Tell the province it's time to restore real rent control

 

Tell the province it's time to restore real rent control

Say Yes to Fair Rents! was a campaign run by ACTO in summer of 2023.

Picture this. You live in Ontario. You get paid and realize this month’s rent is almost due. And it’s no big deal! You are confident you can pay your rent on time and in full. Once the rent is paid, you’ll easily be able to cover your other necessities – like food, transportation, daycare, and cell phone bill – with some left over to save and some to do something fun.

Sounds nice, right?

This shouldn’t seem like wishful thinking. Ontario should be a prosperous place for everyone, where all residents have access to an affordable, safe, and secure home in a community of their choosing – regardless of their income.

And yet, in 2023, a life like that is out of reach for many Ontarians – especially for those who rent their homes.

Background

Using Toronto as an example, a renter must now earn $98,000 / year to comfortably afford the average asking price for a 1-bedroom rental in the city. But according to the 2021 Census, the median total income of renter households in Toronto was $65,500.

The math does not add up.

The Canadian Housing and Mortgage Corporation has long maintained that housing is only affordable when it does not exceed 30% of your gross annual income. Anything beyond that is considered unaffordable. Of the top 20 most unaffordable metropolitan areas in Canada, 12 are in Ontario, with the top five being Peterborough, Oshawa, Barrie, Toronto and Kingston.

This didn’t just happen. It’s the result of a 30 year experiment in housing policy that has failed. The province has the power to do something to fix it, and it’s time for them to step up.

Why restore fair rent control?

Most existing units in Ontario are protected by a type of rent control; meaning the landlord can only increase a tenant’s rent each year up to the limit set out by the province. It used to be that rent control applied to all units, even ones that were turning over. However, in the 1990s, the policy of “vacancy decontrol” was introduced. Rental prices have soared ever since. A CMHC report found that in 2022, vacancy decontrol sharply increased rents for two bedroom apartments that had turned over by 26% in Hamilton, 17% in Ottawa, and 29% in Toronto – compared to 1.2% for existing units with sitting tenants.

Rent control also doesn’t apply to rental units that were first occupied on or after November 15th, 2018. For those unfortunate tenants, they have no protections at all. Their landlords can raise the rent by however much they want. And raise it they do – landlords are raising prices by sometimes hundreds of dollars a month, well beyond what their tenants can afford.

Why is Ontario in this mess? Well, the idea was that getting rid of effective rent controls would encourage the development of rental housing because it would be more profitable for developers to build it. And if the market was flooded with all these rentals, it would keep rent prices low.

Did it work? Absolutely not. Check out this graph of “housing starts.”

Vacancy decontrol was introduced in 1991, and we can observe that the construction of rentals takes a dramatic nosedive in the years afterward. Instead of having more rentals than we know what to do with, we have nowhere near enough, and what is being constructed isn’t affordable to most renters. In this kind of housing environment, landlords win and renters lose. These policies treat housing as an investment for profit, rather than a right for every single person. Ontario’s weak rent regulations are part of what makes it so alluring for big financial investors, who are snapping up available affordable rental housing to unceremoniously kick long-standing tenants out and jack up the prices. Rinse and repeat.

Want to learn more? Check out our new report: Housing Hardship: How Ontario’s Renters Struggle to Keep a Roof Overhead.

 

 

Tell the province it's time to restore real rent control

Say Yes to Fair Rents! was a campaign run by ACTO in summer of 2023.

Picture this. You live in Ontario. You get paid and realize this month’s rent is almost due. And it’s no big deal! You are confident you can pay your rent on time and in full. Once the rent is paid, you’ll easily be able to cover your other necessities – like food, transportation, daycare, and cell phone bill – with some left over to save and some to do something fun.

Sounds nice, right?

This shouldn’t seem like wishful thinking. Ontario should be a prosperous place for everyone, where all residents have access to an affordable, safe, and secure home in a community of their choosing – regardless of their income.

And yet, in 2023, a life like that is out of reach for many Ontarians – especially for those who rent their homes.

Background

Using Toronto as an example, a renter must now earn $98,000 / year to comfortably afford the average asking price for a 1-bedroom rental in the city. But according to the 2021 Census, the median total income of renter households in Toronto was $65,500.

The math does not add up.

The Canadian Housing and Mortgage Corporation has long maintained that housing is only affordable when it does not exceed 30% of your gross annual income. Anything beyond that is considered unaffordable. Of the top 20 most unaffordable metropolitan areas in Canada, 12 are in Ontario, with the top five being Peterborough, Oshawa, Barrie, Toronto and Kingston.

This didn’t just happen. It’s the result of a 30 year experiment in housing policy that has failed. The province has the power to do something to fix it, and it’s time for them to step up.

Why restore fair rent control?

Most existing units in Ontario are protected by a type of rent control; meaning the landlord can only increase a tenant’s rent each year up to the limit set out by the province. It used to be that rent control applied to all units, even ones that were turning over. However, in the 1990s, the policy of “vacancy decontrol” was introduced. Rental prices have soared ever since. A CMHC report found that in 2022, vacancy decontrol sharply increased rents for two bedroom apartments that had turned over by 26% in Hamilton, 17% in Ottawa, and 29% in Toronto – compared to 1.2% for existing units with sitting tenants.

Rent control also doesn’t apply to rental units that were first occupied on or after November 15th, 2018. For those unfortunate tenants, they have no protections at all. Their landlords can raise the rent by however much they want. And raise it they do – landlords are raising prices by sometimes hundreds of dollars a month, well beyond what their tenants can afford.

Why is Ontario in this mess? Well, the idea was that getting rid of effective rent controls would encourage the development of rental housing because it would be more profitable for developers to build it. And if the market was flooded with all these rentals, it would keep rent prices low.

Did it work? Absolutely not. Check out this graph of “housing starts.”

Vacancy decontrol was introduced in 1991, and we can observe that the construction of rentals takes a dramatic nosedive in the years afterward. Instead of having more rentals than we know what to do with, we have nowhere near enough, and what is being constructed isn’t affordable to most renters. In this kind of housing environment, landlords win and renters lose. These policies treat housing as an investment for profit, rather than a right for every single person. Ontario’s weak rent regulations are part of what makes it so alluring for big financial investors, who are snapping up available affordable rental housing to unceremoniously kick long-standing tenants out and jack up the prices. Rinse and repeat.

Want to learn more? Check out our new report: Housing Hardship: How Ontario’s Renters Struggle to Keep a Roof Overhead.