Rent control revamp will spur building boom: Leach

Housing minister foresees 10,000 new rental units withing two years

Toronto Star - June 13, 1997
by Daniel Girard

Revamping Ontario's rent control system will spur developers to begin building 10,000 new rental units in Metro within two years, say Housing Minister Al Leach.

"The whole purpose of this is to get more units built so that tenants can have choice," Leach said yesterday after kicking off public hearings into Bill 96 - the Tenant Protect Act.

"Right now, there is no choice for tenants," he told reporters. "In the last 10 years, there's been a handful of new rental units put on the market and thousands of more tenants looking for accommodation."

Despite claims from tenant advocates and opposition MPPs that he's opening the door to exorbitant rent increases, Leach insisted the bill "takes a seriously flawed system of rent regulation and improves it."

Although rent controls were introduced by Bill Davis' Conservative government in 1975, Leach blamed the current system brought in by the New Democrats for stifling construction of rental units.

Metro announced earlier this week that only 37 rental units were built in 1996, although the annual demand is in the range of 6,000. In 1995, 64 were built, 132 in 1994, 22 in 1993 and 278 in 1992.

"Clearly, there are very serious problems," Leach told the legislative committee. "And this government is committed to doing something about them."

Under the new system, rent controls would come off newly vacated apartments, allowing landlords to charge whatever they want.

The controls would kick in again - based on the new rent - once an apartment was occupied. Tenants who stay in their units would face no rent control changes.

Public hearings will continue in Toronto each of the next two Thursdays. They will travel across the province during the summer with final approval of the bill expected in the fall. It would take effect Jan. 1.

Leach told reporters that developers, many of whom have been sitting on vacant land for years, predict they will begin construction on 10,000 units of new rental housing within two years.

Combined with the government's changes on development charges and overhaul of property taxes, which account for 40 per cent of the cost of rental buildings, Bill 96 should give developers the boost they need, he said.

And if the predicted construction does not materialize, Leach said he would encourage municipalities to offer breaks to developers such as cheap municipal land sales as well as reduced property taxes and development charges, particularly to stimulated building affordable housing.

Leach said "goverment persuasion" would be employed to ensure developers didn't just build high-end units but also addressed the needs of low- and middle-income earners.

"We'll do whatever we have to do," Leach told reporters, refusing to elaborate.

Elinor Mahoney of the Coalition to Save Tenants Rights called the bill "the tenant rejection act."

Mahoney predicted rents will rise between 10 and 30 per cent in the first year and "after that, the sky's the limit."

"In a place that has low vacancy rates, such as Toronto, we're going to see a captive tenant market and higher rents," he said.

Toronto's vacancy rate is hovering at 1.2 per cent.

Tenants will not only have to pay more rent every time they move but will find it tougher to force, through law, landlords to maintain buildings, Mahoney said.

The bill will also allow landlords to discriminate against people they might not want in their buildings by refusing to negotiate reasonable rates, she said.

Liberal MPP Dwight Duncan (Windsor-Walkerville) said that because 70 per cent of tenants move within five years, the government is simply eliminating protection against skyrocketing rents.

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