TORONTO – At least 1,000 planned rental units in Ontario have been cancelled or converted to condominiums since the province introduced new rent control rules, a report released by a group representing rental-housing providers said as it warned of a supply crunch if the issue isn’t addressed.
The report, commissioned by the Federation of Rental-Housing Providers of Ontario and released Monday, said the Liberal government‘s’s Fair Housing Plan has negatively impacted the province’s rental housing supply.
Before the introduction of the government legislation, 28,000 rental units were in the planning pipeline, but since the new rules were introduced 1,000 of those units have been cancelled or converted to condominiums, the report said.
The federation’s president, Jim Murphy, said Ontario needs 34,000 rental units built a year to keep pace with demand and it is currently falling 6,250 short each year.
“We need more supply, full stop,” Murphy said. “And we’ve got to encourage everyone, the industry included but also governments to come to the table with policies that will create the environment for new rental units”
In April, the Ontario government announced what it called a comprehensive housing package aimed at cooling a red-hot real estate market.
Amongst the 16 measures were a 15 per cent non-resident speculation tax to be imposed on buyers in the Greater Golden Horseshoe area who are not citizens, permanent residents or Canadian corporations and expanded rent control that will applied to all private rental units, including those built after 1991, which were previously excluded.
According to Canada Mortgage and Housing Corporation data in the report, vacancy rates in the province have already fallen to 2.1 per cent across the province.
Murphy said both provincial and municipal governments could make policy and tax changes to help encourage developers to deliver more purpose-built rentals.
“The problem right now is that there has been uncertainty created because of that change and we’re starting to see cancellations of projects at a time when we need more supply,” he said.
Housing Minister Peter Milczyn said the province does not plan to change rules which cap annual rent increases.
“I am listening to the industry, monitoring the situation, but we’re taking our action, which was to ensure there’s fair rental policies for tenants and releasing surplus provincial lands to build more rental supply,” Milczyn said.
Milczyn said he is skeptical about the findings of the report, adding that over the past decade only about six per cent of housing starts in Ontario were for rental housing.
“Under the old rent control regime that wasn’t generating lots of purpose-built rental housing,” he said.