# Rent Control



## Ethan (Aug 8, 2010)

The opposition party in my province is looking at implementing rent controls if elected this fall:



> REGINA — Rent control needs to make a comeback in Saskatchewan to protect people from "unreasonable" hikes in what they pay each month, the Saskatchewan NDP says.
> 
> Opposition Leader Dwain Lingenfelter said on Tuesday that his party, if in government, would act quickly to amend the Residential Tenancies Act.
> 
> ...


I am opposed to rent controls (full disclosure, I own rental property). The NDP's rent control proposal doesn't concern me too much, as current polls suggest the NDP aren't likely to win the next election and the ruling Sask Party does not support rent controls. I did not realize that rent controls affect a significant percentage of the Canadian population. Are there any posters on here that own rental properties in rent controlled areas? How have rent controls affected your returns?


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## slacker (Mar 8, 2010)

The rent is too damn high !!

http://www.youtube.com/watch?v=x4o-TeMHys0


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## Barwelle (Feb 23, 2011)

slacker said:


> The rent is too damn high !!
> 
> http://www.youtube.com/watch?v=x4o-TeMHys0


Thank you. That. was. funny.

I also like his stance on marriage outside of traditional marriages:

"If you want to marry a shoe, I'll marry you."


Back on topic...

I'm conflicted. On one hand, I like the idea of limiting rent increases, so that it makes it easier for low-income renters to afford their house. If a $1000/mo house suddenly goes up to $1300, that $300 could sure cause alot of trouble for a single mother with three kids who works at Mac's, or for the 70-year-old couple living on CPP and their meagre savings.

On the other hand, it isn't necessarily fair to the landlord to limit their profits. They should be able to benefit from putting the effort into saving up for, buying, and managing a house on top of their own. And if they jack their rent too high and can't find renters anymore, it's their own fault.

I'm a socialist, so I am leaning in favour of rent controls, just for the fact that it could make lives easier for those in a bad position... it's not always their fault that they are barely scraping by. 

I can't speak from experience, I don't rent or have any rental properties, and I'm in Alberta, a rent-control-free province.


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## financialnoob (Feb 26, 2011)

In Ontario, there are a LOT of problems with landlord/tenant legislation, but I think the rent control aspect is one of the few items that actually works well. It doesn't set prices for vacant apartments (though it used to). It simply governs the way rent increases are handled.

Nowadays, the annual increase is simply tied to the CPI. In extraordinary circumstances such as significant property/utility/additional expenses, landlords can make an application for a larger rent increase. I don't really see any issue with any of that.


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## Mensa (Oct 19, 2010)

In Ontario, the previous Act did indeed abolish the "maximum rent" for rental properties, effectively bringing in vacancy de-control. It allowed Landlord's to increase rent when a change in tenancy occurred. The current legislation allows for the same thing. What this accomplished was to allow badly depressed rental amounts to normalize. This was especially true in cases where a rental unit had existed for a long period of time.

IMO, rents are similar to sale prices, in that a unit will only rent at a marketable price. If the rent is too high, the unit sits vacant. In my area the vacancy rate is around 6%. In the GTA, the rate is much lower but I would bet that a landlord is hard pressed to rent a unit out that is priced over market. Especially now that prices are so inflated there. 

If rent control were brought back to the table, where is the incentive for new rental units to be created? Where is the incentive to maintain current units in a marketable state?

While the current system is not great in Ontario (i.e. the guideline increase amount for 2010 was a mere .7%, which is a joke) vacancy decontrol plus limiting increase amounts seems fairly equitable to me. I know that some will argue that landlords try to get rid of long-term tenants in order to increase the rents, but I believe that morally bankrupt people exist everywhere and legislating for them only punishes the vast majority of responsible, reasonable people.


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## GeniusBoy27 (Jun 11, 2010)

I agree with Mensa.

To me, rent control really isn't a smart solution, and I'm also a socialist by nature. In the long run, it leads to a shortage of usable housing, as landlords forgo repairs, and more and more rental places get taken off market.

I think the significant rent/sale price of houses would narrow if rent control was eliminated.


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## andrewf (Mar 1, 2010)

If you're a socialist, you should support a basic income. Rent control doesn't work and hurts poor people by reducing the supply of rental accomodations.


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## ChrisR (Jul 13, 2009)

Funny, I do NOT normally lean in the socialist direction, but I'm shocked to read that 35% of Canada does not have rent control protections in place. (Maybe that's because I'm a renter!)

I agree with financialnoob that rent control does not set prices, it only ensures that rents are increased in a manner that is fair to both the renter and the landlord!

One thing I'll point out, at least in Manitoba, the circumstances do NOT need to be extraordinary for the landlord to apply for larger rent increases. My landlord has applied, and received rent increases greater than the set 2% every year for the last 6 years. (Some years I contested, and others I did not.)

To get an increase above the standard 2% the landlord simply needs to show that their costs have increased since the last lease was signed. This can include:
- improvements/repairs to the unit.
- improvements/repairs to the building.
- increased maintenance and service costs.
- increased RE values (and corresponding property taxes).

After all that, if the landlord still feels that their unit is being rented below market value, they can boot the tenant out at the end of the lease, leave the unit empty for 2 months (I believe), perform some upgrades, and then jack the price as high as they like.

What they can't do is lure in a renter, and then jack the price on the next lease agreement just because they think the renter won't (or can't) do anything about it. Remember: not everyone can just pack up and move because they don't like the price. Moving involves credit checks, evidence of employment, references, etc. It also involves a lot of other costs, a lot of time and a lot of hassle. Kids may need to change schools and so on...


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## andrewf (Mar 1, 2010)

ChrisR said:


> Funny, I do NOT normally lean in the socialist direction, but I'm shocked to read that 35% of Canada does not have rent control protections in place. (Maybe that's because I'm a renter!)
> 
> I agree with financialnoob that rent control does not set prices, it only ensures that rents are increased in a manner that is fair to both the renter and the landlord!
> 
> ...


The answer to that is lease agreements with built-in options to renew with mutually-agreeable conditions on price increases. If you landlord won't offer this to you, maybe you should seek other accommodation. This is how things work in commercial real estate.


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## ChrisR (Jul 13, 2009)

andrewf said:


> The answer to that is lease agreements with built-in options to renew with mutually-agreeable conditions on price increases. If you landlord won't offer this to you, maybe you should seek other accommodation. This is how things work in commercial real estate.


Yes, but commercial real estate contracts are read by commercial real estate lawyers!

The vast majority of home renters probably don't understand the details of very simple lease agreements. In fact, most probably don't even read them!


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## Dana (Nov 17, 2009)

If my rentals were subject to rent controls in the traditional sense (not the modified version we have in Ontario) I would probably not be a landlord. I would not enter into a business that is so tightly regulated that the amount of revenue I can generate is legislated for me. There would be even less incentive for Ontario residents to become landlords (we have plenty of reasons not to do it already) and there would be even more of a shortage of affordable rental housing as a result - rent control is a self-defeating strategy and likely a ploy by the NDP in Saskatchewan to win over the votes of the renters in the province who may not otherwise vote (Renters are less likely than land owners to vote in elections).


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## arie (Mar 13, 2011)

*rent*

i have rental property in ontario and the comments given are true ; now that you can virtually rent a vacant property at any rent it has given more flexibility ; however you have problems with long term tenants who can only be increased by the guideline amounts and may be paying under the market rate
its more of a problem getting problem tenants out as there is security of tenure in the province ; the rent tribunals tend to bend over backwards not to toss tenants out


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## GeniusBoy27 (Jun 11, 2010)

As a socialist, I rather see an equivalent rent credit boost to offset substantial costs, rather than rent control. i.e. set a minimum housing price support structure. The difficulty is that rent prices vary significantly across the country and across provinces.

Maybe provincial regulated by region? I don't know. Other suggestions?


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## ChrisR (Jul 13, 2009)

GeniusBoy27 said:


> As a socialist, I rather see an equivalent rent credit boost to offset substantial costs, rather than rent control. i.e. set a minimum housing price support structure. The difficulty is that rent prices vary significantly across the country and across provinces.
> 
> Maybe provincial regulated by region? I don't know. Other suggestions?


But that assumes that people who benefit from rent control need social assistance!

I don't need any handouts. I rent because I choose to rent, not because I'm poor. 

But as a renter, I think that I have some right to price stability. I'm perfectly capable of shopping around for a reasonable price, but housing isn't like dry cleaning. If my dry cleaner decides to double his rates... I switch dry dry cleaners. What am I supposed to do if my landlord decides to double the rent? Move? How often? Every year?


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## Ethan (Aug 8, 2010)

arie said:


> its more of a problem getting problem tenants out as there is security of tenure in the province ; the rent tribunals tend to bend over backwards not to toss tenants out


This is my concern. I currently have a great tenant, I have not increased rents for him and I don't plan on doing it in the foreseeable future. However, if I get a tenant at some point that I want out, it is very difficult to get them out. Without rent controls, I could jack the rent to an unrealistic level to entice the tenant to leave, or I could evict them for not paying the high rent. With rent controls not only am I stuck with the bad tenant, but I can't realize extra cashflow to offset the extra costs incurred from having a bad tenant (ie damaged property, loss of other tenants in the building if the bad one is noisy, etc.).

It comes back to the risk/rewards of ownership. I took the risk of ownership, the government shouldn't be able to claw back my rewards.


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## financialnoob (Feb 26, 2011)

Ethan said:


> This is my concern. I currently have a great tenant, I have not increased rents for him and I don't plan on doing it in the foreseeable future. However, if I get a tenant at some point that I want out, it is very difficult to get them out. Without rent controls, I could jack the rent to an unrealistic level to entice the tenant to leave, or I could evict them for not paying the high rent. With rent controls not only am I stuck with the bad tenant, but I can't realize extra cashflow to offset the extra costs incurred from having a bad tenant (ie damaged property, loss of other tenants in the building if the bad one is noisy, etc.).
> 
> It comes back to the risk/rewards of ownership. I took the risk of ownership, the government shouldn't be able to claw back my rewards.


I'm not familiar with the Saskatchewan Tenant/Landlord legislation, so I'm probably missing something here. 

But in Ontario, landlords absolutely can apply to have bad tenants evicted without manipulating rent levels. Property damage and excessive noise from the tenant or their guests can be a pain to gather evidence on and prove, but are absolutely grounds for eviction.

The legislation itself doesn't seem to be setting rental prices, which is good. I'd be against that. But if it's about implementing a fair and easy system of rent increases, I don't get the issue. I'm sure bankers make the same complaints when legislation forces them to be more accountable.

As for risk/rewards, I can understand that. However what you're talking about isn't the ability to cover your expenses so much as a free pass to artificially manipulate rent levels for totally unrelated reasons, which really makes me think Saskatchewan definitely needs this type of legislation.


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## Ethan (Aug 8, 2010)

financialnoob said:


> I'm not familiar with the Saskatchewan Tenant/Landlord legislation, so I'm probably missing something here.
> 
> But in Ontario, landlords absolutely can apply to have bad tenants evicted without manipulating rent levels. Property damage and excessive noise from the tenant or their guests can be a pain to gather evidence on and prove, but are absolutely grounds for eviction.
> 
> ...


In SK, the landlord must give 1 month's notice. I can ask the tenant to leave immediately if I can prove of an illegal or offensive act, nuisance or disturbance bothering neighbours, or if rent is 15 days overdue. However, the tenant can refuse to leave, at which point I have to refer the case to the rentalsman. I'm not sure what that entails, but I don't have the time or resources to deal with this.

In SK we must give 6 month notice of a rent increase, so maybe jacking the rent isn't a good solution. Thankfully I haven't had problems evicting a bad tenant yet.


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## ghostryder (Apr 5, 2009)

ChrisR said:


> But as a renter, I think that I have some right to price stability. I'm perfectly capable of shopping around for a reasonable price, but housing isn't like dry cleaning. If my dry cleaner decides to double his rates... I switch dry dry cleaners. What am I supposed to do if my landlord decides to double the rent? Move? How often? Every year?



Isn't that what a lease is for? If you want stability, sign a lease. If you want the flexibility to move out on a whim, you go month to month. But then you sacrifice the price stability.


Besides, in SK you can't raise rent in the first 6 months, and you have to give 6 months notice for any increase. So in the first year you would never have a rent increase.


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## financialnoob (Feb 26, 2011)

Ethan said:


> In SK, the landlord must give 1 month's notice. I can ask the tenant to leave immediately if I can prove of an illegal or offensive act, nuisance or disturbance bothering neighbours, or if rent is 15 days overdue. However, the tenant can refuse to leave, at which point I have to refer the case to the rentalsman. I'm not sure what that entails, but I don't have the time or resources to deal with this.
> 
> In SK we must give 6 month notice of a rent increase, so maybe jacking the rent isn't a good solution. Thankfully I haven't had problems evicting a bad tenant yet.


That's actually pretty good compared to the Ontario legislation. 6 months is a bit excessive though. Glad you haven't had a bad tenant yet though. 



ghostryder said:


> Isn't that what a lease is for? If you want stability, sign a lease. If you want the flexibility to move out on a whim, you go month to month. But then you sacrifice the price stability.
> 
> 
> Besides, in SK you can't raise rent in the first 6 months, and you have to give 6 months notice for any increase. So in the first year you would never have a rent increase.


I'm not arguing against rent increases. My concern is the landlord's right to arbitrarily jack it up to artificially high levels. You can still have price stability while allowing for reasonable increases. 

People get really upset over gas prices fluctuating wildly for no apparent reason. That could cost them $50 to $100 more per month. Imagine the same for rent, only costing 3 to 5 times that. 

Or to use a better analogy, lets use your cell phone bills, only if you change providers, you have to buy a new phone and get a new phone number (I know phone numbers are portable, but where you live isn't, so for this analogy, that'd be included as part of the inconvenience). 

The cell phone company says you should lock in for a 3-year deal to get "price stability," and the rates might be a bit higher for that stability. But if you cancel for any reason, you'll be subjected to large penalties. Or you go month-to-month, they raise rates multiple times a year, sometimes by reasonable amounts, sometimes by ridiculous amounts, and without any explanation whatsoever.

Now imagine the frustration of switching phones/providers every year to avoid an unreasonable rate hike. Now imagine doing that for where you live, factoring in time to search for a new place, packing, moving costs, address changes for services, letting friends and family know, et cetera.

I'm just saying there should be more options than just long-term contracts with huge potential penalties vs. month-to-month contracts including unreasonable spikes in rental costs.


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