Wynne Liberals are right on rent control plan
The market has failed to make housing affordable for too many Ontarians
Let there be no doubt about one thing: Rent control matters to millions of Ontarians, and the Liberal government is right to pursue housing reforms now part of the budget unveiled by Finance Minister Charles Sousa.
While the proposed 15-per-cent tax on foreign buyers has dominated the headlines, the most significant change for many is the dismantling of the discriminatory 25-year-old law that exempted units built after 1991 from rent control. That law was fundamentally unfair because it created a twotier rental market that gave one group of landlords the right to charge at will, while imposing caps on the other.
Expanding rent control to cover all private units, regardless of when they were built, no doubt levels the playing field. And that’s good for renters.
The 1992 legislation in question was enacted in the belief that removing rent caps on new buildings would invigorate the home industry, and with rising profits and demand, developers would be eager to build more rental units.
But there’s theory and there’s reality. The anticipated surge in rental construction never materialized. Developers built more and more condos that were not subject to rent control, but little that was affordable.
“The reality is there hasn’t been any more rental built, there have not been rental buildings built in any comprehensive way,” Premier Kathleen Wynne said recently.
She is right. Still, the housing industry and some economists continue to insist things work best when left to the market, and that any attempt at rent control will kill rental construction.
“Even the very mention of rental control as an option is having a chilling effect on developers. From recent discussions with developers we know that it is already impacting decisions,” CIBC economist Benjamin Tal wrote in a recent report.
But here’s the thing: Developers had great incentive for 25 years to build and make the market work for renters but that didn’t happen in any meaningful way. Now that they are being held accountable, builders are predicting doom and gloom to get their way.
Whether the issue is raising minimum wage, protecting the environment and a host of others, the business sector resorts to wild predictions of economic disaster. For the most part, these “sky will-fall” predictions are an excuse to maintain the status quo, but the thing is, we can’t wait another 25 years for renters to get relief.
Remember that about 30 per cent of Ontario households rent — and many of them are hurting right now. As a society, we just can’t say, “it’s free enterprise so let the markets decide” and hope for the best.
Somebody has to act to stabilize a market run amok, and the Liberal government is right to press ahead with reforms.
It is doubtful that the quality of life now enjoyed would have been as good as it is today if Western societies had pinned their fates entirely to the dictates of the free market. Yes, governments should intervene as little as possible in the private sector.
But there comes a time when government needs to step in and be the catalyst for change. On the housing crisis, the time is now.
The limited measures announced to deal with the problem are appropriate. The 16-point package is obviously not a silver bullet. It is only a start. There’s more governments can do — such as reducing development charges, cutting the time for development approvals and making more public land available — to stimulate rental construction.
The problem today is largely Toronto’s and some in other cities might think it’s not their issue. But it could easily be Ottawa tomorrow, so we all have a stake in finding a solution.
Fortunately, all three major parties at Queen’s Park seem to agree on what needs to be done.
Let’s implement these measures and build on them. Mohammed Adam is an Ottawa writer.
Now that they are being held accountable, builders are predicting doom and gloom to get their way.