Rent control not the solution
There’s no better indicator of the kinds of people who tend to go into journalism, and the kinds of people we tend to pitch journalism to, than Toronto real estate news. As home prices reached a certain level of astonishing last year, there was a spate of stories about crestfallen millennials abandoning their “dreams of detached homes,” as a Toronto Star headline put it. Home prices having since become even more astonishing, we have learned that even semi- detached homes — ick! — are beyond the reach of many who for some reason believe they should be able to afford them. Readers might wonder if home ownership had been declared some kind of hereditary right — if not a human right — under Canadian law.
One of the joys of Toronto for people of adequate means is the chance to be king or queen of your own castle, and its backyard, minutes from downtown. The market may be in for a correction, but “ad- equate means” have inflated mostly because Toronto is a vibrant, wealthy city people are desperate to live in. When today’s typical would-be firsttime homebuyer was born, the home ownership rate in Toronto was around 58 per cent. People managed. So can future generations.
The media are focusing now on a new and related market villain: the Giant Rent Hike. A hilarious Globe and Mail headline last year promised to explain how Montreal “maintain( s) its enviably l ow rents.” The answer, alas: “ample but antique housing stock; a sluggish economy; and a language barrier that puts a soft cap on population growth.” The free market strikes again.
But politicians cannot abide it working in the opposite direction. “We hear from families that say these increases are chasing them from their homes — the place they’re raising their kids,” Ontario NDP Leader Andrea Horwath said Monday. “Some people are seeing rent increases of hundreds of dollars or even $ 1,000 a month. That’s not fair, it doesn’t have to be this way and Wynne Liberals could have done something about this years ago.”
The NDP’s solution: rent control. MPP Peter Tabuns tabled a private member’s bill Monday that would extend limits on annual rent increases to units built af- ter 1991 — thus closing a socalled “loophole” the Mike Harris Tories introduced in hopes people would build more new units. The Liberals followed quickly behind, with Housing Minister Chris Ballard promising “substantive rent control reform” — details to come.
You can see the attraction, politically. Robber baron landlords swoop in, cackling, forcing families onto the streets and auctioning off their homes, literally, to the highest bidder. The government can stop it. Why won’t the government stop it?
No doubt there are some very sympathetic stories out there. But we in the media tend to be very good at finding those, and it’s hard not to notice the preponderance of “victims” who could afford very high rent in the first place, and didn’t do their homework with respect to rent control or the lack thereof. A typical example: CBC introduced us to a 32- yearold who was paying $ 1,650 a month for a tiny one- bedroom condo, only to be sent couchsurfing by a whopping $950 increase.
I rent a very similar condo; I fear the same outcome. But I don’t fear couchsurfing, and I wouldn’t ask anyone else for sympathy: $1,650 still rents you a whole lot of apartment in this city. In October, t he Canada Mortgage and Housing Corp. ( CMHC) had the average two- bedroom apartment in the City of Toronto at $1,272 — up two per cent from a year earlier. There are perfectly good newly renovated two- bedrooms going f or $1,400, right across the street from me in St. James Town. I might well live there some day soon, and I’ ll have nothing to complain about.
The fact is, rent control would largely help highend renters in a high- end market. The vast majority of units that aren’t rent controlled are condos. In October, CMHC pegged the condo- over- apartment rental premium in the GTA at 46 per cent for one- bedrooms, 54 per cent for two- bedrooms and 65 per cent for three-bedrooms.
The real challenge these days is finding an apartment, period: the vacancy rate in October was 1.3 per cent. Critics say the “loophole” didn’t actually incentivize building rental apartments, but closing the “loophole” certainly won’t. Indeed, it’s tough to see how it would accomplish much except transferring money from unit owners to their tenants. Many will like that idea on principle — but if owners can’t rent to the highest bidder, they are unlikely to suddenly rent for less to the youngest, most disadvantaged and most vulnerable people rent control ostensibly helps.
If you want central Toronto to be a more affordable place to live, you need to figure out how to boost supply. There are lots of different ideas out there. It’s a topic of constant discussion at City Hall and Queen’s Park alike. Rent control is nothing but a political distraction.