Landlords and Lawgivers

RENT CONTROL IS hardly an exciting issue. The vast fog of conflicting data thrown up by the opposing factions of tenants and landlords makes the issue, at best, confusing. And yet rent control is of critical importance, especially to a city such as Cambridge. Not only does 90 per cent of the city's population rent, a large proportion of its wealth is tied up directly or indirectly (through property taxes) in its housing supply. The present rent control law ends this year, so the state legislature must decide on its extension, amendment or repeal in the coming months. To aid in this decision, the Massachusetts Legislature commissioned the Harbridge House report. To the same end, the Greater Boston Real Estate Board funded George Sternlieb's investigation.

Unfortunately both reports reflect the biases of their funders, and thus their analysis of rent control is somewhat distorted. The Harbridge House report was done in a period of three months, and it shows. Its structure is vague and its use of statistics undisciplined. At times the report relies on irrelevant figures to back up its arguments and, even worse, uses statistics from biased sources without qualification. Finally, the report entirely sloughs over crucial issues such as rent control's effect on housing maintenance. The Sternlieb report, Sternlieb's investigation is incomplete and contains important informational gaps.

Rent control was initially instituted in the greater Boston area in 1970 to alleviate the effect of a severe housing shortage which was driving rents to artificially high levels. Its purpose was to provide decent housing at a decent price. The most important objections to rent control are that the original housing crunch no longer exists; that the short-term benefits of lower rents are being sacrificed to the long-range effects of reduced maintenance. Rent control's proponents claim that it has had no detrimental effect on the quality of the housing stock and that the original housing shortage continues. Predictably, the Harbridge House report sticks to the latter line while the Sternlieb report follows the former. Only a sharply analytical look at the information provided in both reports allows the reality of the issue to shine through.

OF PRIMARY IMPORTANCE is the existence or non-existence of a severe housing shortage. There's little question that if such a shortage exists, some kind of rent control is necessary to keep rents within reasonable limits. After conclusively proving that there is no reliable measure for vacancy rates which would determine the extent of a housing shortage, Harbridge House still speculates that there is such a shortage. The Sternlieb report entirely ignores the issue. There are indicators on both sides-public housing projects (except in Roxbury and Dorchester) are over-subscribed, but there is an increasing number of abandoned buildings in supposedly overcrowded Cambridge.

Then there's the issue of rent control and its effect on housing quality. The Sternlieb report makes a strong argument that landlords, confronted with stable rents and rising costs, are cutting back on their only variable-maintenance costs. Mortgage payments and taxes are by far the greatest costs for landlords, and are almost entirely beyond their control. The margin left for maintenance is never a large one, but with inflation (especially in heating fuel) and rent control, it may be non-existent. With a housing stock such as Cambridge's, consisting largely of older buildings, maintenance costs are substantial, yet absolutely necessary to stave off deterioration. The Harbridge House report flatly states that rent control is not affecting the amount landlords spend on maintenance. Citing the increased powers of tenants to hold up rent increases by complaints about housing conditions, the report states that housing quality has at least been maintained under rent control. Placing the burden on the tenant of maintaining housing quality seems, however, both unreasonable and unrealistic. The tenant's ability to put pressure on his landlord is limited by his interest and, more importantly, his understanding of rent control. In any case, the Harbridge House's own statistics on the increasing number of reported housing code violations suggests that housing quality is indeed declining. A quick drive in the Central Square area of Cambridge, down such streets as Broadway. Columbia or Brookline, confirms this suggestion and presents a dramatic picture of relatively recent housing deterioration.

But even if simple maintenance is not sacrificed, rent control can hurt housing quality in subtler ways. Banks are normally unwilling to lend to prospective builders in rent controlled communities. In Cambridge, there is no incentive under rent control to make capital improvements such as kitchen modernization or any major renovation. Burned buildings are left to rot; renovation simply isn't worthwhile under rent control. Even if George Sternlieb's picture of housing deterioration is somewhat exaggerated. It is difficult to escape the conclusion that rent control's discouragement of both new construction and renovation must lead to a progressive outmoding of the housing stock.

ONE OF RENT control's major faults-obvious in both reports-is its haphazard, complicated administration. As a result of its reliance on local boards which hear each case individually, rent control is run by an unpredictable, bureaucracy floundering in vast amounts of red tape. In the Harbridge House's (taken from projections made by the Rent Board), the average delay between application and final decision on a rent increase in Cambridge is six weeks. The Sternlieb report cites a figure of five and a half months. In either case, by the time an increase has been granted, inflation may already have rendered it obsolete.

One facet of rent control's administration which both reports miss is the fact that it is biased against the small landlord. The large landlord who owns a number of properties has the money and know-how to get the most out of rent control; the live-in owner of one or two buildings may not. Furthermore, present rent rates in Cambridge are based on 1967 rates which tend to be higher in buildings owned by large landlords, both because they were more attuned to what the going rates were, and because owner-occupiers often rent at reduced rates to friends and relatives. And yet it is the small resident landlord that the city needs the most. Living with his tenants, he is much more likely to look after their interests than a remote absentee landlord living in the suburbs.

Both reports also fail to realize that rent control affects different areas differently. Harvard Square is much better able to absorb rent control because of the cushion provided by high rents. In Central Square, however, the landlord's profit margin is much thinner, and as a less affluent area, its housing deteriorates much more quickly with any cutbacks on maintenance. Ironically, rent control is hurting most the very groups it was designed to aid-the lower-income group tenant.

Rent control is a complex issue, one that is hard to generalize about except in a shallow, ideological way. The fact that rent control as it is presently administered probably contributes to housing deterioration does negate the need for some form of rent control to restrain rent inflation in a tight housing market. With the present rent control law, however, rents will rarely keep pace with inflation, and to expect landlords to permanently absorb the difference is naive. In the present situation, rent control may just be a case of pay now (higher rents) or pay later (new taxes for new housing).