When the government announced earlier this year that it would be expanding Ontario’s rent-control rules, tenants cheered and landlords grumbled. The province’s old rules had exempted any units constructed after 1991 — which included each and every condo tower built since the city’s latest building boom started gathering steam— leaving tenants at the mercy of a landlord’s avarice. In one high-profile case, a CBC reporter’s rent was nearly doubled. The new rent-control regime applies to all units, regardless of when they were built.
The province’s rental-housing owners were, unsurprisingly, not happy with the move and warned at the time that it would come at a cost: reduced proposals for new rental construction, and perhaps even the conversion of planned rental projects into condominiums.
On Monday, the Federation of Rental-Housing Providers of Ontario (FRPO) released a report that suggests the GTA is already starting to see some early unintended effects of rent control: four rental projects — comprising 1,000 units — have now become condo projects, and more can be considered “at risk.” FRPO’s report does acknowledge that more than 30,000 units of new purpose-built rental homes were still in the pipeline as of the second quarter of this year, compared to over 19,000 a year prior. However, it says that the increase came at a slower rate than in previous years, and warns that we could be seeing early indications of a broader problem.
Progressive Conservative leader Patrick Brown said that his party will revisit Liberal rent-control changes if it forms the government after next year’s election.
“I want to create more supply; I want more rental units. If you’re a young person right now, how do you afford an apartment in the city of Toronto?” Brown said Monday. “I’m very concerned that we’re not going to have affordable rental accommodation for the next generation.”
Brown pointed to British Columbia’s higher rent-control thresholds: legal rent increases there can be as high as inflation plus two per cent, while in Ontario, they’re currently capped at the rate of inflation. (In both provinces, landlords can apply for increases above the legal maximums.) At the same time, Brown said, cases in which tenants saw their rents double “simply can’t happen.”
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The New Democrats have said that the changes introduced by the Liberals this year don’t go far enough to protect renters. Peter Tabuns, MPP for Toronto-Danforth, has introduced Bill 144 (“The Real Rent Control Act”), which would strengthen landlords’ obligations to maintain units in a state of good repair and end “vacancy decontrol,” the ability of landlords to set whatever rent they choose after a tenant has moved out.
The government’s housing plan does include some measures to counteract the effects of expanded rental control, including grants to offset municipal development charges and provincial scrutiny of bureaucratic barriers to new construction. On Tuesday, the government announced the formation of a team in the Ministry of Housing that will “streamline” the development process.
The team will be led by Paula Dill, who was a planning commissioner in the pre-amalgamation city of North York, before moving on to the amalgamated City of Toronto and then to the province, where she’s been the Provincial and Land Development Facilitator.
Minister of Housing Peter Milczyn said on Monday at Queen’s Park that the blame for Ontario’s decades-long stretch of sluggish rental construction should properly be put not on rent control, but on how the federal government taxes rental housing. This view doesn’t exactly contradict those of the FRPO and other rental housing advocates, who have also argued for changes to federal taxation.
But the FRPO report cautions that if the Liberals fail to adjust their policy, the current rental-supply crunch in Ontario, focused in the Greater Toronto Area, will only get worse. It forecasts a shortfall of 6,000 rental units annually for the next decade, meaning the province would need to double its current rate of construction just to meet projected demand. Meanwhile, owners of existing rental units are already spending more than $5 billion over the last five years renovating an aging building stock — 85 per cent of the province’s rental units are 35 years old or more. That number will grow as units continue to age and as near-zero vacancy rates let landlords recoup their investments through higher rents.
If the Liberals are worried about any of this, they aren’t showing their hand yet. Milczyn said the government isn’t reconsidering any element of its so-called Fair Housing Plan.
“We know that over the past decades, only 6 per cent of the new housing starts were rental housing under the old rent-control regime,” says Milczyn. “That wasn’t generating lots of rental housing, so I’m skeptical of what FRPO is saying. I’m listening, but I’m skeptical.”
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