Ontario Premier Kathleen Wynne says the argument that applying rent increase caps only for older buildings would lead to more rental units being built "does not actually hold water" with her.

The Liberal government is in the process of developing what it calls "substantive" rent control reform.

Currently, annual rent increase caps 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.

Wynne says developers argue that the 1991 rule was important so that more rental units would be constructed, but she says that hasn't happened in any comprehensive way.

"Rents have doubled, is that okay?" Wynne said to reporters on Tuesday, calling the issue an "extremely urgent matter."

"[It is] not acceptable, this is something that we need to look at. And our Minister of Housing has said that the issues around rent control the 1991 rule are all part of the discussion on how we move forward to make housing more affordable."

Mayor John Tory echoed the point.

"The private sector, in carrying out their own activities with respect to the rents they charge should be very careful about what they do in instances like this, because it can provoke the kind of legislative and policy reaction that is something they say would be very much against the interests of future construction of rental accommodation in the city of Toronto," he said.

A recent CIBC Economics report said the average rent in the Greater Toronto Area has risen by nearly 12 per cent in 2016 to a record high of $2.77 per square foot, and tenants in some newer units have told media outlets about skyrocketing rents, which in some cases are doubling.

Wynne said Tuesday that housing affordability is an issue beyond just Toronto and signalled that new proposals are on the way.

With files from CBC News