Delivering Community Power CUPW 2022-2023

Busting the rent control myth

Rents are increasing without any regard for the actual financial means of Canadian renters. We need effective solutions

Canadian PoliticsEconomic CrisisSocial Movements

Photo by Kurt Bauschardt/Flickr

Rent control is back. Or rather, it never really left. We’ve just started paying attention again.

For decades, we were told by policymakers that rent control is inefficient and costly. It would lower supply, deteriorate the housing stock and, perhaps worst of all, result in intolerable government overreach. If you put restrictions on rents, so it goes, you interfere with the market, lowering returns and disincentivizing the private sector from maintaining and building homes. The type of rent control doesn’t seem to matter, either. Whether it’s price caps, rent increase limits, eviction or vacancy controls, they are best avoided at all costs. When you stifle landlords, you unwittingly hurt the very people you’re attempting to help.

Yet despite the policy’s decades-long condemnation, it’s suddenly seeing a comeback, and not just among housing activists. Rent control is going the way of the minimum wage: while experts claimed for years that wage hikes would lead to mass layoffs, Canadian economist David Card recently won the Nobel Prize for proving just the opposite. It turns out there wasn’t much evidence proving that minimum wage hikes actually cause unemployment. To the contrary, that idea was based more on textbook theorizing than on real-world empirical evidence. Now, as North America’s housing crisis continues to spiral, researchers are finding the same thing with rent control. When it comes to the hard data, fearmongering around rent regulation has little basis in fact.

According to a number of recent studies, there is scant evidence that rent control prevents new housing construction. As economist J.W. Mason has written, there are already around 200 cities in the United States with some form of rent control, and in cases where governments decided to abandon the policy, subsequent research didn’t back up their fears. This includes extensive research focused on Massachusetts, New Jersey and California. None of these jurisdictions saw a demonstrable decline in new construction nor a significant deterioration in quality after rent control policies were introduced.

What available data does tell us is that, while new construction is not affected by rent regulation, cities like San Fransisco did see declines in available rental units due to excessive condo conversions by landlords (a practice that cities like Montréal have already banned). However, the same studies still conclude that rent controls are an effective way of reigning in prices and encouraging long-term tenancies. In fact, one 2007 study found an increase in housing supply in New Jersey due to landlords subdividing existing properties, while another from 2020 admits that any potential construction decreases can be easily offset with exemptions for new units and more public housing.

Here in Canada, with home ownership now increasingly out of reach, many young people are turning to long-term renting, with 63 percent giving up on ever owning a house at all and ownership rates declining in every single province. Renting is beginning to clearly represent a more immediate solution to the housing crisis over bringing first-time buyers into an overheated market. At the moment, however, renters are getting squeezed: in Burnaby, average rents increased almost 33 percent in 2022 alone, and in Vancouver that number was 23 percent. On average, rent for apartments with new tenants rose 18 percent across Canada last year. This does not even begin to touch on the uniquely troubling rent issues in cities like Toronto, where $2,000 might hardly cover the average monthly rent for a basement suite. With over 40 percent of Canadians now living in unaffordable housing, rent prices are becoming unsustainable, especially as inflation exacerbates the cost of living crisis and wages remain relatively stagnant.

The fact is that rents are increasing without any regard for the real financial means of Canadian renters. Indeed, rents aren’t rising based on what is reasonable for tenants, but instead on what landlords and investors think will make them the most money. With prices subject to an overly speculative, warped market rather than being responsive to the material needs of working people, we are facing not just an economic crisis but a moral one. It cannot be understated just how bad things can get when you allow a fundamental social need such as housing to become so unregulated. In one especially dreadful case in Calgary, a landlord raised their tenants’ rents up to 24 percent upon renewal, falsely claiming it was done to cover utility costs (in Alberta there is no limit on rent increases, which might explain why the province saw the largest average rent increase in all of Canada last year). Extreme rent-to-income ratios are also forcing Canadians into “deplorable” living situations even in supposedly ‘world-class’ cities like Vancouver, dealing with “crumbling ceilings, cockroach infestations and sharing a bed next to a stranger.”

While things have never been worse for renters, five out of 10 provinces already have some form of rent control, with most of these provinces having implemented it over 40 years ago with mixed success. Manitoba, for example, is one of two provinces that has vacancy controls (alongside Prince Edward Island). Winnipeg is currently one of the country’s most affordable cities, and studies show that its rent control policies have had no effect on rental construction. Québec has had a form of rent arbitration since 1980 and has some of the lowest rents in all of North America, even in Montréal, Canada’s second largest city. Unfortunately, these controls have not been enough to curb the crisis, with rents quickly rising alongside the highest number of evictions ever in at least two decades.[1] Ontario also enforces an annual cap for rent increases, usually around 2.5 percent—and yet, the average one-bedroom apartment is over $2,500 a month. This price has increased a staggering 23 percent since 2022. However, in Ontario, rent control does not apply to residential units first occupied after November 15, 2018. In 2023, this represents a significant number of new units that now have no form of rent control, and creates a two-tier system of tenants’ rights.

What the data demonstrates is not that rent control is responsible for rising rents. In fact, a lack of rent controls, alongside other contributing factors such as archaic zoning laws, NIMBYism, and speculation, are driving up costs for those who don’t own a house.

Ultimately, there are just too many loopholes in existing rent control laws that need to be addressed if we want to ensure affordability in the long run. When landlords can simply evict tenants, renovate and charge sky-high rents, we need to step in and enforce some form of vacancy control. If landlords convert rentals into condos to make more money, we need to step in there, too. And if we find landlords aren’t maintaining our housing stock, we can follow in Vienna’s footsteps to pass programs which successfully allow renovations where landlords would otherwise be negligent.

We now know that supply, one of the most important tools to solving the housing crisis, is not affected by rent controls. This means we can find ways to plug the holes in existing rent control laws to help protect renters, while still encouraging new rental construction, providing subsidies, and crucially, dramatically expanding public housing. Rent control is certainly no silver bullet, but there are still plenty of ways it can be adapted to better protect renters, while still addressing all of the classic concerns raised by critics.

As advocates have argued, rent controls help to reduce inequality and ensure financial security for tenants, better affordability and rent-to-income ratios, stronger community relations, and more livable cities. Crucially, affordable housing grants working people more time and money, ensuring they have more economic freedom. Rent controls could help middle and low-income renters in virtually every other aspect of their daily lives, leading to happier and healthier societies with more freedom and less insecurity.

Improved rent controls alone will not solve the housing crisis. But they can certainly play a major role, especially when coupled with a slate of other transformative policies aimed at ensuring housing is treated as a human right, not an investment. With the evidence on our side, and a rigged market on the other, it’s long overdue for cities and provinces across Canada to pursue improved, expansive rent controls, and help bring the outrageous and unchallenged influence of speculators to an end.

Gavin Armitage-Ackerman is a socialist writer and graduate student at McGill’s School of Urban Planning, where he researches housing. You can reach him on Twitter @ouaiscestgarbo.

[1] This is partly due to the fact that in Québec, tenants themselves are responsible for enforcing rent regulations on their own landlords, through negotiating and an often confusing tribunal process, rather than the province automatically enforcing it.


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