The Detrimental Effects in Changing the Rent Control Act Rent Control-pro The Detrimental Effects in Changing the Rent Control Act In a just society, the ruling authority must decide what is right when allocating wealth to its individual citizens. The same ruling authority does this by intervening with the inner workings of a marketplace to uphold its fundamental values and ideals. The aim of government intervention is to create a just society that will reflect the peoples values. Governing bodies do this by establishing laws that enforce fairness or equity. The Ontario government passed the Rent Control Act in 1975. The law levels the playing field between landlords and tenants.
New units are exempt from controls for their first five years after which the controls are put into place. The controls put a ceiling on annual rent increases. Under current law, a landlord may only increase a tenants rent by 2% plus inflation.1 As with all other markets, the housing market is based on supply and demand. If the nature of the market were allowed to take its course, then the price of housing would become unaffordable for most citizens. An unfair situation would be created where power and money would be disproportionately appropriated to land owners. Rent control laws were established by previous governments to protect society and its people from inflated and uncontrollable housing costs.
The Harris government now wants to repeal these laws. On June 25 the Minister of Housing, Al Leach, released a policy paper outlining the changes that are to be made to Ontarios rent laws. Conservative legislators plan to pass the proposed Tenant Protection Act in the fall. The omnibus legislation will rescind the Rent Control Act, the Landlord and Tenant Act, the Rental Housing Protection Act, Residents Rights Act, the Land Lease Statute Amendment Act, the Vital Services Act.2 The most objectionable change allows the act to lift controls off vacant units. The 3.2 million renters in Ontario are very concerned about the changes.3 The housing ministry will accept written submissions from the public until August 30. Public hearings are also planned in hope that they will ease the transition. However, most people are indignant towards the idea.
Changing the rent control laws would be detrimental to society as they threaten citizens positive right to affordable housing, harm their mobility rights and increase the gap between the rich and the poor. The proposed Tenant Protection Act assaults peoples right to affordable housing. If people are to adhere to a basic standard of living, then the cost of their homes must be affordable. But what exactly is affordable? The Ministry of Housing released a report stating that 70,000 Toronto house holds (20% of the citys population) do not have affordable housing. The report explains that a tenants’ housing is unaffordable if they are paying more than a quarter of their gross income in rent. This is an alarming thought since some renters are paying 70-80% of their gross income in rent.4 The problem of high housing costs is combated by rent control to allow people a minimum quality of life.
Housing like medical care is not normal good or service. It is a basic need. Renters need to buy more than landlords need to sell. If the renter does not get a place to live, he is on the street. If the landlord has no tenant, he just has an empty apartment. In short, there is a mismatch of power in the rental market. The laws of supply and demand are unfairly applied against the buyer.
Thus controls came into being precisely because the market does not work. Lifting controls would hurt peoples ability to bear the cost of housing without serious harm. The government justifies this action by arguing that something must be done about Torontos apartment shortage. Because apartments are offered below their market value, they are sold faster new ones can be created. Toronto has a vacancy rate of .8% with only twenty new apartment units built in Metro last year.5 Currently, two thirds of renters move once in five years. Since controls are lifted off vacant apartments, the government believes that after a few years, most apartments will be decontrolled and the supply problem would be solved.
In truth, areas that are already decontrolled are not seeing new apartments. Instead of building moderately priced, modest apartments, developers find it far more profitable to build condominiums. Clearly, condos do not fall under the category of affordable housing. Yet, the province is making it easier to convert apartments into these extravagant units. Under the proposal, if there is a conversion, the warning time a tenant must receive would be cut from 240 days to 120. Even if developers wanted to build new apartments, the governments rationale is still flawed.
When the controls are lifted off vacants, tenants will not be able to afford to move. Moving means and end to rent control. In other words, the mobility assumption that they make is wrong. With the price of vacants skyrocketing, and a notice that a tenant’s apartment is being turned into a condo, where is a not-so-well-off tenant to go? Luckily, previous governments have established non-profit housing. Also called co-op housing, the Ontario Housing Corporation manages 1200 of these publicly funded housing projects across Ontario. On these sites 84,000 units were sold to the low end of the housing market.
They are provided to ensure affordable housing. Someone who cannot afford a condominium can easily take up residence in a moderately priced co-op apartment. This would solve any claims to affordable housing rights that people would be scared of losing under the proposal. Unfortunately, soon after taking office, the Conservatives decided that they would no longer support the building of non-profit housing, and withdrew funding for 70% of planned non-profit projects. The total reduction in funding to the O.H.C.
was $82 million. This was done in light of a waiting list of 40,000 people. Funding needs to be increased, not reduced. 1228 units need to be built each year just to keep up with the exigency.6 How are positive rights to affordable housing supposed to be upheld after such a drastic cut? The government explains that they expect the private sector to support the low end of the housing market through the continuance of the Shelter Allowance Program. This encourages landlords to build and maintain affordable housing.
In 1994 the government funding for the program reached its peak at $2.4 billion. This favoritism of landlords was fiercely protested by the Coalition to Save Tenants Rights. Why was the responsibility of affordable housing cut from non-profit community volunteers, and not landlords? The C.S.T.R. had this to say: To develop housing for the lower end of the housing market if rent controls are lifted, the landlord lobby, FRPO, presents a list of demands: lower property taxes on rental properties, no GST on new building, no development charges for sewers, roads and parks. Home owners will pick up the slack for property tax and development charge shortfalls and everyone for the GST.
These too, are a form of government subsidies. Yet, FRPO persuaded Mike Harris that the government shouldn’t be in the housing business because the subsidies are too high. Ah, we get it! Subsidies are okay if they’re being shoveled into the pockets of private landlords. But they are a bad thing if they’re going to non-profit community groups that build affordable housing. Money spent on co-ops is used far more efficiently than the shelter allowances wasted on landlords.9 In addition to subsidies, landlords say they will not build affordable housing unless taxes are lifted from the building process.
The end result is that the proposed Tenants Protection Act would cause no new affordable housing to be built. Only higher rents, which will result in more evictions. An altogether vicious circle. As more and more sources of affordable housing are disappearing, basement apartments may become the only ones left. It is not known for certain, but estimates number the amount of basement apartments in metro to be in six figures.
Many people rely on basement apartments for a home simply because of the affordability of the unit. To their comfort Bill 120 was passed as the Residence Rights Act in 1994, legalizing basement apartments. Bill 120 also afforded protections to tenants by strengthening eviction laws in their favor. To their dismay, Bill 20 was passed as the Land-use Planning and Protection Act on November 20, 1995. Bill 20 gives municipalities the choice of weather or not to allow the building of any new basement apartments. Bill 20 which was passed by the Conservatives, is only a foreshadowing of what is to come.
The proposed Tenant Protect Act declares all basement apartments illegal again. The gains made for peoples positive right to affordable housing would be lost. Declaring a potential supply of small apartments illegal would worsen an already bad shortage. This shortage of apartments will not be solved by lifting rent controls. This would only result in the further development of lucrative condominiums.
With a reduction to public housing and the of barring of basement apartments, affordable housing in Ontario is falling left, right and center. The shortage is now worse. Affordable housing is not only vital, but is a persons right to be able afford himself shelter. All of society is hurt when its citizens can not allow for basic living expenses. By ending affordable housing, the repeals to Ontarios rent laws would harm its populace by infringing on their mobility rights. The changes would compromise tenants mobility by sentencing them to their apartments. With controls lifted off vacants, tenants will not be able to afford to move.
Conversely, landlords who wish their unit to be decontrolled will have to force tenants out. This will create class war of landlord-tenant relations. Because landlords have the upper hand in the housing market, tenant rights would be jeopardized. This mismatch of power would result in landlords harassing tenants, withholding repairs, and eventually, evictions. Landlords have had a history of strong-arming tenants to get their wishes. With no rent control on vacants, they will declare an open season on tenants. Tenants would have little recourse but to take their complaints directly to the Ministry of Housing, and file a lawsuit to be settled in the courts.
If the proposed Tenant Protection Act falls through, the sheer volume of harassment complaints are expected to be so numerous, that the lawsuits would put an unbearable strain on the legal system. In the anticipation of the overload, the Ministry of Housing has established a complaint line. The 24 hour message system will be brought up to screen less important tenant problems and to declog the Tenant Complaint Office.7 Leach also plans to create a quasi-judicial tribunal. Complaints would be diverted from courts to the tribunal for everything from increases to evictions. Both parties would be given a short time to present evidence and make their case.
Shortly after, a judgment would be made. Since there are no appeals, both parties would be expected to abide by the decision. If one party complains that the other has breached the ruling, the tribunal would send out their anti-harassment unit to investigate and slap fines. Drive-thru justice? One-stop shopping? This Band-Aid solution to the problem of tenant harassment will in no way protect tenants. Str …