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Fiscal Alliance Foundation Study · June 2026

Rent Control Raises Taxes
on Homeowners

How Massachusetts's Proposed Rent Control Ballot Measure Shifts Tax Burdens

By Jared Walczak

$312
Annual tax increase for median homeowner
$18,700
Additional liability over a 30-year mortgage
5.9%
Rise in statewide residential tax rates
62%
of MA households that own their homes
Executive Summary

Rent control is a hidden tax on homeowners.

For homeowners, the proposed rent control ballot measure could easily seem like someone else's battle. This belief is perfectly understandable. It is also mistaken.[*]

Rent control drives up property taxes for owner-occupied housing, forcing homeowners to bear a larger share of the local tax burden. Under statewide averages, property tax burdens on the median single-family home would increase by $312 per year. Had these effects been present for the past ten years, the median home's cumulative property tax burden would have been almost $2,600 higher.

$1,117
Annual tax increase on the average home in Boston
30.8%
Long-term reduction in rental property value under rent control
3.32%
Weighted-average increase in homeowners' tax bills statewide
10.2%
Average statewide rate increase municipalities would require — Tufts CSPA
The Proposal

The Strictest Statewide Rent Control in the Nation

Massachusetts has tried rent control three times before — voters repealed it in 1994. The proposed 2026 ballot measure would reimpose it statewide, and more aggressively than anywhere else in the country.[5]

Massachusetts (Proposed)
≤5%
Capped at the lesser of inflation or 5%. No vacancy decontrol. Applies statewide with no municipal opt-out.
Strictest in the nation
California
5%+CPI
Annual increases allowed up to 5% plus inflation, with an absolute cap of 10% per year.
Statewide · enacted 2019
Oregon
7%+CPI
Annual increases allowed up to 7% plus inflation, absolute cap of 10%. First modern statewide system (2019).
Statewide · enacted 2019
Washington
7%+CPI
Annual increases allowed up to 7% plus inflation, absolute cap of 10% per year.
Statewide · enacted 2023
Key Features of the Massachusetts Ballot Initiative

Annual rent increases would be limited to the lesser of inflation or 5 percent. Rent would not reset with a change in tenancy (no vacancy decontrol). New dwelling units would be exempt only for the first ten years. It applies statewide with no ability for municipalities to opt out — making it the first of its kind in the country at this level of restriction.

Under the proposed regime, statewide residential rates would rise by 5.9 percent. This is more stringent than most existing rent control regimes and prior rent control systems in Massachusetts.

Capping rent increases at no more than inflation reduces owners' year-over-year income, leading to deferred maintenance and deterioration of properties they can no longer afford to maintain. The cost of maintaining rental units — construction, building materials, HVAC, roofing, property insurance — has risen at rates well above inflation for decades.

Where possible, owners will convert rental housing to condominiums, remove units from the market, or abandon properties. New investment dries up because even if units are profitable in the short term (exempt for the first ten years), owners know the downward ratchet is coming.

Statewide Effects · Long-Run Estimates

How Rent Control Shifts the Property Tax Base

Source: Author's calculations; Autor, Palmer, and Pathak (2014)
How It Works

The Chain Reaction: How Rent Control Raises Your Property Taxes

Homeowners aren't subject to rent control — but they pay for it. Here's the step-by-step mechanism by which rent control increases owner-occupied property tax burdens.

Rent Control's Tax Transmission Mechanism
1
Rent Capped
Annual increases limited to ≤ inflation or 5%
→
2
Income Falls
Net operating income declines; maintenance deferred
→
3
Values Drop
Income capitalization mechanically reduces assessed value of rental property
→
4
Tax Base Shrinks
Rental share of tax base falls; owner-occupied share rises
→
5
Rates Rise
Mill levies increase automatically to maintain budget revenue

Massachusetts uses an income capitalization approach to assess apartment buildings — measuring the present value of a property's income stream. When rent is capped, net operating income falls and investment risk rises, so the capitalization rate increases. Rent-controlled properties are immediately worth less for purely mathematical reasons.

When less property tax is collected from apartment complexes, homeowners pay more. Local governments do not vote directly on tax rates — rates are automatically calculated based on total revenue needed divided by total assessed value. If the rental base shrinks, rates rise automatically.

This process is not constrained by Proposition 2½, since the levy increases are intended only to maintain current collection levels. Homeowners cannot vote it away.

Over time, rent control also produces spillover effects: poorly maintained apartment complexes degrade neighborhoods and reduce the desirability of all nearby property — including owner-occupied homes. This further depresses values while leaving rates elevated.

Meanwhile, rent control discourages new construction, creating housing scarcity that drives up the value of uncontrolled (owner-occupied) properties relative to controlled ones. Higher assessed values, combined with higher rates, amplify homeowners' tax burden still further.

The result: homeowners pay higher taxes than before, at assessed values that are higher relative to rental properties, even though their homes may be worth less in absolute terms due to neighborhood deterioration.

Real-World Evidence

What the Research Shows: Rent Control Backfires Everywhere

This study draws on empirical evidence from four jurisdictions where rent control has been tried. The findings are consistent: rental property values collapse, homeowner tax burdens rise, and housing shortages worsen.

Portland, Maine · 2020
Short-Run Validation: Rental Values Decline Fast
3.2–5.4%
Reduction in total property valuation within a few years
$224–$379
Additional annual property taxes on the median homeowner
The decline was driven almost entirely by lower assessed values of rent-controlled properties. Concurrent with a citywide revaluation in 2025, analysts found 63% of the tax burden shift would fall on single-family homes and condominiums.[6]
St. Paul, Minnesota · 2021
Values Collapsed Within Three Months
–12%
Rental property value loss — almost overnight
–79%
Drop in multifamily housing permits in Q1 2022 vs. prior year
Owner-occupied properties saw a 6% decline in transaction prices. Two-thirds of value loss came from income capitalization; one-third from neighborhood spillovers. Neighboring Minneapolis, which did not adopt rent control, saw permits skyrocket.[7]
San Francisco, California · 1994
15% of Rental Supply Removed from Market
–15%
Reduction in rental housing supply
↑ Rents
Market rents rose for uncontrolled units as supply contracted
After rent control was expanded to cover small buildings, owners converted properties to condominiums, sold to owner-occupants, or redeveloped to avoid regulation. The contraction in supply drove up rents elsewhere — the opposite of the policy's intent.[9]
Cambridge, Massachusetts · Pre-1994 Repeal
Closest to Home — A Textbook Case
45–50%
Value discount on rent-controlled properties vs. comparable homes
+18–25%
Value recovery within first decade after repeal
A Harvard study found that Cambridge's rent-controlled regime — less restrictive than the proposed measure — severely depressed rental property values. Repeal triggered rapid value recovery still ongoing after a decade, validating the income capitalization mechanism.[10]
–79%
Drop in multifamily housing permits in St. Paul, Q1 2022 vs. prior year — while neighboring Minneapolis, without rent control, saw permits skyrocket
Comparative Case Studies · Property Value Impacts

Rent Control's Impact on Property Values Across Jurisdictions

Sources: Wallace Economic Advisors (2025); Ahern & Giacoletti, NBER (2022); Diamond, McQuade, & Qian, AER (2019); Autor, Palmer, & Pathak, JPE (2014)

"Rent control has almost always been a local phenomenon, imposed in select cities. The Massachusetts ballot initiative, by contrast, would impose rent control statewide — the strictest such regime in the nation, by a considerable margin."

— Jared Walczak, Fiscal Alliance Foundation Study, June 2026
Tax Impact

Quantifying Homeowners' Higher Property Tax Burdens

Over time, rent control will reduce the assessed value of owner-occupied property by 1.47 percent while increasing tax rates by 5.90 percent — yielding a weighted-average 3.32 percent increase in homeowners' tax bills even though their property is worth less.

$312
Annual tax increase on the median MA home ($661,590) under statewide average rate changes
$18,700
Additional tax liability over a 30-year mortgage, assuming historic rate of increase
Table 1 · Statewide Average Rate Changes

Rent Control Increases Homeowners' Tax Bills by Home Value

Home Value Initial Assessed Value New Assessed Value Initial Tax Burden New Tax Burden Annual Increase
$200,000$200,000$197,053$2,172$2,266+$94
$500,000$500,000$492,633$5,429$5,665+$236
$661,590 (Median)$661,590$651,842$7,184$7,496+$312
$800,000$800,000$788,213$8,687$9,064+$377
$1,000,000$1,000,000$985,266$10,859$11,330+$471
$1,500,000$1,500,000$1,477,899$16,288$16,995+$707
Source: Author's calculations using Massachusetts Division of Local Services data
Select Municipalities · Long-Run Estimates with Scarcity Adjustment

Increased Tax Bill for the Average Home, by City

Source: Author's calculations using Massachusetts DLS, ACS, and Zillow Research. Accounts for Boston's residential exemption. Scarcity premium adjustment included.
Table 2 · Ten Largest Cities

Change in Owner-Occupied Property Tax Burden

Source: Author's calculations. Effects are larger in urban areas due to greater concentration of rental housing.
Table 3 · By Municipal Classification & Tax Class

Aggregate Tax Increases — Urban, Suburban & Rural

Source: Author's calculations. Municipal classification based on MAPC Community Types.
Tufts Center for State Policy Analysis

A study commissioned by the Greater Boston Real Estate Board estimated that under rent control, Massachusetts' residential property tax base would decline by 6–9 percent almost immediately, and after a decade, property values would decrease by nearly 14 percent. This would require municipalities to adopt long-term rate increases ranging from 8 to 20 percent, with an average statewide increase of 10.2 percent.[16]

Who Really Benefits

Rent Control Fails Those It Claims to Help

Rent control's property tax impact is not its most significant effect, but it is often overlooked. The larger story is that rent control consistently fails to benefit low-income renters — the population it is designed to protect.

An analysis of Massachusetts' prior experience with rent control found that people of color occupied only 12 percent of rent-controlled units, despite representing 24 percent of residents in rent-controlled cities. The benefits disproportionately flowed to higher-income tenants.[17]

The San Francisco study found that expanding rent control reduced the likelihood that occupants would move by 20 percent — locking low earners in place and making it harder to move for greater economic opportunity. When they do move, the remaining tenant pool becomes more affluent.[9]

In St. Paul, the greatest benefits went to higher-income renters. In areas with tenants above the median income and landlords below the median owner income, valuation loss was only about 10 percent of what it was in areas with lower-income tenants — indicating that relatively higher earners benefited the most.[7]

Massachusetts Prior Rent Control Experience

Who Occupied Rent-Controlled Units?

Source: Sims, Journal of Urban Economics (2007)

"Broadly speaking, rent control favors higher-income renters in higher-value properties in nicer areas, which are less subject to deterioration. Rent control also explicitly favors those who can remain put — and higher earners are more likely to have stable jobs."

— Jared Walczak, Fiscal Alliance Foundation Study, June 2026
Conclusion

Massachusetts Voters Were Right to Repeal Rent Control in 1994.

The proposed 2026 ballot measure would reimpose rent control in a far more aggressive form than anything Massachusetts has previously tried — statewide, with no vacancy decontrol, and no municipal opt-out. Homeowners have many good reasons to oppose rent control. But there is also an effect that bears directly on their own bottom line: rent control is a tax increase on homeowners.

Why Homeowners Should Oppose Rent Control

Direct Property Tax Impact
  • Median homeowner's tax bill rises by $312/year under statewide averages
  • Over a 30-year mortgage, additional tax liability reaches ~$18,700
  • Boston homeowners face an estimated $1,117 annual increase
  • Tax rate increases are not subject to Proposition 2½ limits
Housing Market Damage
  • Rental property values decline 30.8% long-term under the proposal
  • Housing supply contracts as new investment dries up
  • Scarcity drives up owner-occupied home values, compounding tax burden
  • Multifamily permits collapsed 79% in St. Paul within months
Community Effects
  • Deferred maintenance degrades neighborhoods for all residents
  • Spillover effects reduce home values in high-rental-density areas
  • Rental housing stock shrinks and deteriorates in quality over time
  • Cambridge's prior regime left a lasting imprint on assessed values
Policy Alternatives
  • Supply-side reforms: reduce regulatory barriers to new construction
  • Zoning reform to allow greater density near transit and jobs
  • Targeted housing assistance for genuinely low-income renters
  • Tax incentives for landlords who voluntarily keep rents affordable

"Rent control will reduce the quantity and quality of rental housing, cause its value to plummet, and shift tax burdens onto all other property, including owner-occupied residential property. Rent control is a tax increase on homeowners."

— Jared Walczak, Fiscal Alliance Foundation Study, June 2026
Download the Full Report (PDF) →
References & Footnotes