Condo Conversion

Condominium Conversions

The City Council Committee of the Whole first met on Thursday, November 3rd, 2022, to discuss the proposed framework of the ordinance. The recording of the meeting is available here: http://ondemand.satvonline.org/Cablecast/Public/Show.aspx?ChannelID=1&ShowID=26184

Learn more about condo conversions below or contact City Staff, at imaginesalem@salem.com, or 978-619-5685.

A condominium conversion is when a multi-family residential unit is converted from an apartment into an ownership unit. Older homes tend to be vulnerable to conversions. In Salem, over half (54%) of all homes were built before 1940. Furthermore, the pace of condominium conversions has increased over the past several years while housing costs continue to rise.

The data above is from MA Department of Revenue and is based on ownership at 3rd quarter tax bills.

The increasing pace of conversions is particularly concerning given that the median income of renters is about $37,000 and half of all renter households (4,465) are cost burdened- meaning they are spending more on housing than they can afford leaving less money available for food, healthcare, etc. If these renters were to be displaced, they would have very few options for relocation in Salem resulting in displacement which disproportionately impacts people of color.

Existing state law provides certain requirements for conversions but generally only applies to properties with four (4) or more residential units. This statute is Chapter 527 of the Acts of 1983, captured in MGL Ch. 183A. Here in Salem, we have seen that the majority of conversions (roughly 80%) occur in our two- and three-family housing stock, and those tenants are not afforded the benefits provided by the state law. As stated above, state law allows communities to adopt condo conversion ordinances that protect tenants in buildings with four or more units. Local action cannot lower the threshold, it requires a special act approved by through State Legislation via Home Rule Petition.

This led to the Affordable Housing Trust Fund Board and the Department of Planning and Community Development to draft a condominium conversion ordinance to provide protection for tenants facing displacement.

The proposed ordinance has four purposes:

To decelerate the rate of conversion of naturally affordable rental housing stock into condominiums and cooperatives, especially in multifamily residential buildings
To minimize residential displacement of renter households by strengthening tenant’s rights during a condominium conversion.
To preserve the supply of housing and diversity of housing options, in response to demographic changes such as smaller and older households
To permit the owner of an existing multifamily building to convert rental housing into condominium or cooperatives.

The goal is not to prohibit the conversion of rental units into condominiums, but to create a permitting path for conversions that will ensure tenants will remain housed.

CHANGES FOLLOWING THE AFFORDABLE HOMES ACT of 2024

The Affordable Homes Act, signed into law in 2024, extended the protections offered by the state’s condominium conversion law to tenants of buildings with four or more units to tenants of two- and three-family buildings.

In November 2024, the City received approval from the state legislature on a Home Rule petition that would allow the City to enact a local condominium conversion ordinance. As of June 2024, the City continues to advance an ordinance that addresses the four goals identified above.

Recent Updates:

2024 | Legislative approval of the home rule petition, information on the bill’s progress is available here.
- The Home Rule Petition (HRP) has been filed with the state legislature and referred to the Joint Committee on Housing. A hearing was held on October 24, 2023, where Rep. Cruz, members of the AHTF, and members of the public offered comment in support of the HRP.
- In March 2024, the bill received a favorable vote of committee and started the process of required votes in both chambers.
- August 2024: While the bill did not reach the Governor’s desk during formal session, City officials have been in touch with the state legislators and understand the bill to be moving forward.
- November 2024: The Home Rule petition was approved on November 8, 2024. The City can now move forward with local consideration of the item.
2025 | Local process.
- Winter and Spring 2025: Staff finalize draft ordinance, incorporate changes following Affordable Homes Act.
- May 2025: Staff brought the draft ordinance to the Committee on Ordinances, Licenses, and Legal Affairs on May 1, 2025 (recording here) and May 22, 2025 (recording here). At this second committee meeting, it received a positive recommendation back to City Council.
- June 2025: It is expected that this item will be on Regular City Council Agenda for Thursday, June 12, 2025 for a first vote. Consult the City Calendar for the agenda and meeting access information.