LandlordBC’s Response to Premiers Maximum Rent Increase Formula Announcement
Today Premier Horgan and Housing Minister Selina Robinson announced that their government will be adopting the recommendations of the Rental Housing Task Force as they pertain to the maximum allowable increase formula under the Residential Tenancy Act (RTA). This will mean that for 2019 the maximum allowable increase will be only 2.5% which is equivalent to CPI for the 12-month period ending July 2018. They also announced a new Above Guideline Increase process landlords will be able to apply for to seek additional rent increases. While this decision will provide relief for renters in the immediate term, we are concerned that this decision will undermine the only true long-term solution, increasing the supply of rental housing sufficiently large enough to provide renters with more rental housing options at a range of price-points.
We understand that renters across the province are frustrated by cost of housing and record low vacancy rates. In the face of increasing maintenance cost, property taxes, utilities and insurance, landlords are similarly frustrated with the pressures to keep up with ever-increasing costs to maintain, safe, high-quality homes.
The government has pointed to jurisdictions like Ontario stating that rent controls have had no negative impact on the development of purpose-built rental housing, and that the Above Guideline Increase (AGI) process that has existed in that province for years functions well for landlords.
For the record, a well-known and highly respected BC-based rental housing developer has built over 30% of the purpose built rental housing in Toronto over the past 15 years, by far the largest builder of rental homes in that province. They have confirmed to LandlordBC that the removal of the Rent Control Exemption for post 1991 new rental housing implemented by the Ontario government in 2017 has absolutely has had an impact on new rental housing construction in the Greater Toronto Area. They know the GTA rental market intimately and have confirmed that several purpose-built rental projects have been cancelled and converted to condos.
Another major BC-based rental housing developer who owns and operates 25 purpose-built rental buildings in Toronto, spoke to LandlordBC about the Above Guideline Increase process in Ontario. This is a large, sophisticated landlord. They advised that the AGI process in Ontario is an inefficient, administratively burdensome process that would be inaccessible to them if it wasn’t for their critical mass and internal resources. They advised that the Ontario system is completely stacked against smaller landlords. As the government knows, the BC rental market is primarily smaller landlords. This landlord advised LandlordBC that it can take at least a year for AGIs to be approved in Ontario and, in the interim, they are never able to fully capture rent increases as tenants dispute the AGI or simply refuse to pay.
LandlordBC is recognized for being a progressive organization genuinely concerned about the delivery of safe, secure, sustainable rental housing for British Columbians. We have long advocated for enhanced renter supports like portable housing benefits, have worked very closely with Minister Robinson to help her effect some very bold legislative changes to help renters, and we have worked tirelessly to encourage and support the building of new purpose-built rental housing across the province. Our industry did not create this rental housing crisis. We are trying to end it.
So, while we have no option but to accept the governments decision today, we strongly encourage Minister Robinson to work with us and take the necessary time to study the economic impact of this change to the RTA, and any other changes that may be contemplated when the task force makes its full recommendations to her. We need to ensure that we have a truly viable rental housing industry and plenty of housing options for British Columbians. In our view there’s much more work that needs to be done before any further decisions are taken.