On Thursday, November 15, the provincial government released its Fall Economic Statement and introduced Bill 57, its budget bill. Included in the bill are plans to scrap rent controls on any new or newly converted residential units.
Under current legislation, we have rent control on occupied units in Ontario. In general, landlords can increase rents once a year, up to the annual provincial guideline (based on the Consumer Price Index) — this year, for example, the guideline was 1.8%. If a landlord wants to increase rents by more than the guideline, they have to apply to the Landlord and Tenant Board (LTB) for an above-the-guideline increase and make a case that the increase is justified because they have incurred certain "extraordinary" expenses (such as excessive municipal tax increases, renovations, or security services). Tenants can appeal, but the LTB makes the final decision.
Current legislation does not provide rent control on vacant units — a landlord can charge whatever they want for newly constructed units and units that have been previously occupied but are now empty — but once a tenant moves in, for as long as that tenant lives in the unit rent control applies.
The proposed legislation announced Thursday would end that rent control on any newly built or newly converted units. This means that a landlord could raise the rent on a unit by as much as they want, and they could do this in perpetuity. The guideline would not apply, thus no above-the-guideline application would be required.
The Province is using the argument that getting rid of rent control is the only way to encourage the building of new rental housing. However, Ontario has already tested out this argument and found the evidence lacking. Prior to 2017, rent control did not apply to any residential housing in Ontario that had been constructed after 1991. In 2017, the provincial government under the Liberals changed the legislation to provide rent control for all occupied units, regardless of when the housing was constructed.
During the more than 25 years without rent control on new units, the construction of new rental housing was inadequate to meet the need, evidenced by year-after-year low vacancy rates in many Ontario communities. Despite the lack of rent control, developers did not produce the rental housing needed, and rental costs climbed higher and higher.
Interestingly, after the Ontario Liberal government brought all rental units under the same system of rent control in 2017, rental housing development surged — in Q2 of 2018, 11,073 new purpose-built rental units were under construction, the highest in at least 30 years.[1]
If the Ontario government passes Bill 57, removing rent control for newly constructed and newly converted rental units, tens of thousands of tenant households will lack this critical protection within a few short years. Their choices will be to move into new units with no protection from egregious rent increases or compete for a finite supply of units built before November 15, 2018. Competition in the rental market is already fierce, and unscrupulous landlords are already taking advantage of the situation.
The Progressive Conservatives promised before the election that they would not remove rent control. When Finance Minister Vic Fedeli was challenged after Thursday's announcement, he responded by saying that they have not broken their promise because no current tenants are affected. But current tenants will eventually move to other rental units — as people do, for various reasons — and then they will be affected.
The provincial government has broken its promise to the tenants of Ontario.
This proposed legislation must go through the legislative process before it becomes law. Now is the time to speak out.
Organizations and community agencies will be organizing to address this injustice. In the meantime, add your name to Leadnow's emergency petition demanding that the provincial government keep its word. And read the Actually, Rent Control is Great report (by the Federation of Metro Tenants’ Associations) to get the facts.
1. Federation of Metro Tenants' Associations, prelude to the Actually, Rent Control is Great report, August 2018.