Maine entered the 2025 legislative session with housing at the top of its policy agenda.
For years, Mainers have grappled with unaffordable rents, scarce housing availability for working families, and regulatory barriers that help keep supply low—all of which has been exacerbated by the COVID-19 pandemic, growing numbers of seasonal homes, and development challenges.
This past year, the Legislature passed historic reforms that began to confront these challenges.
A centerpiece of the 2025 session was zoning reform aimed at increasing housing supply. Lawmakers passed LD 1829, a major rewrite of state housing density rules. This law requires municipalities to allow more units per lot, particularly in “designated growth areas” that encourage intentional development. It also prevents communities from imposing overly restrictive lot sizes and density limits, and it simplifies the permitting for development of multi-family housing and accessory dwellings. And the new law makes it easier to build “by right”—a zoning term that means a developer can follow a predictive approval process if the project meets set requirements.
Zoning reform is only one piece of the housing puzzle. The Legislature also created a dedicated funding source for affordable housing through updates to the real estate transfer tax, directing revenue from high-end property sales into a housing fund—a first for the state.
Despite this progress, state officials warn that existing housing dollars are nearly exhausted, and without renewed investment, production may slow sharply in the coming years.
While that funding has been transformational for some projects, it has also limited the development of the “missing middle,” or housing that would support residents in the brackets receiving 80% to 150% of the area median income.
Additional funding reform is needed to address the broader affordability issues and reduce constraints on equitable new housing solutions. One solution aimed at addressing this was to enact legislation to protect residents of manufactured housing communities by limiting excessive rent and fees and establishing preservation funds. Affordability isn’t just about building new units but also protecting existing ones.
So what comes next in 2026?
- Affordable housing funding must be renewed and expanded: With MaineHousing’s current pipeline potentially tapering due to lack of funding, the Legislature will need to revisit financing mechanisms. This might include a new housing bond, expanding transfer tax revenues, or developing other ways of supporting inclusive and equitable housing development. Without steady capital, even the best zoning reforms won’t translate into new homes for those who need them the most.
- Antidiscrimination policies protect vulnerable populations: The Legislature will likely revisit tenant protections and antidiscrimination policies based on income, which would push Maine toward stronger safeguards for renters in a tight market and support diversified housing solutions.
- Healthy Housing = Healthy Workforce = Healthy Economy: The Legislature may explore new ways to integrate housing policy with broader economic goals, such as workforce development, rural housing and revitalization, and increased infrastructure planning. The business community has increasingly mobilized around pro-housing coalitions, emphasizing that workforce shortages and housing scarcity are intertwined.
Housing policy cannot be siloed. The Legislature must consider how the varied housing concerns—affordability, housing preservation, homelessness, regional planning, and developer recruitment—all intersect with zoning, permitting, and finance. Building a durable housing ecosystem will require lawmakers to knit these threads together rather than treat them as separate issues.
Here at Island Institute, we have listened to our communities echo much of this concern—without coordination and consideration for smaller, rural and island communities, such places are at risk. We need to come together to develop community-driven housing solutions that simultaneously protect local character and economies while reducing the risk for development— especially for smaller projects suited to the unique communities we serve.
The 2025 session laid critical groundwork for advancing housing solutions and has signaled a shift from one-off solutions to coordinated reform. We have much work ahead of us and are ready to roll up our sleeves.
Erin Quetell is public policy director for Island Institute, publisher of The Working Waterfront. She works with communities and partner organizations and leads government relations work and public policy campaigns to advance the resilience of Maine’s island and coastal communities. She may be contacted at equetell@islandinstitute.org.
