Rent Contro l / Rent Stabilization (H.2328) Historical Evidence, Economic Realities, and Risks to MA Small Owners A. Rent Control Has Failed Everywhere It’s Been Tried • San Francisco: o Reduced new housing supply. o Increased rents in uncontrolled units. o Accelerated condo conversions. • New York City: o Produced the tightest housing market in the country. o Pushed median rents to record highs • Cambridge, MA (pre - 1994): o Resulted in a decline in rental units o Produced uneven benefits , often helping higher - income tenants. o After 1994 repeal: § thousands of units added § millions in new tax revenue § increased affordability due to increased supply. • Egypt (60 years of rent control): o Ended in 2025 after acknowledging the system collapsed investment , reduced units , and destabilized the market B. Universal Economic Findings • Rent is not a fixed number it is the outcome of supply and demand • When you freeze or cap rent while costs rise: o housing supply drops o rents rise in remaining units o property quality declines o disinvestment accelerates • Confirmed by studies from: o Stanford o MIT o Harvard o Brookings Institution o National Bureau of Economic Research • Every major study reaches the same conclusion: Rent control reduces supply and raises long - term rents. C. Why Rent Control Harms Small, First - Generation, and Immigrant Owners Most • Mom - and - pop owners provide the majority of naturally affordable units • Their cost increases (past two years): o Utilities: +39% o Insurance: +25% o Property taxes: +21% • Under H.2328, rent cap: 5% • This math does not work for families relying on a single triple - decker for: o retirement income o medical expenses o family stability • Capping rent while all inputs rise is a path to foreclosure , not affordability. D. Rent Control Creates the Opposite of Affordability Across cities: • Higher rents (in uncontrolled units) • Fewer units (reduced supply) • Discouraged development • Uneven benefits , disproportionately helping: o higher - income tenants o long - term tenants o individuals with political/social capital • It is incompatible with the economics of real estate. E. Recommendation • Reject Rent Control Bill H.2328 • Real solutions include: o increased production o zoning reform o tenant vouchers o down - payment assistance o targeted acquisition funds o public - private partnerships • “Fixing” rent without fixing supply guarantees failure. Tenant Opportunity to Purchase Act Summary of Evidence, Outcomes, and Risks for Massachusetts A. Documented Failures in Other Cities • Washington, D.C.: o Less than 5% of TOPA offers resulted in tenant purchases. o Most cases ended in assignments, buyouts, or stalled transactions o D.C. Policy Center found 5+ month average delays ; some cases lasted up to 420 days o Financing often expires , buyers walk away , and 1031 exchanges collapse o Due to widespread problems, D.C. exempted single - family homes in 2018 and expanded exemptions again in 2025 • San Francisco (COPA): o Required tens of millions in public subsidies to help nonprofits buy just 13 buildings. o Even supporters admit COPA has “high administrative burden with low output.” o Long delays created frequent failed transactions • Berkeley, CA: o TOPA stalled after major concerns over red tape, cost, and feasibility o Portions of the ordinance were effectively shelved by the city. B. Why TOPA Hurts Small, First - Generation, and Immigrant Owners • Most Massachusetts rental units are owned by mom - and - pop owners not corporations. • A 6 to 12 month delay is not an inconvenience ; it can kill 1031 exchange deadlines and force owners to accept weaker offers simply because stronger buyers can’t wait • Small owners rely on timely sales C. Structural Problems With TOPA • Regulates timelines , not prices but delays reduce value. • In real - world practice, TOPA leads to: o fewer bidders o reduced competitiveness o financing uncertainty o sales collapsing o owners taking lower - quality matched offers • Tenant associations rarely have the capacity to match cash, quick - closing, or non - contingent offers. • The system becomes bureaucratic, litigious, and slow , with minimal tenant ownership outcomes D. Why TOPA Does Not Increase Housing Supply • TOPA regulates sales — it does not build new units • D.C.’s multifamily production underperformed neighboring jurisdictions. • San Francisco’s COPA preserved units, but only with heavy subsidy not scalable statewide. • Massachusetts needs production , not procedural delays. E. Recommendation • Massachusetts should reject TOPA (H.1544) • Focus on tools that: o increase supply o expand tenant access to homeownership o provide targeted subsidy o protect naturally occurring affordable housing • Avoid repeating flawed systems that have already failed in D.C., San Francisco, and Berkeley. SUMMARY Both TOPA and Rent Control share the same structural flaw: They attempt to regulate outcomes without addressing causes • TOPA restricts transactions > reduces investment > reduces supply. • Rent stabilization restricts prices > reduces supply > raises long - term rents. Massachusetts needs policies that: • increase the housing supply • support tenants • protect mom - and - pop owners • expand affordability • promote investment, not drive it away Both TOPA and Rent Control do the opposite. Tenant Oppo rtunity to Purchase Act (TOPA) What Other Cities Teach Us and Why Small Property Owners are concerned 1. What TOPA Does (in Massachusetts and elsewhere) • The MA TOPA proposal (S.998/H.1544) would give tenants in multifamily buildings a right to match a third - party offer when the owner decides to sell. topa4ma.org • Tenants may assign that right to a nonprofit, land trust, or public entity, which then becomes the buyer. topa4ma.org • The proposal is structured as a “local option” — municipalities can choose whether to adopt it. topa4ma.org • Advocacy materials state that TOPA does not regulate sale prices , but it does regulate the sale process and timeline , requiring notice, waiting periods, and structured negotiation. topa4ma.org 2. Evidence from Washington, D.C. (40+ years of TOPA) A. Very low rate of tenant purchases in single - family settings • A D.C. Council - cited study found that from 2009 – 2015 , only 19 out of 398 TOPA offers for single - family properties led to tenant purchases – under 5% Kass Legal Group, PLLC • This extremely low success rate was one reason D.C. exempted most single - family homes from TOPA in 2018 , keeping only a narrow carve - out for some elderly and disabled tenants. DHCD B. Long delays and complex procedures • A 2025 D.C. Policy Center report describes the TOPA process: o 45 days to form a tenant association, o up to 120 – 240 days to secure financing and complete a contract, o and possible restarts or litigation that can extend the total timeline. D.C. Policy Center • The same analysis notes that sales can be delayed by up to 420 days , with an average delay of about 5.3 months in transactions involving tenant associations. D.C. Policy Center C. Outcomes skewed toward assignments and negotiations, not tenant ownership • Today, nearly 95% of transactions where a tenant association forms end with tenants assigning their rights to another buyer, often in exchange for repairs, concessions, or cash — rather than purchasing the building themselves. D.C. Policy Center • D.C.’s own housing agency and analysis note widespread concerns about abuse of the process , including opportunistic claims of TOPA rights and use of the full timeline mainly to extract payouts, especially in the pre - 2018 single - family context. D.C. Policy Center - 2Kass Legal Group, PLLC 3. San Francisco & Berkeley: COPA / TOPA - Style Laws • San Francisco adopted a Community Opportunity to Purchase Act (COPA) in 2019, giving qualified nonprofits a right of first offer / refusal on multifamily properties. San Francisco Government • A 2023 article in The American Prospect reports that San Francisco invested about $37 million to help nonprofits acquire 13 buildings , preserving over 230 homes as affordable — showing that significant public subsidy is required to make these deals work. The American Prospect • The same piece notes that, despite these successes, both D.C. TOPA and SF COPA require substantial organizing, legal, and financing support to function at all — capacity that many tenant groups and small nonprofits lack. The American Prospect • In Berkeley , a proposed TOPA - style ordinance faced strong concerns over “red tape, added administrative costs, and delays” and ultimately stalled; local coverage in 2024 reported that the City Council was expected to reject the measure after years of debate. Bornstein Law 4. Why Small and Immigrant Property Owners Are Concerned A. Disproportionate impact on small owners • D.C. ultimately exempted single - family homes from TOPA after concluding that the law was not achieving its goals and was creating serious burdens for small owners. DHCD • The 2025 RENTAL Act further expanded exemptions (e.g., for some 2 – 4 - unit properties and newer construction), acknowledging ongoing concerns that TOPA can deter investment and complicate ordinary transactions. Holland & Knight B. Financing, timelines, and lost buyers • In MA, analyses of right - of - first - refusal proposals note that tenants may have up to six months after an owner accepts an offer to secure financing, during which the owner’s buyer must wait in limbo. MassLandlords.net • Small owners — especially retirees and first - generation immigrant families who depend on timely sales for retirement, medical expenses, or 1031 exchanges — are the least able to absorb the risk of a collapsed deal caused by TOPA - related delays. Banker & Tradesman C. Mixed evidence on affordability outcomes • Supporters emphasize that D.C . TOPA and SF COPA have preserved thousands of affordable units over time, but this has required substantial subsidy and administrative capacity, and has not solved either city’s underlying housing shortage. D.C. Policy Center \ The American Prospect • Independent commentary and local reporting stress that very few renters actually become owners (under 5% in the DC single - family sample), and most activity involves assignments and buyouts , not long - term tenant ownership. Kass Legal Group, PLLC 5. Key Questions for Massachusetts Legislators 1. Will TOPA meaningfully increase homeownership or long - term affordability for tenants, given the low conversion rates seen in D.C.? Kass Legal Group, PLLC 2. How will small and immigrant owners — who make up a large share of Massachusetts’ “mom - and - pop” housing providers — manage multi - month delays and transaction uncertainty? SPOA Website 3. Could the same resources be more effectively deployed through vouchers, down - payment assistance, or targeted acquisition funds that do not interfere with private contracts? The American Prospect