If you ever doubt the power of an active opposition at Queen’s Park, even in the face of a majority government, last week provided a helpful example. New Democrat Peter Tabuns announced he would table a bill to dramatically revise the province’s rent control rules — which currently apply only to units built before 1991 — to include all units in the province. The Liberals, always eager to borrow an NDP idea without attribution, quickly sent out a release from Minister of Housing Chris Ballard announcing they too believe “it is unacceptable that so many Ontarians are faced with housing costs that are rising dramatically.” Ballard is looking to make “substantive changes” to the province’s rent control rules, according to the release, though it provided neither specifics nor a timeline. (It could propose changes as part of the budget, which would ensure speedy passage, or present a standalone bill, which could languish until the end of the year or later.)
Some kind of substantial change to rent control is overdue, since basically nobody likes the current system. Despite some reporting that’s called the post-1991 exemption a “loophole,” it’s actually deliberate policy. Successive governments had been concerned that rent control rules stifled the new construction of rental units, and not without reason: until recently, new rental construction had been an endangered species since the mid-1970s. The province wanted to provide more economic incentives for developers to build them.
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That policy has, so far, largely been a failure. Condominium construction has vastly outpaced rental construction in and around the GTA for many years notwithstanding the exemption for new builds, and continues to do so. But these things are complicated: the region has just started to see a new generation of rental construction alongside the condo boom as some builders find they can’t find enough buyers and shift to rental instead. A sudden end to the post-1991 exemption could put an end to all that.
There are plenty of other concerns about Ontario’s rent control rules in addition to the post-1991 exemption. Large landlords don’t love that the current rules cap their rent increases at 2 per cent annually (for obvious reasons), while tenants hate that there’s still plenty of leeway in the rules for landlords to pass costs on to them for repairs and other work on everything from plumbing and roofs to wiring and elevators. And landlords' unfettered power to reset rents when a tenant leaves is, depending on who you ask, either a necessary release valve that allows landlords to catch up to the market when longtime tenants move out, or an incentive to evict those very same longtime tenants. In short, nobody is happy, all parties think the current law is too often contingent on the decision of the Landlord and Tenant Board, and the law has been largely the same for a generation. Those are three good reasons for the government to take a hard look at changing it.
The question is, to what end? Until recently, the government had been talking about loosening rental rules to try and encourage more homeowners to become landlords by enabling them to add units like basement apartments. This was sold as a way to both increase the supply of rental housing and help homeowners afford the eye-watering prices of houses in the GTA. The government explicitly said it was also reconsidering the formula used to determine the threshold for legal annual increases in rent-controlled units. Tenant advocates said the proposals risked giving away too much to landlords.
And that’s the problem: the government, not unreasonably, thinks it would be better for tenants if there were more rental housing out there for them to choose from, and that requires making it easier for other people to get into the business of becoming landlords. But most of the things a government would realistically do to facilitate that would make it easier for landlords to run their properties — making it easier for them to raise rents, recoup costs, and evict tenants. Which may increase the supply of rental units on the market, but not necessarily in the way tenants would want. Meanwhile, tenants — also not unreasonably — tend to think their lives would be easier if the government made life harder for landlords who raise rents, pass on costs, or evict them.
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It’s a hard problem, and the rules about tenure are just the beginning. If the government starts monkeying with rent control, it also needs to think about the whole rental system, including factors like property taxes (municipalities across the GTA tax rental apartments at rates two to three times higher than condominiums and single-family homes) and other burdens that fall heavier on rental than other types of housing. Ideally, a comprehensive approach would also include action by the feds, who happen to have a budget coming out Wednesday.
In a perfect world, a government with lots of time left in its mandate would be taking a serious, sober look at this issue without the pressure of an election looming over its shoulder. It is not, alas, a perfect world, and the government has both an election looming next year and an urban base they’re trying to protect from NDP challenges — which creates a risk that they’ll engage in panicky course corrections on the rental file as they have in the energy sector.
Perhaps the Liberals would have been better off letting Tabuns’s bill sail by without comment, but there’s the small matter that they really did promise a major revamp of the province’s rent control rules. When they won the election. In 2003.
Photo courtesy of Henry Faber and licensed for commercial use under a Creative Commons licence. (See the uncropped version.)