New MIT White Paper: Climate-Driven Housing Mandates Show Promise, But Face Real-World Barriers

Multifamily housing leaders highlight complexity and cost of implementation; call for stronger incentives and deeper resident engagement to realize the promise of climate policy

CAMBRIDGE, Mass. – August 11, 2025 – A new white paper released by the MIT Center for Real Estate (MIT/CRE) and Department of Urban Studies and Planning (DUSP) explores the evolving impact of climate-driven building regulations in multifamily housing. The report, Navigating Energy Mandates in the Multifamily Sector: Insights from Apartment Owners and Managers, draws on interviews with senior executives from thirteen apartment firms across the United States. It reveals a consistent theme: While there is broad support for climate goals and recognition that building decarbonization is essential, many apartment owners and managers are struggling to keep pace with the complexity and cost of implementation.

“There’s no question that reducing emissions from buildings is essential,” said Prof. Mariana Arcaya, co-author of this White Paper and faculty at MIT. “Achieving that at scale requires regulatory frameworks that are both ambitious and responsive to the reality of how buildings are constructed, acquired, managed, and maintained.”

The findings point to a clear tension between policy intent and operational reality. Many interviewees described being committed to improving energy performance and even pursuing energy efficiency retrofits voluntarily. Yet the diversity and inconsistency of local Building Performance Standards (BPS) across jurisdictions—each with different metrics, deadlines, and penalties—has introduced confusion and inefficiency into capital planning. Firms operating across multiple markets are finding it particularly difficult to interpret and comply with a fragmented regulatory landscape.

“Multifamily owners aren’t rejecting climate action,” added Dongxiao Niu, co-author of this report who is a former post-doc at MIT/CRE and is currently an Assistant Professor at the University of Cambridge. “They’re asking for clarity, consistency, and a seat at the table. If policies better reflect financial and operational realities, the industry is ready to act.”

The report shows that investment decisions in the multifamily sector are most responsive to mandates when those mandates align with the natural rhythms of capital cycles. Owners are more likely to pursue energy upgrades when systems are already due for replacement or when turnover presents an opportunity for renovations. Policies that ignore these rhythms—such as those requiring major upgrades on a fixed timeline—may unintentionally delay rather than accelerate progress.

While some jurisdictions have introduced financial incentives to ease the burden, interviewees noted that access to such tools remains uneven. Programs like Massachusetts’s MassSave and New Jersey’s Clean Energy Program were praised, but they don’t always cover the most expensive or logistically complex aspects of retrofitting, such as electrical capacity upgrades or full HVAC conversions. Firms also expressed a desire for more consistent and long-term incentive structures, rather than one-off rebates with shifting eligibility criteria.

The report also highlights a fundamental disconnect between housing providers and their residents when it comes to paying for climate upgrades. Property owners widely reported that renters – though appreciative of more comfortable or reliable homes—are not typically willing to pay higher rents simply because a unit is more energy-efficient. Green premiums, where they exist, are modest and rarely offset the cost of compliance. Still, many firms are experimenting with tenant engagement strategies, such as surveys and co-benefit messaging, to better align energy investments with resident priorities.

“We found real openness to decarbonization—but also real risks of delay or disinvestment if policies don’t align with how capital and tenants work,” said Prof. Siqi Zheng, faculty director of MIT/CRE. “Climate progress depends on implementation that is technically grounded and financially viable.”

Looking ahead, the white paper outlines a constructive path forward. It urges policymakers to improve data transparency and utility access, to design performance metrics that reflect engineering realities, and to invest in workforce training and supply chain readiness. Perhaps most importantly, it calls for deeper dialogue between regulators, property owners, renters, and capital providers. Multifamily housing—home to more than 40 million Americans—is where climate policy and housing access intersect. The future of building decarbonization depends not just on mandates, but on cooperation, innovation, and trust.

“With the right tools and collaboration,” the authors of this White Paper concluded, “we can scale energy efficiency across multifamily housing—advancing both climate goals and housing equity.”

The authors of this White Paper thank Paula Munger, Leah Cuffy, George Ratiu, and Nicole Upano at the National Apartment Association (NAA) for their significant support in facilitating our interviews with representatives from multifamily real estate firms. The views expressed in this white paper are those of the authors and do not necessarily reflect the views of their affiliated institutions, NAA, or any organizations mentioned herein.

“The cost and complexity of regulatory compliance undoubtedly exacerbates our nation’s longstanding housing affordability crisis – one of the defining policy challenges of our time,” noted Leah Cuffy, NAA’s Director of Advocacy Research. “Communities need sustainable and lasting housing solutions, and lawmakers should work alongside the industry to craft policies that recognize operational realities and work to build a stronger housing future.”

Download the White Paper here:  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5381100