The Rent Stabilization Act
Commonly proposed solutions to the housing affordability crisis includes building more supply or providing more non-market housing. Policy and legislation changes can also improve affordability and positively impact those who are more at risk of unstable housing. Policy change guarantees long-term sustainable change, if the proposition
Ontario NDP MPPs recently re-introduced the Rent Stabilization Act (Bill 25), which was first introduced ย in late 2021. At that time, a higher number of representatives voted against the second reading of the bill, preventing it from being enacted. Was that a chance at providing some relief to the over 5 million renter households in Ontario?
Now, as rents continue to increase, while wages remain stagnant, Bill 25 is being re-introduced as a part of the solution to worsening affordability. It proposes addressing housing affordability in the province in three main ways: controlling rent increases, providing more protection for renters, and maintaining the supply of affordable housing.
Controlling Rent Increases
Residential rent increase guidelines in Ontario prevent some renters from facing large rent increases, but these guidelines do not apply to all units. Legislation from 2018 allows all newly built units or those occupied by a tenant for the first time to be exempt from rental price increase restrictions. This was implemented with a goal of encouraging developers to build more rental housing by giving them an incentive on their investments. However, this legislation has led to large yearly increases in market rental prices, since landlords of these units can set whatever price they desire once a unit becomes vacant or a tenantโs lease expires.
The Rent Stabilization Act is designed to limit the rent increase landlords can charge tenants each year by tying rent increases to the Consumer Price Index (CPI), which measures the rate of inflation. This means that landlords will only be able to raise rent by a certain percentage each year, based on the CPI. This provides a strategy to stabilize rents in the province and enable rent increases that are more manageable for tenants. Creating and enforcing rules around what the landlord can charge a new tenant will also disincentivize illegal evictions. When rents are controlled, landlords will not be incentivized to find ways to get rid of their current tenants and find new ones that they can charge substantially more, a practice that weโve seen happening in cities like Toronto.
Maintaining the Supply of Affordable Housing
In addition to the billโs goal of providing rent control, it also ensures that landlords do not force tenants out by refusing to keep rental units in good condition. This is done by providing financial incentives for landlords to improve the condition of their properties, and by allowing tenants to use a portion of their rent to make repairs. If a landlord has not completed maintenance on a unit that led to a breach of health, safety, housing or maintenance standards, the Landlord Tenant Board (LTB) can prevent the landlord from charging a new tenant more than what the previous tenant paid.
Rent control and unit management will be monitored by the LTB through a rent registry, which will include information for all rental units. This will enable both current and prospective tenants to be able to see how often the LTB has had to force the landlord of a unit to perform standard maintenance, and rents charged to tenants. This will help to ensure and enforce consistent rents and maintenance of housing units, helping to preserve affordability and adequacy of housing in the long term.
Providing More Protection for Renters
The Rent Stabilization Act also aims to provide more protection for renters by strengthening the rights of tenants and making it easier for them to challenge rent increases. This will be done by requiring the LTB to provide legal representation to tenants who need to go before the LTB regarding a rent increase and request legal aid for this purpose. Additionally, the act gives tenants the right to sue landlords for harassment, discrimination, and retaliation.
Following years of housing policy and legislation that provides benefits for investors, Bill 25 is an opportunity to both improve housing affordability and the experiences of renters living in Ontario. Bill 25 passed the first reading vote in October 2022, and is moving forward. The Rent Stabilization Act had a petition and campaign, to make it clear to politicians that we need policy reform that controls rent increases, maintains affordable housing, and provides more protection for renters.
It costs much less in rent to live elsewhere, sometimes as much as $1,000 less, as is the case for Montreal. However, the commodification of housing stems from the fact that there’s a financial incentive for landlords to remove long-term tenants and re-rent the units at a higher price, sometimes double the price. Why is there a housing market where those who can accumulate housing as a commodity to burden the renters? This becomes an equity issue. Vacancy control would provide protection for renters who are the most vulnerable.
Does Rent Control Solve Affordability?
We see more communities advocating for rent control, locally here in High Park, and British Columbia, so will this help resolve the lack of affordability? Until governmental measures and policies such as vacancy and speculation taxes, vacancy control is an immediate and effective approach.
Written by: Research Assistant Natalie Pilla | LinkedIn
