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Rent control hurts everyone in the long run: Don Campbell

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guest | 18 Jul 2011, 02:28 PM Agree 0

But Real Estate Investment Network President Don Campbell told CRE Online such rent control regulations have unintended consequences that will hurt investors, developers, the government, and even renters. Politically, controlling the rising cost of rents might look good to voters, but it will be a long-term detriment all around, he said.“Often these bills are passed due to the optics of the bill and often throughout history they are instigated in election years,” he said.Renters who mostly support these controls fail to realize they would drive up rents, he said. There are three reasons this would hurt renters, he said:1.     They severely restrict the ability for anyone to financially build rental-specific properties (apartment buildings), thus driving more renters into the more costly option of condo properties.2.     Rents increases will hurt new renters each time properties change hands. Although rent increases are controlled by government guidelines, investors can raise rents back to market levels as soon as tenants move out. Because of a lack of supply, these increases could be quite high.3.     Landlords would be forced to decrease the amount of money spent on repairs and maintenance, thus lowering the quality of the living space for tenants.The government would also face some problems, said Campbell:1.     They will be pressured to provide incentives (like the 1970s and 1980s) to get rental specific buildings built.2.     As actual rents increase, the government will have to increase funding to affordable housing projects.3.     The disputes between tenants and landlords will increase, occupying government resources.4.     What the government gains in “optics,” they will lose in increased spending in these areas.Investors, often some of the most vocal opponents against rent controls in Canada, will no doubt be affected in a number of ways:1.     In Ontario, limiting rents on post-1991 buildings will lead to a decreased amount of funds available for maintenance. 2.     Many investors will let their buildings deteriorate as capital expenditures spending will decrease.3.     Investment money will be pushed out of the region to less regulated areas of the country.Lastly, Campbell said developers will also be dissuaded from building apartment rental buildings knowing that interest rates and energy prices will increase at a faster rate than rents. “Money will be provided elsewhere where it provides a better yield,” he said.
  • Dennis | 20 Jul 2011, 07:21 PM Agree 0
    Right on Don
  • Dennis | 20 Jul 2011, 08:21 PM Agree 0
    Right on Don
  • Thane Lanz | 20 Jul 2011, 11:03 PM Agree 0
    Rent Control has been phased out over the last twenty years in most jurisdictions. Too bad it's making a comeback politically. Don is right it just hurts everyone in the long run. If we don't make enough profit as investors we don't reinvest. That's why most of my future investing will be in Alberta. There is no rent controls.

    ______________________________________________
    Thane Lanz
    Zero Down Canada
    "No Money Down Investment Condos"
    http://www.zerodowncanada.com
  • Thane Lanz | 21 Jul 2011, 12:03 AM Agree 0
    Rent Control has been phased out over the last twenty years in most jurisdictions. Too bad it's making a comeback politically. Don is right it just hurts everyone in the long run. If we don't make enough profit as investors we don't reinvest. That's why most of my future investing will be in Alberta. There is no rent controls.

    ______________________________________________
    Thane Lanz
    Zero Down Canada
    "No Money Down Investment Condos"
    http://www.zerodowncanada.com
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