Who Benefits From Ford’s Changes to Rent Control?

By: Caroline Xhaferri

Ford’s Conservative government introduced its first long-term strategy termed the 2018 Ontario Economic Outlook and Fiscal Review, designed to reduce the Province’s deficit and to “help people make ends meet”. Rent control policies in Ontario plays a vital role in mitigating the effects of changing demographics as a result of global attractiveness as a place of economic growth, in a province booming with new developments in major cities like Toronto and soaring housing prices. Changes in existing rent control policy was one of the most pressing issues arising from the new fiscal plan.

As it currently stands, Landlords may increase rent by 1.8% between January 1st and December 31st, 2019, and only 12 months prior to the last rent increase or the tenant’s move-in date. The mere caps on rental increases are not the forefront of the controversy. What is unique about Ford’s new legislation is the removal of rent controls for newly-built or newly-converted rental units. New developments and new residential units on the market as of November 2018 are no longer subject to rent control legislation in place prior to their development. Thus, the legislation offers protection to existing tenants, and little protection to those wishing to enter the market.

Who benefits?

Existing tenants

For a short period of time, existing Tenants residing in residential units are protected under the legislation. It is only until their rental agreement expires or they desire to leave that the new rent control will affect them.

High income earners

Lax rent control allows for higher income earners to snag precious real estate in larger cities like Toronto and Ottawa. Low income earners who are already paying an upward of 30% of their income on rental units will continue to feel the effects of isolation from the downtown core and prominent areas of the city.

Landlords and Developers 

Ontario is experiencing an unprecedented housing supply shortage. Rent control was initially introduced to protect low income earners and young adults hoping to live in major cities. The Liberal’s defensive approach protected tenants from being pushed out of residency as a result of the looming threat of housing supply shortage created by unstable housing prices. Rent control for a Conservative government, on the other hand, has become the scapegoat of the existing low housing supply. According to Ford, lax rent control would combat the issue by freeing up residential units to those who can “rightfully” afford it. Evidence suggests that the approach not only further restricts housing supply, but discourages diverse migration to major cities, furthers the gap between lower and higher income residents, and offers no security for Tenants.

Landlords and developers benefit the most from these new rent controls. Prices on new available for rent units are unrestricted, and within a year, landlords can choose to raise the rent according to their own discretion. Developers are encouraged to continuously build luxurious, vacant, high income rental units as the return on these units are subject to no restriction.  In addition, Landlords can refurbish old residential units to characterize them as “newly converted”; a loophole to take advantage of lax rent controls.

What is being done elsewhere?

Developers’ outcry against British Columbia’s strict rental controls are mere whistles in the wind. The argument that rent control forces developers to re-evaluate their investments and delay existing projects have little to no influence on B.C’s attempt to mitigate the housing affordability crisis. Vancouver especially has created individual task forces to monitor and assess the real time effects of changes of rent control in the city and are set to make recommendations in the upcoming months. Considering Vancouver’s stance on housing affordability is one largely based off of public engagement, residents are hopeful that their concerns will be heard and tailored too.

New York and San Francisco have adopted specialized rent control policies that branch out into complex policies based on demographic specifications including on neighbourhood location, income, year built, units within residents, and developers, amongst others. Policies on rent control dictate aspects such as when rent control comes into effect, when it does not apply, caps on rent increase, procedures for new developers, and regulations applicable to landlords. These policies have successfully regulated the booming housing market the cities have experienced in the last decade. NYC and San Fran are real time examples of routes rent control can adopt considering places like Toronto are following suit of expansive housing demand and low supply.

Ontario’s new rent control policies does little to alleviate the issue of affordable housing in major cities like Toronto.  Further, it does virtually nothing for those looking to get into the city, who face little housing supply and high prices. Residents would benefit by making their concerns heard and demanding a fair and just assessment of the housing affordability situation in Ontario as a result of these changes. The overarching threat of developers taking over our housing market is fast approaching, and we must take action to ensure it is stopped in it’s tracks. c

Caroline Xhaferri is a first year  Master of Public Policy candidate at the University of Toronto’s Munk School of Global Affairs and Public Policy, with a Honours Bachelor of Arts in Criminology & Ethics, Society and Law from the University of Toronto. Caroline is passionate about urban policy, planning and development, and municipal affairs.