Was Ford’s rent control plan worth it?
Experts debate whether policy spurred the creation of enough units to justify tenants’ instability
Maria Chubulu thought she hit the Toronto rental jackpot.
An “amazing,” brand-new onebedroom condo, never occupied by another tenant, just a few minutes’ walk from the waterfront. Through the window, she could see the CN Tower. And best of all, she signed the lease in January 2021, when downtown asking rents were lower than usual.
But her monthly rent bill — originally set at $1,950 — is now expected to surge.
The exact amount is still up in the air, Chubulu said, but her landlord has suggested increasing the rate to between $2,350 and $2,650 this spring — a jump of between 20.5 and 35.9 per cent.
That would be allowed under a three-year-old exemption to Ontario’s rent control rules, for units first occupied after Nov. 15, 2018, introduced by Doug Ford’s Progressive Conservatives not long after forming government.
“I had absolutely no idea,” Chubulu said of the exemption.
More than 7,500 purpose-built rental units have been built in Toronto alone since the policy was enacted, says market research firm Urbanation, plus an untold number of condos and other homes rented out by investors.
And as the years go on, more and more tenants are finding themselves in units without rent control and facing the prospect of large rent spikes.
The provincial government, backed by some academics and industry players, says the rent control exemption is a way to incentivize the development of much-needed rental supply with hopes of pushing rents down.
But other academics and advocates argue the trade-off for tenants facing a lack of stability is too steep, and that the number of units actually built since the policy came into force hasn’t been enough to address demand.
And with a pandemic-era rent freeze ending last month, Urbanation president Shaun Hildebrand expects some tenants who signed leases mid-COVID-19 — when some landlords offered lower rents or incentives amid lower demand — may see higher-than-expected jumps.
“I think some tenants are going to face a bit of a shock,” he said.
Among them is Rasool Moradi Dastjerdi. Early in the pandemic, he also saw an opportunity to find a better home, for himself, his wife and their then-three-year-old daughter. The family had previously been squeezing into in a onebedroom unit in an older Toronto building.
For only a few hundred dollars more, Dastjerdi found a newer, one-plus-den condo near enough to the University of Toronto, where he works as a postdoctoral fellow. But this fall, he says his landlord suggested the $1,760 rent they agreed to could increase to $2,150 for 2022.
Shocked, Moradi Dastjerdi insisted it couldn’t be allowed, pointing to the maximum annual increase set out by the province — 1.2 per cent for 2022. His landlord replied, Moradi Dastjerdi told the Star, by pointing out the 2018 exemption for newly occupied units.
“They are providing this (exemption) to help, I don’t know who,” he said. It’s a rule that he believes adds financial pressure on tenants, increases the risk of landlord-tenant conflicts and assists investors over residents.
Hildebrand says his firm has seen an uptick in purpose-built rental development in Toronto over the last three years. He believes the policy change has contributed to that rise, but said it was likely not the only factor.
Where Urbanation counted between 1,000 and 1,300 new purpose-built rental units completed per year between 2016 and 2018, Hildebrand said they’re expecting 4,805 new units this year and 4,246 next year.
However, more than 3,000 rental units were completed in 2019 that would have been in development well before the policy change, he said. And he’s observed piqued interest in recent years from institutional investors such as pension funds in the purpose-built rental sector. He also cautioned numbers were still low compared to what’s needed.
To David Hulchanski, a housing expert with the University of Toronto, the increase hasn’t been sizeable enough to justify the policy. He believes bygone subsidies and incentives such as the federal MultiUnit Residential Building program of the 1970s — which offered tax advantages to stimulate rental construction — were far more effective in boosting supply.
Though he doesn’t believe the exemption will wound the city’s most vulnerable tenants — newly built units, he said, were often rented out at higher prices to begin with — he thinks more renters ought to be aware of the rules and whether their unit qualifies before signing a lease.
“People who are in those units should know,” he said. “There are no regulations at all in terms of the annual rent increases, unlike other similar units, maybe across the street but a couple years older.”
Chuburu says she could afford an increase, but is frustrated by the exemption’s lack of limits. Even if someone was a great tenant, she said, it may not beat out the lure of a higher profit.
“It doesn’t become about the people living there,” she said. “It becomes about money.”