Vacancy decontrol and above guideline increases are important to protect current supply

A few days ago, an article appeared in Toronto Star that talked about the difference in rents between long-term tenants and new tenants living in the same buildings in Toronto. The article described the untenable situation facing many renters in Toronto and the GTA and took aim at rent control and vacancy decontrol as the cause. For many Ontarians, the struggle to find a good, affordable home that meets their needs and budget is real. While historically this has been a Toronto and GTA problem, housing affordability is top of mind in communities all across Ontario and requires a coordinated response between all levels of government and the private sector to encourage and support new purpose-built rental housing.

Since its introduction in the 1980s, rental housing providers have learned to live within the bounds of the rent control system. Its measures are important because they protect sitting tenants from extraordinary rent increases, while providing a mechanism to offset major capital projects essential to keeping aging buildings in a state of good repair. Among these measures are vacancy decontrol, which allows units to reset to current market rent when they become vacant, and above guideline increases, which allow rental housing providers to increase rent above the provincial guideline to cover strictly regulated critical repairs and maintenance of important building infrastructure.

These measures help to keep the economics of purpose-built rental housing viable and must be protected. Vacancy decontrol is important because rents do not keep pace with the cost of running and maintaining buildings. This is especially true in a post-pandemic world where inflation, the rise in commodity prices, and the disruption of global supply chains has caused the cost of nearly everything to rise. Vacancy decontrol allows for catch-up investment and preventing units from falling into a cycle of underinvestment and decline in state of good repair.

Simply put, what vacancy decontrol does for units, above guideline increases does for critical building infrastructure by allowing rental housing providers to apply to the Landlord & Tenant Board to request a rent increase to offset a portion of the cost for major capital improvements to things like boilers, roofs, parking garages, and elevators ensuring that aging buildings remain safe for residents. This is important because no incentive to get shovels in the ground can overcome the damage that is done to investor confidence when governments fiddle with the basic economics of operating a purpose-built rental building over time. In order to get badly needed new rental housing built, policy makers have to be responsible in how we manage what we already have.

We all know Ontario has a housing crisis. The Housing Affordability Task Force report calls on the province to set a goal of adding 1.5 million new homes over the next 10 years. FRPO strongly supports this goal and has made a number of recommendations to the province including creating an “As-of-Right” zoning framework for purpose-built rental based on meeting a set of conditions agreed upon by the province and the municipal sector, density incentives in communities with the greatest need for rental housing, and a provincial triage service led by a Rental Housing Facilitator to cut red tape and speed up approvals.?

The vast majority of the existing stock is aging with more than 80% of existing rental units in Ontario built before 1980. Targeting vacancy decontrol and above guideline increases would take the province backwards by making it harder to maintain these aging units, discourage investment, and reduce the housing supply for Ontario renters. Ontario is one of the best places in the World to live, work and raise a family. Future generations are counting on us to build enough housing for them, so the time to act is now.