The Impact of Rent Control on Tenants: A CBC Radio Discussion

With the cost of rental housing reaching all-time highs, many current and potential renters have one thing on their minds: rent control.

The median rent for a two-bedroom apartment in a purpose-built building was $1,258 per month in 2022, much more in Toronto and Vancouver, according to the Canada Mortgage and Housing Corporation (CMHC).

Those rates represent a 5.6 percent increase from the previous year, CMHC says, well above the 2021 average of just three percent.

Many tenants who are “really struggling with rising rents” are pushing for more regulation, said Bahar Shadpour, director of policy and communications for the Canadian Center for Housing Rights (CCHR), a tenant advocacy organization.

But rent control works differently in various parts of the country, and there are mixed opinions about whether it’s the answer.

What regions have rent control?

Five provinces and one territory offer some form of rent regulation: British Columbia, Manitoba, Ontario, Quebec, Prince Edward Island, and, recently, Yukon.

Nova Scotia has a temporary rent control policy, implemented during the pandemic, that expires end of 2025.

How does it work?

In all provinces and territories, rents can typically only be increased on a rental unit once every 12 months, and landlords must give one to three months’ notice, depending on the length of the lease.

But with rent control, governments set a maximum increase each year. In Ontario, by 2024, it is 2.5 percent.

But in most places, those maximums only apply to tenants who currently rent a unit. In general, landlords can increase rents between leases as much as the market allows.

That’s where vacancy control comes into play. PEI, for example, regulates rental rates between tenants. Rents are tied to the unit, not the tenant, according to the CCHR.

Manitoba also offers vacancy control, but only in buildings with four or more units.

In Quebec, landlords must notify new tenants of the lowest rent in the previous 12 months when signing a new lease.

For current tenants in Quebec, rent control applies if the tenant rejects an increase within one month of receipt of the notice. and request a review by housing court. The court can then determine the increase, based on an annual calculation that the tenant and landlord must agree to.

There are exceptions?

Yes. Owners can request increases beyond the mandatory limits to cover changes such as repairs or improvements to a unit.

They can also evict tenants if the property requires major repairs or remodeling, known as “renovation,” or if a family member needs to move.

There are good reasons why exemptions like these exist, but they can be abused to sneak in a rent increase, says Mike Moffatt, an economist and assistant professor at the Ivey School of Business in London, Ontario.

“That [the landlord] I could do is say, ‘Well, my son is going to school and he needs that unit for a year.’ So you give it to a family member for a year, then the son leaves, and then you can go back to collecting market rent,” he told CBC Radio. Cost of living.

There may also be other exemptions. For example, buildings in Manitoba first occupied after March 7, 2005 are exempt from rent control for 20 yearsas well as units over $1,570 per month.

Does rent control help tenants?

Opinions differ.

Moffatt says that while regulation may prevent landlords from “taking advantage of market conditions,” rent control generally only benefits existing tenants. It can lead to higher rents for new tenants.

“Often those rents go up [when] existing tenants leave,” he said. “So it tends to favor one group over another.”

Shadpour says one solution is to expand vacancy control, to “disincentivize that form of rent raising.”

CLOCK | How high rents are affecting students:

Student housing rental is out of control. There is a solution?

Students are facing higher rents and a shortage of supply, and some experts say post-secondary institutions need to coordinate enrollment levels with housing availability.

Does it affect construction?

Others say rent control discourages developers from building purpose-built rental buildings.

“In Ontario in the 1950s, ’60s and early ’70s, there was a huge boom in the construction of purpose-built rental apartment buildings,” said Tony Irwin, president and CEO of the Federation of Rental Housing Providers of Ontario (FRPO).

“When rent control was introduced, along with some other tax incentives, federal tax incentives, which I think were removed, then you saw purpose-built rental construction come crashing down.”

A February 2023 report published by four groups, including the FRPO, back that up. It shows that between 1960 and 1979 about 224,000 rental units were built in Ontario. That compares with fewer than 24,000 between 2000 and 2023.

“Most developers and builders have a choice: they can build something like a purpose-built rental or they can build something like a condo,” Moffatt said.

If there are too many restrictions on the former, “developers and builders will say, ‘Oh, to hell with that. I’d rather sell them as condo units,'” he said.

Although rent control alone does not influence development, Shadpour rejected the argument that it limits development given historical trends. Ontario removed rent control on buildings built after Nov. 1, 1991, an exception that remained until 2017, hoping to encourage developers to build rental housing, she says.

“And what we see across the board is that that didn’t happen — developers still created condos and single-family homes.”

What else can help?

All the experts Breaking: spoke to agree that increasing the rental housing stock is critical.

“We’ve been underbuilding for decades,” Irwin said. “There is such a huge shortage of housing in general, and rental housing in particular, that it is putting a lot of pressure on rents.

“It’s a supply and demand conversation.”

Providing incentives, such as tax breaks, to developers will help spur new construction, Moffatt and Shadpour say.

Meanwhile, municipalities must streamline approvals so builders can finish construction in a timely manner, Irwin says.

And with home prices showing no signs of slowing down, Shadpour says developers should prioritize more affordable options.

“We can’t have any more purpose-built luxury rentals. People can’t afford it.”