As some Toronto tenants have seen their rents double recently, Ontario premier Kathleen Wynne is pushing for new rent control laws. Real estate developers argue these changes could stifle the growing rental development trend, but the premier calls the situation “unacceptable”.
“The reality is there hasn’t been any more rental built, there have not been rental buildings built in any comprehensive way. And so that argument does not actually hold water with me at this point,” Kathleen Wynne said on the issue.
The proposed rent control laws are a great source of concern for developers, who say they could contribute to the housing stock problem faced throughout the Toronto real estate market, and the GTA in general.
A Canadian Imperial Bank of Commerce (CIBC) Economics report released on April 4th contradicts premier Wynne’s assessment of GTA built-to-rent developments, highlighting the fact that this segment of industry has been gaining momentum, and that the GTA is transitioning towards a more rent oriented market. Economists are already seeing developers react with caution to the premier’s proposed laws.
Currently, only buildings completed before 1991 have a rent cap in Ontario, which means that landlords will only be allowed to increase rent by 1.5% this year. Newer buildings have no such limitations, which industry stakeholders claim is a crucial reason for a revival of built-to-rent developments.
The cap law came into effect in 1992 and was intended at the time to be a temporary solution, but has since become permanent, through various revisions. This law is seen as one of the main reasons for the long stagnation of purpose-built rental construction in Toronto, which has only recently started increasing.
“The number of purpose-built units under construction is now north of 5,000, accounting for 16 percent of new supply. And as of the fourth quarter of 2016, there were almost 28,000 proposed new purpose-built units,” economist Benjamin Tal wrote for Ottawa Citizen.
Other arguments raised by economists and developers against extending rent control include:
- Often neglected building maintenance
- Decreased tenant mobility
- Tensions between groups of tenants, often instigated and maintained by the landlords themselves
Premier Wynne’s arguments come at a time when Toronto apartments for rent have seen skyrocketing prices, in some cases jumping from $1,650 to $3,300. The urgency of the matter is not lost on the administration, as the premier and other prominent political figures, such as NDP leader Andrea Horwath, are determined to work on multiple initiatives, perhaps mirroring the latest plan for affordability in Mississauga, but on a larger scale.
Even the Official Opposition in Ontario supports measures taken to increase affordability, as Progressive Conservative leader Patrick Brown stated he’s hoping to see a proposal from the government soon.
Original article published by Ottawa Citizen.
