The Ontario government's effort to cool the housing market in the GTA could backfire in Ottawa, according to a property owner group who fears adding rent control to units built after 1991 will reduce the number of available rental properties.
"I think it's a terribly misguided initiative. It's actually going to hurt the people it's supposed to protect," said Victor Menasce, president of the Ottawa Real Estate Investors Organization.
The group is made up of about 400 investors, many of whom are landlords renting properties in Ottawa.
According to Menasce, most of the rental units added to the Ottawa market in recent years are condos purchased by investors, then put up for rent.
Menasce warns imposing rent control on these newer units will make investors think twice.
"What it will do is it will take rental stock off the market," said Menasce.
'1991 loophole' closed
Each year, the province sets a rent increase guideline based on the consumer price index. In 2017, the guideline was 1.5 per cent.
For units built before 1991, landlords are generally not allowed to increase the rent by more than the guideline, unless they get permission from the Landlord and Tenant Board because of a significant increase to their property tax or utility bill, or if they make significant improvements to the property.
As for units built or first occupied after 1991, the rent increase guideline hasn't applied, meaning landlords were free to increase the rent by as much as they wanted. Until now.
Thursday's announcement means all residential units will be subject to the annual rent increase guideline, regardless of when they were built.
New tenants need protection too: ACORN
Rent control, however, will still only apply to an existing lease, meaning landlords can do what they want to the rent when a tenant moves.
That omission from Thursday's announcement did not sit well with ACORN, an association of community organizations representing low and moderate income families.
"This is good, but we'd really like to see things done for vacancy control," said Stephenie Graham, co-chair of the Vanier chapter of Ottawa ACORN.
According to Graham, some landlords neglect repairing an apartment in the hopes of encouraging the tenant to end their lease.
"People are being pushed out, just so the rents can go up," said Graham.
To fix that, ACORN wants rent control to apply to a rental unit, rather than the lease for the unit.
But Menasce counters that landlords aren't raising rents just for the sake of making more profits.
"The problem she (Wynne) is trying to solve is the problem of rent going up. It's like trying to treat the symptoms of a problem instead of the root cause," said Menasce.
According to Menasce, significant increases in hydro bills, water bills and development charges are some of the reasons why landlords are increasing rent.
"The only way to reduce the rent, is to reduce the cost," said Menasce.