Rent control has been a hot topic in the media for the past several weeks, thanks to CBC Toronto and the No Fixed Address series of stories. Now, the debate has found its way into Queen’s Park. New Democratic Party MMP Peter Tabuns is set to table legislation to close the 1991 “loophole” that exempts for most condo-apartment and rental units built after 1991.
As the Ontario legislature prepares to debate the bill, landlords and tenants, along with their advocates, have spoken out about these potential changes. Here’s what they have to say.
What is the Rent Control Loophole?
To start, it’s important to recognize that the so-called “loophole” is no loophole at all. The law was designed that way for a reason.
Prior to 1997, residential landlords could only increase the annual rent by a pre-set amount in Ontario’s annual rent increase guideline. The government of Ontario passed the law in 1997 allowing landlords to increase the rent by any amount once a year for buildings that were built or occupied after November 1, 1991.
The change was meant to encourage development of new rental housing. The idea was that removing restrictions on rent increases would result in more vacant apartments available for renters, meeting a growing demand that was not being met on its own. Whether it accomplished this goal is subject to debate.
Arguments for Rent Control
Kenn Hale, a lawyer with the Advocacy Centre for Tenants in Ontario, says the law isn’t working as intended.
To keep up with population growth, Ontario needs at least 10,000 new rental units each year. This is especially important in the GTA, where rental vacancies are currently at 1%. However, housing developers are not meeting this demand. On average, less than 3,300 new apartments come on the rental market every year.
To tenant advocates, this shows the policy has failed.
Others, along with Peter Tabuns, approach the issue from a social justice perspective. “People deserve protection against unreasonable rent increases. The exemption that exists now for building built after 1991 needs to go. It isn’t helping people anymore. In fact, it’s putting people in a very difficult position.”
The NDP bill would still allow landlords to increase the rent each year, but only by the amount prescribed by the rent increase guideline. This year, the guideline is set at 1.7% of the previous year’s rent.
Ontario Housing Minister Chris Ballard agrees that, “it’s absolutely unacceptable that renters are facing the pressures that they’re facing today.” However, he has not committed to changes or said whether he will support the bill put forth by Tabuns.
Arguments Against Rent Control
Many landlords have spoken out against this potential change. Some, like Toronto landlord Frances Newbigin, worry that landlords would not be able to keep up with increases to tax, water, and hydro bills.
Others argue that changing the law would hurt the rental market and make things even worse for tenants. The president of the Federation of Rental Housing Providers, Jim Murphy, says the law would create uncertainty. “If the rules keep changing what does that do to the confidence to provide the housing that’s required?”
Bob Aaron, a real estate lawyer who also owns investment property in Ontario, puts it bluntly. “If we impose rent control now, nobody will ever trust the government again,” he argues. “I think it would destabilize the entire rental market…the construction of new apartment buildings and rentals will cease immediately.”
The Ontario legislature is set to debate the bill this week.