Condo Market Reports
Ontario's Expansion on Rent Control
Why the Government’s sudden preoccupation with rent controls?
The media has reported two cases where the landlord doubled the rent from $1600 to get rid of a tenant. The current rules of the Rental Tribunal make it very difficult to evict a tenant for non-payment of rent or for carrying out illegal activities. This is the only resort for landlords to get a speedy resolution. In both instances, the landlord needed to sell the unit as vacant. We can tell you that landlords value good tenants and want to keep them. By keeping a good tenant, you avoid vacancy costs and you save on leasing commissions. Good tenants can usually get rents below market for these reasons.
But there are more tenant voters than landlords. Hence, we have rent controls which will not be good for tenants in the long term. We currently have a vacancy rate under 1%. Plans by several developers to build apartment buildings will be shelved. Over time, more investors of condo units will also sell, particularly if the returns are negative or if they cannot evict tenants for valid reasons. The result will be fewer rental units for a growing population. If you want to see the future, check out Stockholm which has rent controls and a Government rental registry with a six year wait list!
In summarizing, we do have an idea to get more condo units into the rental pool. There are thousands of units available on Airbnb. Most of these owners do not declare the income and pay no HST. As a condition of operating in Canada, Airbnb should have to provide a download of all rentals each month to Revenue Canada to reassess. That would change the economics and make one year rentals more attractive to owners!
Make sure you check out our full Toronto Condo Market Report for April-May 2017.