As the housing supply crisis gets worse, planned rental developments are either being cancelled or converted to condominium projects due, in part, to housing and rental policies implemented by the Ontario government. This is widening the gap between rental housing supply and demand even more. In fact, a recent study revealed Ontario will be short 6,250 rental units every year for the next decade to meet rental demand. If you're a renter, or hoping to be, that number should concern you, and it's only going to get worse.
Anyone looking to rent these days knows just how small the supply of rental units is in Ontario.
Nowhere is this picture clearer than in Toronto, where the vacancy rate in 2016 was just 1.3 per cent, and choice is increasingly limited for anyone wanting to live in the vibrant downtown core, where demand is extremely high.
With supply not keeping up with demand, the rental climate has gotten so bad that some renters have resorted to Tinder-style bios to woo would-be landlords. No tenant should have to go to such extremes to fight for an apartment in the location they want, at a price they can afford.
We need more rental housing, now.
The Ontario government's quick fix was the introduction of Bill 124 in April, which removed the exemption of rent control for buildings constructed after 1991. As any economist knows, when it comes to the laws of supply and demand, there is no such thing as a quick fix. With the new provisions, the incentive for developers to build rental units instead of condos is greatly diminished since it dramatically shrinks the rate of return on investment. Since that law was introduced, Ontario has lost 1,000 planned rental units.
In a Sept. 25 story in the Globe and Mail, RioCan and Allied Properties cite the Ontario government's new rent controls as the reason why the REITs converted 133 planned rental units to condominiums at the Kingly development in Toronto. Statements like these leave little room for misinterpretation.
To its credit, the government is putting forward provincial land for the development of new rental supply, including three sites released recently. But as Matt Galloway recently commented on CBC's Metro Morning, it is likely to be years before those units are available. That land still needs to be bought and developed. And we need more rental housing, now.
The solution is simple: we need to build more rental units for Ontarians to live in. A healthy supply of true rental apartments — not just condos — will provide a quality, affordable housing choice. So how do we kick-start building?
Part of that solution is to either tie the rent increase guideline applicable to new purpose-built rental buildings to inflation plus a certain percentage or allow for a rolling exemption from rent control for new rental units that Ontario had under the NDP and Quebec has today. Such actions will provide the modest investment return necessary to ensure continued growth in the supply of new, purpose-built rental housing, while respecting the Ontario government's intent to assure tenants have reasonable, predictable rents they can afford.
Through legislation, savings would be passed along to tenants.
Taxation is another issue deterring new rentals. Rental buildings can be assessed at up to three timesa single-family home. The government of Ontario has introduced property tax fairness for new purpose-built rentals, but all multi-res rental units need to be assessed at the same rate as single-family homes province-wide. Through legislation, savings would be passed along to tenants.
I welcome anyone to join us to learn more about the rental housing issue in Ontario. But more than anything, we need action to start moving on rental supply. We're calling on the government to help stop the cancellations and conversions of rental housing that renters desperately need, and to work with us to find creative ways to inject more supply into the market. We owe it to the renters of Ontario.
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