Bye bye 1991 loophole — rent control to expand to all rental units in Ontario
Rent increases for existing tenants can be no higher than the rate of inflation and capped at 2.5%
Renters in Ontario are breathing a sigh of relief today, hearing that their rent will be protected from exorbitant increases.
Announced on Thursday, here's what Ontario's Fair Housing Plan means for renters:
- Expanding rent control to all units, including those built after 1991.
- Annual rent increases for existing tenants can be no higher than the rate of inflation.
- Rent increases will be capped at 2.5 per cent, even if the rate of inflation is higher.
- Change becomes effective as of April 20, regardless of when legislation is passed.
- A standard lease will be developed in multiple languages.
- Tenants will be adequately compensated if asked to vacate for "landlord use."
Housing Minister Chris Ballard was the first to tell CBC Toronto about new rent controls in mid-March, saying at the time that the government was working on legislation that would expand "on the rent controls that are currently in place." The legislation will be introduced on Monday and is expected to pass, as the Liberals hold a majority in Ontario. Initial debates have been scheduled for Tuesday and Wednesday.
Thursday's news comes after weeks of increased pressure on the government in light of stories about massive rent increases people in Toronto have been forced to pay, many featured as part the CBC Toronto series "No Fixed Address."
Changes are 'great and very important'
Valerie Bruce, a renter living in Liberty Village, recently received a notice saying her rent would double from $1,600 to $3,200, so she decided to move.
Though the news may be too late in her situation, she called the proposed changes "great and very important," adding that there needs to be security and safety for the increasing number of renters who are living in condos in Toronto.
Given today's announcement, Milos Milic, who currently lives in a pre-1991 rental unit, says he would now consider moving into a newer unit.
ACORN, an organization that represents low-income families, also welcomed the news, saying rent control on units built in 1991 and earlier was a failed policy that did little to build new rentals and did a lot to make housing unaffordable in the province.
Rental industry 'disappointed and concerned'
Not everyone is happy with Thursday's announcement. The Federation of Rental-housing Providers of Ontario (FRPO) said it's disappointed and concerned with the proposed changes because they were made "without formal consultation" with the industry responsible for rental housing.
The announcement will "put thousands of units, and millions of dollars in provincial revenues at risk," said Jim Murphy, FRPO president and CEO. "It is a rash, politically motivated decision which will hurt, not help, generations of Ontario renters."
Ernie Hardeman, the PC housing critic, said the changes come too late and that the government should have moved "when they started musing about it." He isn't convinced the 1991 rent control exemption should have been removed for all buildings, and suggested a "graduated method" that saw the rules apply to pre-2001 may have been a better fit.
The Bank of Montreal commended the government for taking action, but said it's too early to tell if the new measures will help.
Stan Cho, a homeowner, renter and landlord of 19 different units, said today's move will hurt tenants more than anybody else because domestic investors will stop buying.
"We should have a free market economy where the supply and demand is balanced and the market dictates how much the rent increase should be," he said. "Right now, the reason we're seeing these rent increases is because we don't have that balance."
He believes the focus should be on reducing red tape for developers and homeowners, adding that he's been trying to get permits and approvals for his house for over a year.
He said landlords who have doubled the rent are the exception and that the government's "panic mode" reaction doesn't fix the real problem, which is demand.
Julie Bond, who leases several condos in Toronto, echoes Cho's concerns, saying the income she gets from her properties doesn't even cover the mortgage, maintenance and taxes.
Skeptical that the changes will have a positive effect, she says, "Perhaps this is a great way to correct the housing market, to ensure that all landlords sell their units" and that "many people will lose their residences as a result of [Thursday's] policy."
Vacancy rate still low in Toronto
The changes will be effective as of April 20, regardless of when the legislation passes, meaning landlords will not be able to raise rent by more than 1.5 per cent this year — the annual provincial rent increase guideline for 2017.
However, a landlord can raise rent by any amount in between tenant residencies. For example, if one tenant paying $1,600/month chooses to move out of their unit, the landlord can charge the incoming tenant $2,000/month or more.
With the city's vacancy rate sitting at one per cent — the lowest it's been in seven years — rental bidding wars will likely go unchanged.
If a unit is listed at $1,700/month, there is nothing stopping potential renters from offering more money to secure a lease.
The housing plan also includes change at the Landlord-Tenant Board which will make the process "fairer and easier." Eviction provisions will be tightened, ensuring that tenants evicted for "landlord's own use" will be adequately compensated.
How will these changes affect how you live in Ontario? Email us
With files from Chris Glover