I see a world in which we can incentivize housing production and protect tenants,” said Bluestone. “It needs to be a balance.”