Will buying or renting become more affordable?

Most of us despair about children or grandchildren being able to afford detached home

The hottest issue in the GTA today is housing affordability — single homes, townhouses or highrises (rental or condo). Will the Wynne government’s fixes work? To some degree, probably.

It’s interesting that one proposal applies a 15 per cent foreign speculation tax within the Greater Golden Horseshoe. What about Canadian speculators who prebuy to flip? Why exclude them if the object is to reduce prices?

Most of us despair about our children or grandchildren ever being able to afford a detached home. With new highrise condos starting in the $300,000 range, how long will it take them to even scrape up a down payment?

Then, there’s the spectre of huge mortgages, and the looming danger of interest rate hikes. Many young people don’t even have permanent jobs, but are on contracts, without benefits like health care. Talk about a perfect storm!

What’s their alternative? Can they borrow from the Bank of Dad? If not, it’s renting. That’s probably a reason so many couples put off having children. How can you cage ebullient toddlers and youngsters in a 900 square foot apartment? Few apartments are family oriented. And many landlords like renting to quiet seniors, who don’t damage units, are less likely to move, and pay on time. Neighbours complain about noise and active youngsters. There’s more space in most townhouses, but rents are considerably higher.

A complicating factor is high rents, period. In Burlington, nice (not luxurious) apartments run mainly from $1,000 to $2,000. When rent controls came into effect they covered buildings of six units or more built before 1991. The government is extending them to post-1991 buildings, but some developers claim that will stall new purposebuilt rental buildings. The jury’s out on that, and the proposal would provide for partial rebates on the development charges they pay. In recent years, more have been built. It’s market driven. Today rentals are in high demand, so more are being built.

Proposals include the annual provincial formula guideline for rent increases (2017’s is 1.5 per cent), with a cap of 2.5 per cent. Landlords can still apply for increases to cover capital costs. Tax rates for “multi-residential” buildings are much higher than “residential” rates. So builders often opt to register their buildings as condos, but rent all the units. Our older 119-unit building has been a condo since its 2011 conversion, and the owner realized a huge tax reduction — about $100,000 a year. Proposals include changing that tax structure to a “similar” rate.

In the early 2000s landlords offered discounts to lure tenants, but complained that they had to calculate rent increases on the discounted rent. So legislation was changed, allowing them to increase rents based on the higher figure — the “lawful” rent. But some, including ours, figured a way to beat the system. Ours quotes a rent, but the lease is written for a 10 per cent higher amount, and contains discounts of 10 per cent, so you pay the same rent, right? Wrong! I call these “disappearing discount” leases.

Not only are annual increases based on the higher amount, but each year the discounts are reduced. In four or five years, they disappear entirely. Zero. Further, renewals are virtually ununderstandable, because they quote percentage increases of the “lawful” rent, not what you’re paying. Will new standardized leases prevent scams to exceed the provincial guidelines?

There have been many legislative changes over the years, mainly benefiting landlords. Initially, when a tenant moved, the same rent applied to the new renter. That changed to allow setting new rents. If individual condo owners who rent them out are included in the changes, that’s good. If not, gouging as recently occurred in Toronto, can continue. That played a role in the recent action by the province to cool housing costs, but rules for individual landlords were less clear in the proposals.

These moves should help stem some unreasonable housing costs. And if Wynne drastically cuts the board’s power, as is being rumoured, she may yet be re-elected.