Is Rent Control Coming to Somerville?

The Petition

As some of you may have heard, the city of Somerville has been pushing for a “home rule petition” that would allow for rent stabilization, also known as rent control.

In November, the Legislature Matters Committee for the city of Somerville voted to approve the petition. It now appears likely to be heading to the state house for a vote (pending a final vote by the city council in mid-December).

If the petition heads to the state house, the state legislature will need to give it the thumbs up. If that happens, the city of Somerville would then take feedback from community members to hash out the final details.

As currently written, the petition would place a ceiling on rent increases at no more than the rate of inflation plus 2%. Rent increases also wouldn’t be able to surpass 5% in any year.

The petition currently allows for exceptions to rent increase limitations. For example, there would be exceptions for new construction units built within the next 15 years, so as not to discourage new builds. Since the petition focuses on long-term renters, there would also be exceptions for hotels, motels, and other short-term rentals. The focus is also on residential rentals, so dorms, religious facilities, extended care, higher ed, and other scenarios outside of typical residential housing would also be exempt. These are just some of the exemptions being considered.

My Thoughts

You may have questions or concerns about this petition. I have a few thoughts below:

This push for rent stabilization ultimately speaks to an underlying issue: housing supply.

As many of you know, there is an affordable housing crisis throughout Massachusetts. In Somerville, there simply is not enough housing to meet tenant demand. If supply met demand, rental prices would be more likely to stabilize on their own. I believe the best way to increase housing supply is to make it easier to create housing in Somerville, starting with an update on the existing zoning code. Right now, Somerville has a very restrictive zoning code, which makes it difficult for developers to build in the volume necessary to meet the housing demand.

We should closely follow Boston’s efforts around rent stabilization.

You might be asking - what’s the likelihood that rent control will actually happen in Somerville? I recommend closely following a similar petition underway for Boston. Boston passed a home rule petition to enact rent stabilization in March, which must also be passed by the state legislature. The state legislature has repeatedly postponed reviewing the petition, but I believe that the state’s decision for Boston will shed light on the political appetite for rent control - and help inform what happens in Somerville and elsewhere.

Landlords should avoid panic-induced major rate hikes.

Many landlords do not aggressively push rent increases and actually go out of their way to keep rents relatively low compared to market rate. As the possibility of rent control rises, some owners have expressed to me an interest in aggressively increasing rents now, for fear of falling way behind market rate and never being able to catch up. My advice is twofold:

• Ensure your rent is within market range now so that you can sustainably hold on to your investment. This approach will serve you well whether rent control comes or not.

• Remember that your rent needs to be within reason so that your unit is accessible to a wide enough tenant pool. Aggressive rate pushes (done out of fear) are not the right way to go as they typically lead to unhappy tenants, aggressive tenant demands, and higher turnover rates which can result in high turnover associated costs (deep cleanings, property updates, and missed rents on turnover).

Landlords should also remain calm and optimistic about the future.

If you own property in Somerville, you own in an extremely resilient market with a strong and diverse tenant pool and tons of long term upside. Whether rent control occurs or not, you own an asset that will continue to appreciate, and you are well-positioned to build wealth over the long-term.

If you are concerned about rent control coming to Somerville and would like my advice - please call me anytime at 617-833-7457.