Quote:
Originally Posted by LightingGuy
To the lefties: You do understand that rent control is one of the primary causes of the rental undersupply in Ontario, right? (not the only one, but it is a massive contributor)
If people know that their rent can't go up, they're incentivized to stay put, which reduces supply on the market at any given time, and ironically pushes prices up further for everyone who is looking at that time, and themselves when they reach a point where they actually do have to move.
Furthermore, if landlords know that they can't increase rent to the market rate, they will be less incentivized to construct purpose-built rentals in the first place. Lio can chime in here, but if it was me and I know I'll be operating at a loss for the first few years, the last thing I want is a tenant who intends to stay for 10 years if I can't increase their rent to market rates every year. So I'd rather not build it in the first place.
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Rent control isn't an affordability measure, it's a stability tool. The purpose is not to achieve lower average rents (as it doesn't do that), but to protect tenants from unpredictable and unmanageable increases in the cost of their housing.
You're absolutely correct that rent control disincentivizes new rental construction and causes new tenants to subsidize existing ones. Where we disagree is on the value of this tradeoff. If our only goal was to get the cheapest housing possible then yeah, it'd be a policy failure; but I'd argue that ensuring that the millions of renter households be guaranteed a stable place to live makes it a worthwhile cost to bear. Many of our policies cost money or contribute to COL - but that in and of itself doesn't make them bad policy if they contribute to QOL in other ways.
The flipside of this is that the government should incentivize further rental construction through levers like tax breaks and density bonuses for rental developments. This is where all levels of government have failed over the past several decades - the last big rental boom we had was also as a result of these sorts of measures, and ended in the 80s. We're now dealing with the consequences of decades of underinvestment coupled with unprecedented growth.
I don't want to steer this back to the Greenbelt again, but it's the same sort of concept at play with things like that or heritage preservation by-laws - they certainly don't
help in the creation of housing supply (though the degree to which they hinder it is certainly debatable), but are a worthy tradeoff in exchange for protecting ecologically, agriculturally, or historically important lands. In exchange though, in order to avoid the downstream effects of escalating housing costs, governments need to enact other policies to offset these like upzoning existing built-up areas; streamlining approvals processes & incentivizing construction; and not doing everything in their power to juice the housing market. This is, again, where we've failed horribly.
Quote:
Originally Posted by LightingGuy
People think they're doing tenants a favour with rent control, however it's hurting them. And it's not really benefitting landlords either, because if their costs go up, eg. during high inflation periods, they can't increase their prices. The only time they can do that is if a tenant moves out. Rent control benefits no one. In comparison, Alberta has no rent increase control and has incredibly stable YoY rent compared to Ontario, historically speaking. Rent in Edmonton for a 2 bedroom unit in 2014 was ~$1200. Today it's ~$1450. Can't say the same thing about any city in Ontario.
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You're making the correlation = causation assumption again. Alberta has no rent control and their rents are cheaper, therefore cheap rent must depend on there being no rent control. In reality of course, things are much more complicated than that. Consider some of the following thoughts:
- Ontario & BC also had cheaper/slower-growing rent prices until the past 5 years or so, even
with rent control (which existed to varying degrees since the 70s). What changed in this time?
- Quebec also has rent control, but prices are still lower.
- Alberta has no rent control, but are rental housing starts there actually higher than in Ontario or BC? (honest question, couldn't find the data)
- Real estate is still relatively affordable in Alberta, so there is less of a "renter for life" class; and by extension, less of a need for rent control. Indeed, rent control is often a reaction to periods of rapidly escalating rents as opposed to vice versa.
You hold Alberta up as a paragon of affordability; and relative to Ontario and BC, it sure seems like it is. However, I'm not convinced that it's actually different enough or immune from the same forces as to avoid being affected by housing crisis - my theory is that they're just a few years behind on the same path (just as Ontario was a few years behind BC). Rent prices in Calgary for example are up 23% year-over-year - second only to Vancouver. Home prices are also up there, and now sit at an average of $550,000 for all types; which is roughly where Toronto was just 7-8 years ago.
Quote:
Originally Posted by goodgrowth
If you want less immigration fair enough at least there is some intellectual honesty there.
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Literally something that all of us have been saying for years! Demand vastly exceeding the ability to supply leads to rapidly escalating prices regardless of how liberal our land use policies are.
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