How Rent Control Could Work for All

Massachusetts is facing a ballot question that would bring back rent control. The basic concept is that the maximum rental increase would be limited to CPI or 5%, whichever is less. 

Even if someone moves out or is evicted, you cannot readjust your rent. You are stuck with your base rent. If rent control passes and your unit is empty, your base rent will remain whatever the previous rent was.

Opponents of the bill believe that building values will fall, along with tax receipts, putting cities and towns in a difficult position.

Who Stands to Lose the Most?

• Owners with below-market rents, since they will not be able to increase them. This reduces the building’s value because a building is only worth the amount of income it can generate. If you are unable to raise rents to market rates, your building will be worth less.

• Owners of buildings that need capital improvements. If you have an older roof, mechanical systems, or outdated units, your building has less value. Even if you replace or improve these items, you cannot charge higher rent, so the value-add component of these buildings is greatly impacted.

• People who play by the rules. If you follow these proposed rules, you will have to keep rents essentially where they are. Others who do not follow the rules will have an advantage over you.

  
  

What Is the Solution to Keep Rents “Fair and Equitable”?

I remember from my history classes that the best form of government is an enlightened despot who loves his or her subjects and makes all the decisions on their behalf. However, since that is not possible, here is a framework that could work for everyone.

Let’s take a page from the commercial leasing playbook: the Triple Net Lease (NNN).

Unlike the gross lease traditionally used in residential leasing, where variable costs are built into the lease and the risk is borne by the landlord, the NNN lease shares increases in costs between both parties. Why not adopt a similar model for residential leases?

Using HUD Fair Market Rents as a Starting Point

First, we use something similar to the HUD Fair Market Rent (FMR) as the base rent. Most people are familiar with the top-line numbers. Here are the Worcester County figures for 2026:

What most people do not understand is that there is also a separate utility allowance schedule. To receive the full rent amount listed above, the landlord would need to provide heat, hot water, and electricity.

Let’s use a 3BR unit with natural gas for heat, cooking, and hot water as an example. You can view the 2025 utility allowance schedule here.

That creates a total utility reduction of $224. The adjusted gross rent the landlord can charge becomes $2,314 per month.

A Real-World Multi-Family Example

Now let’s imagine you have three 3BR units in a building that you purchased for $800,000. Gross rental income would look like this:

• $2,314 × 3 units = $6,942/month

• Annual gross income = $83,304

This is approximately a 4,000 SF building, and after the sale the City will likely assess it at around $750,000, which would result in an annual tax bill of about $10,000.

If you put 20% down as an investor at 6.5%, your principal and interest payment would be approximately:

• $4,000/month

• $48,000/year

Annual operating costs would include approximately:

• Insurance: $4,000

• Water and sewer: $1,800

• Landscaping and plowing: $3,000

• Property management: $6,700

• Maintenance and repairs: $4,200

• Capital expenses: $4,200

• Vacancy allowance: $4,200

So your total expenses are approximately $86,100.

With annual income of $83,304, the property actually loses money, despite the investor putting $160,000 down to purchase the building.

So why would anyone still buy it?

One reason is the expectation that the property will appreciate over time, which is largely tied to rents increasing over time. With leverage, investors may still outperform what they would earn by simply leaving money in the bank.

Another reason is depreciation. High-income earners can often create paper losses through depreciation that help offset taxes.

What If Residential Rentals Worked Like NNN Leases?

So let’s change the residential rental model and apply the NNN concept.

What if the fixed portion of rent was reduced to $1,333 per month, and tenants shared one-third of the variable operating costs landlords face?

Wouldn’t that be more “fair”?

Why $1,333?

Because it is essentially one-third of the owner’s monthly principal and interest payment to the bank.

In theory, you could fix that amount and simply layer variable costs on top.

If you have a landlord who keeps the property in excellent condition, plows frequently, and plants flowers, maybe landscaping and plowing costs rise from $3,000 to $6,000 per year, so your rent increases.

Maybe it barely snows one year and your rent decreases.

If the landlord upgrades the property, your rent increases. If they defer improvements, your rent decreases.

If they hire professional property management, your rent increases. If they self-manage, your rent decreases.

It would essentially function like a condo fee for tenants.

And best of all, it would be FAIR.

Or would it?

What stops a landlord from hiring their son to do landscaping for $20,000 per year? Or paying a family member to manage the building?

How would tenants know whether expenses were legitimate?

The obvious solution would be to create a tenant board, similar to a condo association, that reviews spending decisions.

But at that point, you have effectively taken a privately owned building and handed control of it to the tenants.

The Bigger Problem With Rent Control

As you can see, the idea sounds intriguing on its face, but for lack of a better word, it is “stupid.”

The larger point is that rent control creates many of the same problems.

Once you artificially fix the income side of the equation, many of the decisions about maintaining, repairing, or improving a building are effectively taken away from the owner.