Freedom Flyer March 1996 Cover

Freedom Flyer 29

the official newsletter of the
Freedom Party of Ontario

March 1996

Article electronically reproduced from:

The Ottawa Times

August, 1995

Home builders await rent control fate


Mike Harris' promise to eliminate NDP rent control legislation has taken a back seat in the past month to the subsidized housing controversy, but now that Ontario's government has made its decision regarding that matter, rent control is once again rearing its head. David Horton, executive director of the Ontario Home Builders Association said "there is a strong belief that the core problem with housing in this problem is rent control."

The amount of rental housing in Ontario has decreased - NDP critics say "dramatically" - in the Ottawa area over the past four years.

Linda Lalonde, chairman of the Social Assistance Recipients' Council of Ottawa-Carleton, blames free enterprise, stating that "the reason we have social housing is because the private market is not providing for it."

The conservatives and Liberals, however, hold the former NDP government responsible for legislation that, they say, provides many disincentives to landlords.

Drawing on research from the Fraser Institute, a political and economic think tank, Freedom Party (Ontario) predicted such a situation in a 1991 proposal to former NDP housing minister Dave Cooke: research in six countries revealed, "in every case, government intervention produced a mix of housing deterioration [and] a reduction - often to zero - in apartments available for rent."

In 1995, NDP rent control legislation prevented landlords from increasing their rent by more than 2.9 percent per year, Lyn McLeod's Liberals claim. The limit in 1992, prior to this legislation, was 6 percent. Although landlords could apply for an additional 3 percent increase to reclaim capital expenditures, significant restrictions existed.

For example, landlords are unable to increase their rents to recover costs from interest rate charges, mortgage renewal costs or insurance.

The Liberals claim that "65% of Ontario's rental units are over 20 years old, and the cost of repairs needed to these units is between $7-11 billion. Under NDP legislation, it would take landlords over ten years to pay for such periods."

Individuals, lobby groups, and municipal politicians are asking housing minister Al Leach what the PCs' plan is to provide housing for the 11,000 people who were on waiting lists for subsidized housing.

Landlords and home builders insist that eliminating rent control is the answer because the costs and red tape associated therewith discourage people from becoming Iandlords, putting rental housing limits on the market.

In the past, reports Freedom Party, governments tried to rectify problems caused by rent control by introducing additional policies such as subsidized housing.

Andrew Falby and his partner believe they are victims of such policy, reported The Financial Post. They own 100 rental units in Sarnia, and fear they will soon have to declare bankruptcy due to Rae's policies.

Rae's government introduced 700 subsidized units to Sarnia, which has a total of only 6,500 rental units. According to the Canada Mortgage and Housing Corporation (CMHC) Sarnia has the fourth highest vacancy rate in Canada today at about 10 percent. "Highrises have been devalued by 5%-7% per year [25-35% in the past five years]," Mr. Falby added.

There is even a rumoured vacancy rate in subsidized units - of 8 percent, wrote The Financial Post, adding that "this is another example of government enterprise siphoning taxes of the private sector then competing against it by providing goods or services that the private sector is providing."

The conservatives introduced rent control to Ontario in 1975 as a temporary measure. Twenty years later, they intend substantially to restructure it - eliminating it on all new housing, John Baird (PC, Nepean) said. Mike Harris believes that private investors have the capability to offer better housing than does his - or any - government, but at the same time he is committed to ensuring that rental housing meets security and fire standards, and preventing "unfair" and retroactive rent increases, Mr. Baird told The Ottawa Times.

Saying that landlords should only receive a "reasonable return" on their investment, the Liberals affirm support for rent control in principle. The Family Coalition Party, however, demands an end to it.

Freedom Party also opposes it, arguing that "governments are the problem," not landlords, citing "high property taxes, development fees, inflationary monetary policies, land transfer taxes, high interest rates, zoning regulations, [and] arbitrary building codes and standards" as "primary causes making housing unaffordable for an increasing number of people."

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