A Bit More Detail

Assorted Personal Notations, Essays, and Other Jottings

[URBAN NOTE] “Toronto’s Rent Control Risks Stoking the Red-Hot Housing Market”

Bloomberg’s Ken Chipman argues that rent control in Toronto risks shifting real estate development from rental units to condos.

Ontario’s government is set to impose the most sweeping rent controls in a quarter century, linking annual increases to inflation, with a cap of 2.5 percent, on all buildings as it tries to keep costs under control. The measure, meant to protect tenants from price gouging, could end up making it more — not less — expensive to rent in North America’s fourth biggest city.

The rules threaten to bring apartment construction to a halt, critics warn. At least one developer said he’s scrapping all rental projects in the pipeline. Others are considering doing the same. This risks worsening the rental-housing shortage and hurting those already priced out of the for-sale housing market, where prices are at a record high even as the troubles at mortgage lender Home Capital Group Inc. threaten to spill into the market.

Lamb Development Corp. had seven apartment buildings in the works in Ontario — five in downtown Toronto — before Premier Kathleen Wynne announced the expanded rent control on April 20, part of the province’s 16-point plan to cool scorching home price gains. The proposal calls for a rent cap on all units, not just those built before 1991 as mandated by current law.

“We won’t build these buildings as apartments. We will build condominiums,” said Brad Lamb, Lamb Development’s founder. “If you were to now ask 20 or 30 prominent developers about purpose-built apartments, they will tell you they are no longer viable in Toronto.”

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Written by Randy McDonald

May 16, 2017 at 8:45 pm

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