CREW poll: Does rent control in Toronto need an overhaul?

There have been suggestions that rent control needs to be put in place for properties built after 1991: Do you agree?

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Ontario Premier Kathleen Wynne has promised rent control, following reports that some Toronto landlords are jacking rents up as much as double for occupants in their units.

There are currently no rent control rules for buildings built after 1991.

One major bank is arguing against the potential move.

“On this issue, economic theory is very clear: rent control is a bad idea. If rents are established at less than their equilibrium levels, both the quantity and quality of available rental units will fall.  Under rent control, developers are less incentivized to build rental properties, a fact that exacerbates any price crunch,” Benjamin Tal, CIBC chief economist, wrote in a recent research report. “The turnover  rate  under  rent  control  is  lower  as  tenants  stay  in  properties  longer.  And naturally, landlords would spend the bare minimum to maintain their units given that, in many cases, they do not need to attract other tenants.”

For her part, Wynne isn’t buying the argument that rent control will discourage the building of rentals.

“The reality is there hasn’t been any more rental built, there have not been rental buildings built in any comprehensive way,” she said last week, per the Canadian Press. “And so that argument does not actually hold water with me at this point.”

But Tal provided a real world example where rent control has had an adverse effect.

“New York City should be featured in any economic text book as an example of public policy that achieved the near opposite of its goals. Roughly half of the apartments in the city are under rent control, the other half is constantly undersupplied with a clear impact on prices,” he wrote. “And  given  that  most  housing  programs  tie  government  support  to  an apartment unit, not a person, the incentive to  not  move  is  enormous—further  limiting  supply.  What’s more, the share of rent controlled units that are in poor maintenance is almost four times higher than seen among uncontrolled units.”

But with examples of 100% rent hikes in Canada’s hottest market surfacing, the government seems poised to take some action.

Should it be an overhaul to the current rent control rules?

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COMMENTS

  • by Shah 2017-04-10 12:43:08 PM

    After reading different articles on Toronto home prices I have drawn a conclusion no one have done the root cause analysis all I hear is bubble for the last several years, pointing fingers on each other, it's high time the Government should intervene by arranging meetings with Builders, Banks and Real Estate Associations

  • by AC 2017-04-11 9:07:40 AM

    So Kathleen Wayne is getting involved in rent control issues because 'some landlords are raising the rents to double'. Why isn't she focusing on real matters? She wasn't very successful with anything else during her term and now wants to be a HERO!!? She appears to be pulling a 'Trump' by drawing attention from real matters to stupidity like this. The rents are obviously too low for these landlords because there's no way one would increase the rents to an amount that would be unreasonable or unsustainable. The units would simply NOT rent and tenants would go elsewhere. Would a landlord risk pricing his /her units out of the market and risk them sitting vacant!?? Has anyone thought of this?? If one takes advantage of this and increases the rent, it's usually to bring a unit to market rent. By increasing it too high and being above your competitors, means your unit will sit empty (yes, we have competition you see). Lose a month or two in rent because you are asking too much means you won't be making it back anytime soon. If she gets the policy makers to start imposing rent controls , we will have huge issues of which will cause the domino effect (listen to the experts for a change Ms. Wynn). Has she given serious thought to this? With today's market and prices, the numbers in rentals don't work as is. Doing this will further deepen the gap and it won't make sense for investors to buy (it already doesn't). She should listen to the experts rather than run with something she thinks will make her a superstar. Sounds like Kathleen Wynn's looking to leave her legacy with 'rent controls' as nothing else she's done has been exceptional or worth mentioning. It's like a dog with a bone, she's finally got something she thinks will make her a star and she's now running with it and won't let go. Please listen to the experts Ms. Wynn and don't destroy this incredible market. We are a wonderful, world class city and everyone wants to live and invest here. Finally we are on the world map. Is Ms. Wynn aware that Toronto was voted best overall in all categories for most livable city in the liveability rankings; least expensive in worldwide cost of living; best for business in the business environment rankings; most democratic in the democracy index; and most secure based on the global food security index according to the Economist. We ranked best overall in the world!!! Does she also know that Toronto ranked 4th out of 30 global cities in PWC's 6th annual Cities of Opportunities? Now shouldn't we ask ourselves why??

  • by CT 2017-04-11 12:35:46 PM

    Maybe Wynne should focus on controlling Hydro prices instead of rent increase .. also maybe get back all the taxpayer money she wasted on her failed powerplant before she interferes in rent control

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