news Greed and Partisan Politics are the Reasons You Don’t Have Rent Control

The Ontario government recently had the chance to fix the two-tier rental market, but Liberals and Progressive Conservatives joined forces to shut it down.

Elections are usually known for bringing out the political basket of goodies: tax breaks, extra spending, programs, protections etc.

So, you’d think a bill protecting Ontario’s tenants from massive rent increases would be politically easy right about now for all parties—a slam-dunk with an election right around the corner. Sadly, you’d be wrong.

Currently, the Residential Tenancies Act exempts any building in Ontario built after 1991 from any kind of rent control. Today, landlords in those buildings can raise rent by any amount they want, as a CBC reporter and a whole building of tenants recently found out.

The government finally agreed to boost rent control in the future, but haven’t said when or what is coming. Two weeks ago, NDP MPP Peter Tabuns tried to force the issue, trying to get the 21 words in the law that allow the increases taken out, thus bringing all units under rent control.

Tabuns’s attempt to fast-track the bill to end the exemption was sunk in the provincial legislature when the Liberals and Progressive Conservatives joined forces to shut it down.

It was, needless to say, an odd move by both the government and opposition.

Ending the exemption via a private member’s bill was actually first suggested by an opposition PC MPP in 2011, upset at tenants in his Ottawa riding getting gouged. These days, Progressive Conservative finance critic Vic Fedeli doesn’t even mention tenants and just talks about red tape.

A couple of weeks ago, both economists and Premier Kathleen Wynne outlined why the argument against rent control—that it affected whether developers build rental housing or not—“does not actually hold water.” And last week, the Liberals said they would be bringing out a bunch of changes to the law soon…but not today.

As long as the exemption stays in place, the risk to tenants remains high. While lobbyists for landlords have argued for keeping the exemption to maintain “investor stability,” it creates major tenant instability today for those who get massive arbitrary increases in a wildly artificially distorted housing market.

All new rental units being built are exempt from rent control, meaning that for thousands of units a landlord who made a bad investment or who doesn’t know how to manage money can simply pass their costs onto tenants who make around $40,000 a year or less.

Even more scary are “economic evictions,” where a tenant is punished with a massive rent increase for asking for repairs. The act currently creates a class of tenants that have no real tenant rights.

It’s a bad situation and one that prompted Mayor John Tory to warn landlords to “be very careful about what they do in instances like this.”

Again, though you might think that all parties would immediately move to rein in landlords charging these kinds of exorbitant rents, but there is a counter incentive to end tenant pain: keeping landlord profit.

Right now, landlords are enjoying the strongest rental market in 30 years, with record profits, tenant bidding wars, and record high rents. They are seeing investors pour in to snap up the available housing stock. They want the money party to go on forever.

As media and community groups have pointed out, landlords give a lot of money provincially, especially during leadership conventions. Meanwhile, the most successful way to build rental housing—by incentivizing rental construction over condo construction with zoning and developer tax changes—doesn’t necessarily go over well with the development industry.

Probably more importantly, landlords have very successfully and repeatedly (with examples back to 1982!) sold the idea that rent control negatively affects rental housing construction even though there’s no economic evidence that it does generally or specifically in Ontario.

Sadly, a number of different media outlets and editorial boards (here, here, here, here, and here) have repeated this industry talking point, almost ignoring the federal policies whose existence gave rise to most of our housing stock. These days, federal housing commitments are hailed for their size, in comparison to those of the previous government, even though they are peanuts compared to the programs of the 1980s.

In the meantime, tenants will experience increasing suffering. As long as it remains more profitable to build condos over rental housing, the rental supply will keep shrinking and rent will keep shooting up 8 per cent year after year, while wages remain stagnant and employment precarious.

Any new stock (mostly from new condos) will help with supply, but it’s not enough without federal and provincial governments stepping in to help. And, any new stock will have no rent control.

Until rent control is brought in for all tenants, we will continue to see a growing two-tier system. One tier will have stable rents that rise with inflation. The other will have thousands of tenants unable to move and pushed to the financial edge when forced to pay for a landlord’s gambling habit, a bad investment, or a landlord chasing the highest rent in an out-of-control failed rental market.

Geordie Dent is the executive director of the Federation of Metro Tenants’ Associations.