Today's discussion:

What’s wrong with rent control?

The goal shouldn’t be to slow the growth of high rents. The goal should be to bring down the cost of rent in Canada’s least affordable cities. With rents where they are, it’s understandable that people are grasping for easy answers. But while rent control may have its place as an anti-displacement measure, it’s no panacea for affordability.

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Comments (13)

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Mark H Switzer

Jourisdictions with rent controls are dismal operating environments for Land Owners. Land lords and developers will work towards conversion away from rentals to condoization or Cooperative ownership models. When the land owner cannot cover the carry or operational costs of the property, financial ruin is inevitable. When the market controls rents, invariably the units that have unreasonably high rents will become vacant, rent values will drop to accomodate the market. It has always been understood that rental units in the center core areas of major metro cities will have high rents. Government interference in the rental market in an attempt to open up more units or solve the housing problem is a smoke screen at best.

27th February 2024 at 7:56 am
STEVE J CHIPMAN

I believe many economists have rightly pointed out that controls of any kind which force prices below market rates result in shortages. The demand for rent controls is a demand that the interests of new tenants be sacrificed to those of existing ones since the lower rents of the latter must be compensated by higher ones for the former. It is also equivalent to trying to solve problems now at the risk of creating even larger ones in the future.

27th February 2024 at 7:51 am
Mike K

It seems to me that if the federal government would limit immigration for a few years and that cities made it easier to get more built more quickly, we could build our way out of the high rent problems. It will take time, but I would rather keep the government out of the economy as much as possible and allow the marketplace to fix the issue.

27th February 2024 at 1:24 pm
Hatty

You make the most sense

27th February 2024 at 4:11 pm
A. Chezzi

I guess in a perfect world, there would be no need for rent control but we don’t live in a perfect world. Renters are often at the mercy of landlords and developers who want to increase their rents and use renovation as a way of putting renters out. There are examples of cities being duped by developers and while cities might recoup some of the loss, renters are often left holding the bag.
There has to be a mid way point between the tight controls of Sweden and the non existent controls which allow a wild west approach in Canada. It cannot be no profit or profit by any means possible. Unless all citizens have good housing, the economic well being of the country suffers.

27th February 2024 at 8:27 am
Bob Welling

Only mote product will bring done costs.

27th February 2024 at 7:45 am
Kim Morton

As a former landlord, I can state that rent control is a bad economic decision. That and the Landlord Tenant Act, that effectively removes any rights for landlords, make owning rental units a poor investment.
At a minimum rents must be able to be increased at the real rate of inflation, not the cherry-picked government number. Or, as during covid, the government in their usual lack of wisdom decreed that tenants didn’t have to pay their rent, without any compensation to landlords makes a mockery of free enterprise and causes serious financial harm to owners.

27th February 2024 at 11:15 am
Austin Brown

Government can control what they rent but I will control what I rent. Sound good 👍

27th February 2024 at 7:44 am
Michael F

Regulating the short term rental market was a good start to put long term rental units back into the market. Tax incentives for developers to build large scale rental housing is another good option. Municipal governments being pushed into allowing ‘missing middle’ type projects is another reform sorely needed. All levels of government need to work together. There was recent article in Politico that featured just how hard it was for the Feds to work with the city of Oakville to reform their zoning bylaws. They wanted the federal funds but wouldn’t commit to any actual timelines on reforming their bylaws.

27th February 2024 at 12:54 pm
Zac

Bring back Canadian Mortgage Housing Cooperative (CMHC). I live in Vancouver and am surrounded by highly sought after co-op housing originally built with funding from the CMHC. CMHC hasn’t done that kind of work since the early 90s when it reformed into the mortgage insurer it is today. I completely agree with the author, Canadian housing affordability starts and stops with the two biggest markets, Vancouver and Toronto. If we can improve affordability in those jurisdictions there will be a positive effect in other areas..

27th February 2024 at 10:55 am
Paul

Canada tried rent controls, back in the 80’s I think. It is a self defeating policy.

27th February 2024 at 9:21 pm
Gail Tom

This was tried in Winnipeg for low income earners so when they started earning enough to purchase a home . What happened was they never moved out and there was nothing in place to ensure the earners got in who needed to. This would never work today as it would be deemed racist. The other issue is these types of apartments were government controlled so for sure it wouldn’t work.

27th February 2024 at 12:43 pm
Valerie

In theory upzoning for more housing increases supply and should ‘eventually’ decrease prices, but in practice it often increases the prices of land with little affordability benefit. Housing kicks at some of the usual intuitions about supply and demand because a large component of price increases has been about bidding up a functionally fixed supply of land, rather than material and labour costs that exceed the amount that can be recovered through rent. It’s not a coincidence that cities like Houston that allow outward expansion and don’t restrict the amount of residential land available have more affordable housing and are less prone to speculative bubbles, and it’s not easy to replicate that affordability through density alone.

Rent controls are a double-edged sword in that they can restrict supply (especially if not well-designed) but also moderate land prices. They are not the only policy tool and are not necessarily as effective as affordability policy that simultaneously targets owned housing that competes for the same land, but the idea that rent controls inherently and always choke off supply misses that land doesn’t act like other inputs.

27th February 2024 at 11:14 am