In an effort to manage the skyrocketing prices facing home buyers in the Greater Golden Horseshoe (GGH), the Provincial Government of Ontario recently introduced “The Fair Housing Plan”, which includes several measures that have been taken to encourage affordable housing for Ontario residents. While the plan includes strategies aimed at helping home owners, controls have also been put into place for those who rent.
The Problem Facing Renters
Many renters living in the GGH have experienced dramatic increases in their rent in recent months, which according to the Ontario Government, has created a burden for families. Urbanation, a Toronto authority on the condominium and rental apartment market, says that the average rent per square foot for new leases in the Greater Toronto Area condo market rose 11 per cent in the last quarter of 2016 compared to a year earlier, the fastest pace of growth since at least 2011.
Ontario also saw its average vacancy rate drop to 2.1 per cent in the fall of 2016, from 2.4 per cent in 2015, the lowest vacancy rate since October 2003; in Toronto, the vacancy rate was 1.3 per cent, the lowest in 12 years. The supply of affordable rental units has not yet met the demand.
The 1991 Loophole
Much like today, the mid-1990’s saw a serious dip in supply of affordable rental properties. Hoping to spur more rental developments, the Ontario Government introduced Bill 96 – the bill that removed rent control on all new buildings. Government chose to leave rent increase guidelines intact for buildings constructed before 1991. Tenants living in properties built after 1991, however, have since been left vulnerable to unpredictable rent increases.
The Fair Housing Plan
In addition to measures like the Non-Resident Speculation Tax, and a tax rebate for first-time home buyers, the plan for housing reform includes relief for renters. The Rental Fairness Act 2017, imposes rent controls of 2.5 per cent or lower on all private units in the entire province. The Ontario Government also implemented a $125-million, five-year program that encourages the construction of new, purpose-built rental apartment buildings by rebating a portion of development charges. A second inducement ensures rental building owners will pay the same property tax rates as other residential properties.
A new standard lease has been developed by government to tighten the provisions around “landlord’s own use” evictions. This new lease will provide compensation to tenants who are asked to vacate. It will be available in several different languages.