Investors Rejoice As Ford Announces Rent-Control Pull Back
Rent Control To Be Abolished For New Builds
As part of its newly announced “Housing Supply Action Plan,” the Ontario Government is proposing a strategy to increase the province’s rental housing supply through measures intended to bolster new development while protecting rent control for existing tenants.
According to the official press release, “The demand for housing in Ontario has risen rapidly in recent years, driven by strong population growth and low interest rates. However, the supply of housing has not kept pace, leading to higher prices and rents.”
Since 2017, purpose-built rental construction in the wake of the previous government’s “Fair Housing Plan” saw a marked decline as a result of punitive new policies, and the rental housing sector has been advocating for change ever since.
Ford’s position on Ontario’s strict rent control regime has been somewhat unclear, until today.
“Many people in Ontario face challenges in finding suitable, affordable rental accommodations, in part due to an extended period of under-building of rental units,” the statement said. “Since 1992, rental unit construction has not matched household formation. Approximately 20 per cent of Ontario households live in purpose-built rental housing. In 2017, the level of new rental construction would accommodate only 10 per cent of new Ontario households. If construction of rental units had kept pace with underlying demand, construction would have started on an additional 6,100 units in 2017.”
The new Housing Supply Action Plan, to be launched in the spring of 2019, proposes to put in place the following key measures:
Preserve rent control for existing tenants;
Encourage developers to build more rental housing by exempting new rental units from rent control;
Cancel the Development Charges Rebate Program, which it calls “expensive and ineffective,” estimating it will create a savings of approximately $100 million over four years.
“Rent control policies that weaken investment incentives and construction activity have played a role in limiting supply growth in purpose-built rental housing,” the document continued. “To address these challenges, the government will enact policies to increase the supply of housing across Ontario [while following through on] its commitment to preserve rent control for existing tenants.”
In a series of Tweets issued by REALPAC, the new plan appears to have won the industry’s endorsement. “REALPAC supports the Province of Ontario’s move to exempt new buildings from the unfair #rentcontrol regime. Housing providers appreciate this market based incentive.”