Does removing rent control help build more apartments?

What happens to a city like Toronto when you take away rent control provincial government wiped out rent control I’m faced move where will I go don’t like it move out in theory you’re regulating rent protects tenants from being priced out of their Apartments but one key argument against rent control is

That it discourages new rentals from being billed coupled with rent controls it’s not a very appealing picture if developers don’t think they can make enough money from a rental building then they won’t build it if new rentals aren’t being built that’s bad for renters so what happens when rent

Control goes away do more rental buildings go up a rent control exemption Ontario’s government did just that five years ago but the results they’re not exactly what you’d expect thank you Ontario is open for business back in 2018 a newly elected provincial government wanted to give developers a

Reason to build rentals so the Ford government rolled back some rent controls if you lived in a unit your rent was still protected but any newly built units or newly converted units would have zero rent control regulations at the time the government said this would help create market-based incentives for Supply growth meaning

Developers could make more money from rentals and therefore would naturally want to build more of them taking away rent control was supposed to make all of that happen and it worked sort of my name is Sean Hildebrand I’m president of a company called urbanation I’ve been tracking the market for for over four

Decades now according to Urban Nations research when Ford took away rent control the city saw a huge jump in proposed rental buildings there’s a large inventory of rental projects in the GTA that are proposed for development meaning they have submitted an application developers applied to build more than 90 000 new rental units

Sounds like that could put a dent in Toronto’s supply problem right but here’s the thing only one third of those applications actually got the green light and for those that did get the go-ahead to start building construction isn’t exactly easy right now building in Toronto is slow and expensive very few

Projects start construction over the last number of quarters and this is due to high construction costs it’s due to labor shortages it’s due to uh approval delays and getting these projects shovel ready and perhaps not surprisingly higher interest rates means it costs more to build than it did a few years

Ago Developers to take out loans to build these projects so when rates rise it hurts the economic viability of of proceeding with development as well so there’s some very real negative uh consequences a report by the Canada mortgage and housing Corporation in 2021 found that costs associated with building including everything from land

To government charges even underground parking or just too high to make it worthwhile for many developers and that’s even without rent control in place That report found that depending on the location and size some rental buildings could still be profitable enough to attract developers and it is true that in spite of all these challenges more rental buildings are going up now than in the last 10 years but don’t expect it to solve Toronto’s rental problems overnight

Staggering length of time it takes between when a purpose-built rental is proposed and then it actually being like ready to move into isn’t Toronto one of the slowest cities in the world for getting it done yeah it’s uh I think it’s 100 months between development application submission and and actually

Having the project completed part of that is is due to slow approvals part of that is due to the lengthy time it takes to build a a rental building or any apartment building 100 months to develop and build a rental building that’s more than eight years the reality is that new

Builds won’t be able to keep Pace with the surging demand in Toronto yeah we have seen this you know an increase in in housing construction generally about 40 percent increase from pre-2019 both in Toronto and across the country so the planning departments are approving permits faster the builders are building

Homes faster um but they’re still not keeping up we’re projecting rental demand in the GTA to increase by over 300 000 units in the next 10 years if you look at the amount of Supply uh that could come online from purpose-built rentals and also condo rentals we’re going to see a shortfall

Of like 170 000 units and that’s under a pretty optimistic scenario and a new building years from now doesn’t mean much to someone who needs an apartment today we’ve made so much progress after Decades of stagnation we’re finally seeing the results of our plan but as Canada and Ontario continues to

Grow at a record Pace we need to do more we need to do more even Ontario’s Premier admits it we reached out to the province for further comment and in a statement the housing Ministry talked about substantial progress adding the province’s quote staying on track with around 11

000 rental starts a 44 increase on the number of starts from the same period last year this is the highest level of rental starts on record for this time of the year so one policy change was never going to fix Toronto’s entire housing crisis and a lot of these issues come down to

Things that provincial policy just can’t control like a shortage of construction workers inflation and interest rates going up but there’s been a lot of focus on this one thing rent control and it’s worth asking was that policy ever really holding back development when Ford rolled back rent control it really had

Only been in place for a year and a half even with Decades of no rent control rentals weren’t getting built in Toronto not on this scale the city needed so for some the benefits of rent control outweigh the potential negatives so I think it’s really important to keep

Rent controls firmly in everybody’s line of sight that that is part of the issue making money isn’t all there is people need a place to live what we do for one another through our governments has always been the way we make sure to provide for one another and governments

Have got a bad rap at being able to do anything right whether it’s rent control or building but it’s like nobody else is going to do it for you if we don’t do it for ourselves through our governments it’s not going to get done so if you think this is a crisis

You know change it the argument I was put back to the developers is where you promised if we deregulate you would build and you didn’t so we don’t believe you when you say uh if we regulate your stop um because you weren’t doing a lot building in the first place so it’s not

Much to stop and I think governments do need to think more seriously about rent control Thank you

What happens when rent control goes away? In 2018 Ontario rolled back some rent controls to incentivize developers to build more purpose-built rental units. But as CBC Toronto’s Shannon Martin found out, that’s not exactly what happened.

00:00 – Introduction
00:53 – Ontario’s conservative government removes some rent controls in 2018
01:45 – Developers send in applications, but building stalls
03:27 – Timelines
05:22 – What does the province have to say 5 years later after policy change
6:42 – Conclusion

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