Manitoba and Quebec residential rental property owners and managers remain
hopeful that their governments will follow the lead of provinces like BC and
Alberta while investigating possible changes to their Residential Tenancies Act
(RTA), particularly to the section responsible for rent controls.
Those provinces were able, through full and open discussions with industry
stakeholders such as resident, owner/manager groups and other parties to strike
balanced and fair legislation as is evidenced in BC's rent increase limit being
set at 3.8% (CPI + 2%, which show respect of inflation and capitol refurbishment
costs).
Over the past five years, Ontario has seen their traditionally stagnant
development market explode with renovations, complete building rehabilitations
and new construction and as a direct result their 1-2% vacancy rates rose to
between 7-12%, as high as 15% in some markets, (according to CMHC and other
research bodies). This shifted the balance of power to the residents who were
being offered a wide variety of move-in incentives as buildings competed for
residents.
However, Ontario's government under the direction of Dalton McGuinty's Liberal
Party, has taken a decidedly huge step backwards in reinstating draconian rent
control legislation, similar to Manitoba, (both provinces have set their 2005
rent increase limit at 1.5% - a full 1% below the last two years CPI levels),
which will certainly impact the recent growth experienced in the development of
private rental housing units since the removal of the same restrictive controls
in the late 1990s. Recapture levels that low will also hamper efforts of
property owners/managers who were looking at doing renovations and investing
major capitol into their buildings.
According to Brad Butt, Executive Director of the Greater Toronto Apartment
Association (GTAA Building Blocks, June 2004), “A draconian rent control regime
is only a cop out for governments devoid of good public policy to help low
income people afford their homes. Because you provide little to no help through
rent supplements or income support to tenants of low income, you blame the
private sector and implement price controls.”
In the August 18th Toronto Star, Dean Pandurov, General Manager of Valiant
Property Management , stated that , “he cancelled some planned improvements
because the company wouldn't be able to recover its costs under the new maximum
increase.”
The postponement or cancellation of general, scheduled and required maintenance
or refurbishments due to the inability to recapture the expended funds under
tight rent guidelines, marginal annual increases and onerous application
processes are far too well known here in Manitoba, where the annual rent
guideline increase has lagged behind CPI by 17.4 points or 27.3% when the
dollars are compounded, over the past 22 years since the current rent control
system was instituted.
Another non-secret is the fact that some housing industry costs, such as utility
rates and school taxes are rising faster than inflation, yet they remain
unchecked and/or unregulated by government.
To achieve a truly balanced market, governments need to get out of the business
of trying to control financial returns in private enterprises, such as rental
housing. Look at Saskatchewan. They are a model case in point of how the
complete removal of rent controls can work to the benefit of all parties
affected.
The complete removal of their rent controls did not lead to widespread evictions
and hardships. In fact according to statistics from CMHC, Saskatchewan's median
rents in each category (1 bdrm, 2 bdrm and 3 bdrm) are all lower than rates here
in Manitoba. They have achieved a balanced market between consumers and
providers of housing at all levels of the spectrum.
As William Tucker stated in his policy analysis, “How Rent Control Drives Out
Affordable Housing”, of May 1997:
“Rent controls mean to assist poorer residents, but they harm far more than they help, they benefit the better-off (who stay in price controlled units longer than they need to, making low priced units unavailable for those who really need them), and limit the freedom of all citizens.”
“Rent Control is best abolished quickly and cleanly, with ample effort to protect the most vulnerable tenants. (In 1994, Massachusetts immediately lifted controls in three cities with a two-year extension for tenants qualifying for the federal definition of “low income”, which amounted to less than 60% of the median for the region or 80% for the elderly and handicapped. In the end only 4% of the tenants in Boston and 10% in Cambridge and Brookeline qualified for the extension)”
“Boston landlords helped their cause enormously by setting up the reserve bank of 200 apartments for emergency relocations. Such an effort would go a long way toward allaying fears and deregulation.”
There are positive models throughout North America for deregulation, both south of the border and right next door to us in the west. Manitoba, Ontario and Quebec need only look at the vast amount of data supporting such change and they too will:
If the Manitoba government is interested in taking a serious look at
improving the housing situation and relieving the emerging housing crisis in our
cities, then they must consult a wide audience-industry professionals, such as
the PPMA, the Winnipeg Real Estate Board and the Winnipeg Chamber of Commerce,
as well as the various industry stakeholders like the Manitoba Home Builders
Association and neighbourhood/community groups as well as the individual
homeowners and taxpayers, that without realizing it, are subsidizing our ailing
rental housing industry.
The rent control system in Manitoba, similar to that of Ontario has resulted in
increasing demand for dwindling supply, which all agree is poor public policy.
With a full and open understanding of the alternatives that work well and those
that don't, our government with then be able to take the necessary steps to
ensure the market provides truly affordable housing at competitive market prices
and enable them to direct federal funding to programs, such as Shelter
Allowances, that have not seen increases in rates for over 15 years.
A free and competitive market will also allow property owners and managers the
financial freedom required to maintain their properties in a healthy fashion,
which ultimately benefits the residents. With the improvement in or
refurbishment of buildings, comes job creation, revenue generation and increased
property taxes that benefits the taxpayers and all levels of government,
creating a win-win situation for everyone.
It is a huge challenge to place at the feet of our public officials, but if
handled delicately and in full consultation with all industry stakeholders, its
benefits will be far reaching and create a lasting legacy of prosperity and safe
and affordable housing as seen in so many other jurisdictions, who exhibited the
fortitude to see this monumental task through to completion.