As the D.C. City Council reviews the rent control issue, it might look for guidance to the experiences of Boston and Montgomery County, where controlled units are in the process of being returned to the free market.
Bostonians, it seems, don't like rent decontrol. But they didn't like rent control either.
According to a recent report in the Boston Evening Globe, the drawbacks accompanying both promise to keep tenants and landlords battling for months to come.
In 1971 Boston set up a rent control program in an attempt to stabilize prices against inflationary pressures and to protect its high percentage of elderly residents. Last year it began phasing our the controversial system as landlords complained that the limits on rents had wiped out their profits. To prevent the abandonment of buildings by landlords whose costs outran rental income - the New York City syndrome, as some housing experts characterize it - Boston instituted vacancy decontrol.
Under decontrol, rents on vacant apartments were allowed to move as high as the market would bear while rents on apartments still under control could be increased 11 per cent.
During the first year of the decontrol program, an estimsted 19,000 out of 108,000 units were freed from price limits. Mayor Kevin White's office estimated that decontrolled units rents rose 15 per cent, although the Boston Rent Control Administration said the average jump was probably 11 per cent. The vacancy rate for the city is about 10 per cent.
With several universities, research centers and major companies located in and around its borders, Boston had an unusually high annual turnover of apartments. The transient population, especially the dollar-watching students and faculty members, were hit with new rent increases. The more stable families and the aged, who tend to remain in the same location for years, were not. Decontrol has led to charges by the newcomers that the city is maintaining a two-tier system with the transients subsidizing long-term renters.
Landlords, too, are unhappy with both the pace of decontrol and their-financial return. Market forces continue to curb rents to the point where owners claim they are not covering their maintenance and financing costs.
Harold Brown, a major landlord in the Allston-Brighton section, said, "Vacancy decontrol has just imperceptively delayed disaster."
The cumbersome administrative procedure established for decontrol is also a source of complaints. In order for a landlord to have a unit decontrolled, he must submit a statement from the tenant who is leaving statting that was not harrassed. The process takes 30 to 45 days for completion.
Roger Lipson, director and counsel of suburban Brookline's rent control agency told the Globe, "The real reasons for rent control are still with us - the supply-demand curve, the inflationary spiral, the higher percentage of elderly residents and an aging housing stock with steadily increasing rents."
With decontrol, tenants' organizations have disintegrated and a lobbying effort to force reinstitution of rent control would be almost impossible, Boston housing experts said.
Montgomery County's decontrol program, in effect since July 1, has worked more rapidly that Boston's. In the first six months of the program, 15 per cent of the housing stock was decontrolled, according to the county Office of Landlord-Tenant Affairs.
When free market rents return this December, half of the 44,000 previously controlled units will have been freed simply through a change of occupant. The county-wide vacancy rate is about 4 per cent. The figure is much lower for towns closer to the District.
The county said the average rent increase on decontrolled units was 9.2 per cent, although the rise for Bethesda-Chevy Chase rents was closer to 12 per cent. Controlled units rents can be increased 4.5 per cent annually. County figures show that average decontrolled rents rose to $221 for an efficiency and to $396 for a four-bedroom apartment.
Ruth Lederer, presidnt of the Montgomery County Tenants Assoication, said few tenants have complained "because people don't know how much the rent was before" they moved in. She said the rent on hey move in. She said the rent on her apartments has increased 20 per cent.