Although Ontario's share of dedicated renters is on the rise, stability for that same group is sorely lacking. Thankfully, tenants do have entities working in their favour -- although regulations that might give them more agency over where they live and the rents they pay are still largely in limbo.
As originally reported by the Toronto Star, a report has gone to City Council today that makes a case for eliminating a rule known as vacancy decontrol.
As it currently stands, long-term tenants are somewhat protected by vacancy decontrol because landlords are restricted to annual rent increases based on the Ontario Consumer Price Index (CPI). That annual increase tends to be between 0.5% and 3%. But little is stopping landlords from forcing long-term renters out so that they can hike rental rates for new tenants. On top of that, there is no rent control regulation to speak of for new tenants.
The aforementioned report -- spearheaded by Abigail Bond, Executive Director of the Housing Secretariat for the City of Toronto -- suggests a better way to go about rent control is to tie rent caps to residential units as opposed to individual tenants.
"Vacancy control is one of many measures recommended in the report to prevent the financializing of housing which has been noted as a key driver of evictions," says Bond in a statement to STOREYS.
Bond also makes a number of other recommendations in her report, including incentivizing the development of new rental housing and the creation of a centralized data system that would house information on all rental units in Ontario to increase transparency.
At first blush, Bond's recommendation to end vacancy decontrol seems like a no-brainer, and city spokesperson Siobhan Ramsay confirmed to The Star that housing staff are officially in support of the rule change. That said, there is debate over scrapping the rule.
On one hand, Bond's report has been met with support from housing advocates, including the Advocacy Centre for Tenants Ontario (ACTO).
"The policy of vacancy decontrol has a harmful effect on tenants because it means they are always at risk of being pushed out of their units and, if evicted, it is much harder for renters to find a comparable unit in the same price range," Douglas Kwan, Director of Advocacy and Legal Services at ACTO, tells STOREYS.
Vacancy decontrol was introduced in Ontario to encourage developers to invest in more purpose-built rental housing. To say this didn't go to plan would be an understatement.
"We’ve had over 25 years of vacancy decontrol in this province and can find no evidence that this policy has led to the material creation of new purpose-built rental units," says Kwan. "Instead, in the intervening years, Ontario has consistently fallen short in building adequate rental housing supply. On average since 1996 (until 2016), Ontario has only built 3,452 new rental units yearly, when Ontario should be building approximately 10,000 new units yearly to meet demand."
Bond echos this sentiment, adding that there needs to be a shift in the types of housing being built.
"New and enhanced investments are urgently needed to deliver the City's HousingTO 2020-2030 Action Plan which aims to approve 40,000 new affordable rental homes, including 18,000 supportive housing units by 2030; prevent homelessness and evictions; improve housing stability for residents across the city; and ensure well-maintained and affordable homes," she says.
Nonetheless, some housing officials maintain that vacancy decontrol exists for a reason, and ending it would only exacerbate the housing crisis further.
"It's a fundamental, very important policy lever, if you will, to be able to allow for rental housing providers to maintain and upkeep their buildings and provide necessary upgrades and improvements. It also provides certainty in the system for those who build housing," Tony Irwin, President and CEO, Federation of Rental-housing Providers of Ontario (FRPO) tells STOREYS. "In our view, taking away measures such as that is not going to do anything to create more housing. It's really going to have a much more negative effect in terms of rental housing providers, builders, saying this is not an environment that we're going to invest in [because] projects are not economically viable."
This is not an unfounded belief. In 2017, rent control was extended to all private residential units per the Rental Fairness Act. The act barred landlords from increasing rental rates past a provincially mandated rent cap -- 2.5% annually. The unfortunate result was that business-minded developers quickly switched gears, converting more than 1,000 proposed purpose-built rental units into condominiums.
While the intentions behind the Rental Fairness Act were noble, they proved to be counterproductive. So, in 2018, Ontario backtracked, announcing that new apartment, condo, and basement units no longer faced any rent control at all. And of course, rents spiked.
There are benefits to getting rid of vacancy decontrol. Vacancy decontrol has made the rental market increasingly unattainable for marginalized groups and low-income earners.
On top of that, Bond asserts that it has led to an uptick in unlawful evictions, including renovictions. But Irwin argues that vacancy decontrol and no-fault evictions should be treated separately.
"As far as I'm concerned, we do have rules in place that govern those activities. The current government in its last term did things to increase fines and penalties on rental providers who don't follow the rules," he says.
To that end, Irwin adds that the FRPO is actively working to increase the efficiency and effectiveness of dealings through the Landlord and Tenant Board.
"We continue to talk to government about that, about the need for more adjudicators, more resources for the system. It does provide access to justice, both for residents and for rental housing providers," he says. "And while we have seen improvements over the last four years, the pandemic and backlog of hearings have created a whole set of new challenges that the government didn't necessarily contemplate and is, I think, trying to move forward positively. But anytime you're faced with such significant change and bringing in a whole new way of doing things, there are a lot of growing pains."
In spite of Bond's recommendations, it's looking unlikely that vacancy decontrol will be scrapped any time soon in Ontario. The province's intention to safeguard new rental development is clear. Still, she stresses that measures need to be taken sooner rather than later to stabilize and prevent further financialization of Ontario's rental sector. She also notes that while getting rid of vacancy decontrol is a stop-gap solution, it's not the solution, and underlying issues need also be addressed by all levels of government.
"The staff report recognizes that many of the tools to tackle the systemic and structural factors that cause evictions lie outside of the City's jurisdiction. As such, it recommends that City Council request the federal and provincial governments to take a number of actions to enhance existing legislations or introduce new policy and financial tools to complement the City's efforts," she says. "These investments will also support the shared objectives of all governments including eliminating chronic homelessness; increasing housing stability; supporting climate action; and creating more equitable, inclusive, and vibrant communities where all residents have equal access to succeed. Further, these investments will help Toronto to attract and retain the talent needed to continue to drive Canada's economic engine."