Annual rent increase caps in the province currently only apply to residential buildings built before November 1991

TORONTO – Ontario’s premier says she isn’t buying an argument from the development industry that stricter rent control will do more harm than good for renters in the province.

Kathleen Wynne’s comments on Tuesday came amid reports of some residents in Toronto seeing their rents double — a situation the premier called “unacceptable.”

Developers and economists have warned that a new rent control law — which the Ontario government has said it’s developing — will discourage the construction of new rental properties, squeezing the already tight supply of rental homes.

Wynne threw cold water on those concerns, saying developers having been making that argument since she entered politics in 2003.

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

That runs contrary to a CIBC Economics report released Tuesday morning, which said the Greater Toronto Area is on the “verge of an historic transition toward a more rent oriented real estate market,” and rent control would damage that.

“Even the very mention of rent control as an option is having a chilling effect on developers,” wrote Economist Benjamin Tal. “From recent discussions with some developers we know that it’s already impacting decisions.”

Currently, annual rent increase caps in the province only apply to residential buildings or units constructed before November 1991. This year the rent for those tenants could be increased by up to 1.5 per cent without the landlord applying to the Landlord and Tenant Board, but there is no cap for units built after November 1991.

The post-November 1991 exemption dates back to a 1992 law — from the NDP government and intended as temporary — that has remained in various updated versions of tenancy legislation and become permanent.

Tal said purpose-built rental construction went through a long drought as a result of pre-1992 rent control, from which it is only now beginning to recover.

“The number of purpose-built units under construction is now north of 5,000, accounting for 16 per cent of new supply,” he wrote. “And as of the fourth quarter of 2016, there were almost 28,000 proposed new-purpose built units.”

In jurisdictions with rent control, maintenance of rental buildings tends to suffer, people tend to become less mobile, and some groups of tenants can be pitted against other tenants and their landlords, Tal argued.

Tal wouldn’t weigh-in on the premier’s comments, but cautioned against stopping more rental units from entering the market.

“Implementing rent control will make the situation worse,” he said.

Wynne also remarked on media reports about rents at two newer Toronto condos doubling from $1,650 to $3,300. She said it is an “egregious” example of the problem her government intends to address.

Asked if her government’s promise to bring in rent control reform may have caused landlords to hike their rents before it takes effect, Wynne said she doesn’t know, but added, “that doesn’t make it any more acceptable.”

“It’s a very urgent matter, it’s an extremely urgent matter and as I’ve said, we are on it, we are working on the different initiatives that we think are appropriate for the Ontario market,” she said.

The changes won’t come in time for Brooke Alyea, a PhD student living in east Toronto with her husband.

The couple left a rent controlled apartment where they paid $1,050-a-month seven or eight years ago for larger apartment, only to find themselves evicted when their landlord sold that house, Alyea said.

“We couldn’t find anything in the price range we were at, which was around $2,000 a month. So now we’re in a place, similar in size to where we were before, and we’re paying $2,250 a month,” said Alyea.

They’re getting ready to move to Montreal, where cheaper rents will “soften the blow” of leaving Toronto, she said.

At Queen’s Park, NDP Leader Andrea Horwath said her party has tabled a private member’s bill to extend rent control to all buildings, and the government can pass it at any time.

“It’s an untenable situation,” said Horwath. “Can you imagine being a tenant that gets a notice from their landlord that in 60 days their rent is doubling? You can’t go to your employer and say, ‘Can you double my wages, can you double my salary because my rent is doubling in two months’ time.'”

Progressive Conservative Leader Patrick Brown said he welcomes any measure to make housing more affordable, and hopes the government brings forward its proposal soon.