Repealing The Rent Control Act- Essay, Research Paper

Repealing the Rent Control Act-

In a just society, the ruling authority must decide what is

right when allocating wealth to its individual citizens. The same

ruling authority does this by intervening with the inner workings of a

marketplace to uphold its fundamental values and ideals. The aim of

government intervention is to create a just society that will reflect

the people s values. Governing bodies do this by establishing laws

that enforce fairness or equity . The Ontario government passed the

Rent Control Act in 1975. The law levels the playing field between

landlords and tenants. New units are exempt from controls for their

first five years after which the controls are put into place. The

controls put a ceiling on annual rent increases. Under current law, a

landlord may only increase a tenants rent by 2% plus inflation.1 As

with all other markets, the housing market is based on supply and

demand. If the nature of the market were allowed to take its course,

then the price of housing would become unaffordable for most citizens.

An unfair situation would be created where power and money would be

disproportionately appropriated to land owners. Rent control laws were

established by previous governments to protect society and its people

from inflated and uncontrollable housing costs. The Harris government

now wants to repeal these laws. On June 25 the Minister of Housing,

Al Leach, released a policy paper outlining the changes that are to be

made to Ontario s rent laws. Conservative legislators plan to pass the

proposed Tenant Protection Act in the fall. The omnibus legislation

will rescind the Rent Control Act, the Landlord and Tenant Act, the

Rental Housing Protection Act, Residents Rights Act, the Land Lease

Statute Amendment Act, the Vital Services Act.2 The most objectionable

change allows the act to lift controls off vacant units. The 3.2

million renters in Ontario are very concerned about the changes.3 The

housing ministry will accept written submissions from the public until

August 30. Public hearings are also planned in hope that they will

ease the transition. However, most people are indignant towards the

idea. Changing the rent control laws would be detrimental to society

as they threaten citizens positive right to affordable housing, harm

their mobility rights and increase the gap between the rich and the

poor.

The proposed Tenant Protection Act assaults peoples right

to affordable housing. If people are to adhere to a basic standard of

living, then the cost of their homes must be affordable. But what

exactly is affordable? The Ministry of Housing released a report

stating that 70,000 Toronto house holds (20% of the city s population)

do not have affordable housing. The report explains that a tenants’

housing is unaffordable if they are paying more than a quarter of

their gross income in rent. This is an alarming thought since some

renters are paying 70-80% of their gross income in rent.4 The problem

of high housing costs is combated by rent control to allow people

a minimum quality of life. Housing like medical care is not normal

good or service. It is a basic need. Renters need to buy more than

landlords need to sell. If the renter does not get a place to live, he

is on the street. If the landlord has no tenant, he just has an empty

apartment. In short, there is a mismatch of power in the rental

market. The laws of supply and demand are unfairly applied against the

buyer. Thus controls came into being precisely because the market does

not work. Lifting controls would hurt people s ability to bear the

cost of housing without serious harm. The government justifies this

action by arguing that something must be done about Toronto s

apartment shortage. Because apartments are offered below their market

value, they are sold faster new ones can be created. Toronto has a

vacancy rate of .8% with only twenty new apartment units built in

Metro last year.5 Currently, two thirds of renters move once in five

years. Since controls are lifted off vacant apartments, the government

believes that after a few years, most apartments will be decontrolled

and the supply problem would be solved. In truth, areas that are

already decontrolled are not seeing new apartments. Instead of

building moderately priced, modest apartments, developers find it far

more profitable to build condominiums. Clearly, condos do not fall

under the category of affordable housing. Yet, the province is making

it easier to convert apartments into these extravagant units. Under

the proposal, if there is a conversion, the warning time a tenant must

receive would be cut from 240 days to 120. Even if developers wanted

to build new apartments, the government s rationale is still flawed.

When the controls are lifted off vacants, tenants will not be able to

afford to move. Moving means and end to rent control. In other words,

the mobility assumption that they make is wrong. With the price of

vacants skyrocketing, and a notice that a tenant’s apartment is being

turned into a condo, where is a not-so-well-off tenant to go? Luckily,

previous governments have established non-profit housing. Also called

co-op housing, the Ontario Housing Corporation manages 1200 of these

publicly funded housing projects across Ontario. On these sites 84,000

units were sold to the low end of the housing market. They are

provided to ensure affordable housing. Someone who cannot afford a

condominium can easily take up residence in a moderately priced co-op

apartment. This would solve any claims to affordable housing rights

that people would be scared of losing under the proposal.

Unfortunately, soon after taking office, the Conservatives decided

that they would no longer support the building of non-profit housing,

and withdrew funding for 70% of planned non-profit projects. The total

reduction in funding to the O.H.C. was $82 million. This was done in

light of a waiting list of 40,000 people. Funding needs to be

increased, not reduced. 1228 units need to be built each year just to

keep up with the exigency.6 How are positive rights to affordable

housing supposed to be upheld after such a drastic cut? The government

explains that they expect the private sector to support the low end of

the housing market through the continuance of the Shelter Allowance

Program. This encourages landlords to build and maintain affordable

housing. In 1994 the government funding for the program reached its

peak at $2.4 billion. This favoritism of landlords was fiercely

protested by the Coalition to Save Tenants Rights. Why was the

responsibility of affordable housing cut from non-profit community

volunteers, and not landlords?

The C.S.T.R. had this to say:

To develop housing for the lower end of the housing market if rent

controls are lifted, the landlord lobby, FRPO, presents a list of

demands: lower property taxes on rental properties, no GST on new

building, no development charges for sewers, roads and parks. Home

owners will pick up the slack for property tax and development charge

shortfalls and everyone for the GST. These too, are a form of

government subsidies. Yet, FRPO persuaded Mike Harris that the

government shouldn’t be in the housing business because the subsidies

are too high. Ah, we get it! Subsidies are okay if they’re being

shoveled into the pockets of private landlords. But they are a bad

thing if they’re going to non-profit community groups that build

affordable housing. Money spent on co-ops is used far more efficiently

than the shelter allowances wasted on landlords. 9

In addition to subsidies, landlords say they will not build

affordable housing unless taxes are lifted from the building process.

The end result is that the proposed Tenants Protection Act would

cause no new affordable housing to be built. Only higher rents, which

will result in more evictions. An altogether vicious circle. As more

and more sources of affordable housing are disappearing, basement

apartments may become the only ones left. It is not known for certain,

but estimates number the amount of basement apartments in metro to be

in six figures. Many people rely on basement apartments for a home

simply because of the affordability of the unit. To their comfort

Bill 120 was passed as the Residence Rights Act in 1994, legalizing

basement apartments. Bill 120 also afforded protections to tenants by

strengthening eviction laws in their favor. To their dismay, Bill 20

was passed as the Land-use Planning and Protection Act on November 20,

1995. Bill 20 gives municipalities the choice of weather or not to

allow the building of any new basement apartments. Bill 20 which was

passed by the Conservatives, is only a foreshadowing of what is to

come. The proposed Tenant Protect Act declares all basement

apartments illegal again. The gains made for peoples positive right

to affordable housing would be lost. Declaring a potential supply of

small apartments illegal would worsen an already bad shortage. This

shortage of apartments will not be solved by lifting rent controls.

This would only result in the further development of lucrative

condominiums. With a reduction to public housing and the of barring of

basement apartments, affordable housing in Ontario is falling left,

right and center. The shortage is now worse. Affordable housing is not

only vital, but is a persons right to be able afford himself shelter.

All of society is hurt when its citizens can not allow for basic

living expenses.

By ending affordable housing, the repeals to Ontario s rent

laws would harm its populace by infringing on their mobility rights.

The changes would compromise tenants mobility by sentencing them to

their apartments. With controls lifted off vacants, tenants will not

be able to afford to move. Conversely, landlords who wish their unit

to be decontrolled will have to force tenants out. This will create

class war of landlord-tenant relations. Because landlords have the

upper hand in the housing market, tenant rights would be jeopardized.

This mismatch of power would result in landlords harassing tenants,

withholding repairs, and eventually, evictions. Landlords have had a

history of strong-arming tenants to get their wishes. With no rent

control on vacants, they will declare an open season on tenants.

Tenants would have little recourse but to take their complaints

directly to the Ministry of Housing, and file a lawsuit to be settled

in the courts. If the proposed Tenant Protection Act falls through,

the sheer volume of harassment complaints are expected to be so

numerous, that the lawsuits would put an unbearable strain on the

legal system. In the anticipation of the overload, the Ministry of

Housing has established a complaint line. The 24 hour message system

will be brought up to screen less important tenant problems and to

declog the Tenant Complaint Office.7 Leach also plans to create a

quasi-judicial tribunal. Complaints would be diverted from courts to

the tribunal for everything from increases to evictions. Both parties

would be given a short time to present evidence and make their case.

Shortly after, a judgment would be made. Since there are no appeals,

both parties would be expected to abide by the decision. If one party

complains that the other has breached the ruling, the tribunal would

send out their anti-harassment unit to investigate and slap fines.

Drive-thru justice? One-stop shopping? This Band-Aid solution to the

problem of tenant harassment will in no way protect tenants. Striping

their legal right to have a say in a real court is only done to keep

tenants out of the Minister s hair. When asked about the anticipated

problem of tenant complaints Al Leach was quoted as saying: We intend

to keep them out of the courts as much as we can. 8 Tenants cases

would be rushed through to keep the line moving. Although efficient,

this does not do justice to tenants concerns. Even if tenants were to

receive a fair decision that would ask the landlord to stop the

harassment, it is not enforceable. The small, underfunded

‘anti-harassment unit would not be able to deter the amount of

harassment anticipated. Their threat to enforce the rule of law is an

empty one. A joke. The government told the C.S.T.R. that it will

protect tenants by doubling the fines for harassment. Fines could be

quadrupled and it still would not matter because they are flawed in

their application. C.S.T.R. states:

Given that the Tories are slashing workplace health and safety

inspections, food inspectors and virtually every other kind of

enforcement of public interest laws you can think of, what makes you

believe their promise to enforce anti-harassment by landlords ? 10

Anti-harassment laws under the proposed Tenant Protection

Act are unenforceable and ineffective due to budget constraints.

Harassment protection afforded to tenants would become nil and an open

season would be declared on them. The first thing that landlords

would do to pressure tenants to move would be to deprive them of

repairs. This sort of behavior is frowned upon by the government.

Under the proposed changes, they shall show their displeasure by

doubling the repair fines. Nonetheless this change, like the

harassment fines, is an empty threat. Sixty percent of Ontario

apartments are greater than 25 years old.11 They either need extensive

repairs or they are so deteriorated, that they are ready to be

replaced by condominiums. This fact plays into the landlords pressure

strategy nicely. If a tenant does not want to move, he has to stand

and watch as his home degrades all around him. When the old furnace

breaks down, he will freeze. When the sink stops working, he will have

no water. It would only be a matter of time before the tenant realizes

that his struggle is useless. He will have to move. Landlords have

gone as far as charging tenants an extra fee of $180 per month for

having unauthorized appliances such as washers, dryers, and air

conditioners.12 If the landlord does not want to see his unit degrade

for the sake of higher rent, there are other options available to him.

He can scare the tenant out of his home. Landlords infamous for using

strongmen for this purpose. Washed out boxers or thugs looking to make

a quick buck are a landlord s best friend. Tenants are told to move,

or else. If they do not get the message the first time, then the

strongmen would reinforce their point. What is worse than no repairs,

or the threats of an enforcer? Eviction. If a tenant does not leave

because of the slumlike conditions or intimidation, he will be flat

out thrown out. Landlords do not like to resorting to this, because of

its expense and the time needed for the legal process. Evictions can

take up to four months. But if the changes are passed, eviction may

prove to be a landlord’s pastime. The Residence Rights Act was passed

by the N.D.P. government in 1994. This made tenants far more difficult

to evict. Under the proposal, eviction laws under the Residence Rights

Act would be repealed. Landlords would be given much more discretion

in evictions. The time it takes to evict would be shortened and there

would be no appeal process. Changing rent control laws would not only

harm peoples mobility rights in that they will not be able to afford

to move, but insult would be added to injury in that landlords would

not let them stay. Where would they go?

They would end up on the streets. Repealing rent control would

make the rich richer, and the poor, poorer. If controls are lifted,

the inherent mismatch of power in the housing market would cause a

shift in the wealth between landlords and tenants. Owners and

developers would become richer from the higher rent their land yields,

while those who can not foot the increases would be deprived of a

home. The forces in the market would cause tenants to be caught up in

an affordability gap . This is because the cost of building housing

has increased at a higher rate than average tenant incomes for the

last ten years.13 The poor would be especially hit hard. From

1982-1994, monthly incomes of tenants living in projects actually

fell, from $717 to $661. Eliminating rent control is supposed to raise

vacancy rates. However, vacancy rates do not deal with affordability.

Since 85% of renters fall on the bottom third of income earners, empty

apartments would come from those who could no longer afford them.14 If

the Tenant Protection Act is to pass, rent supplements should be

worked into the proposal. Supplements would help tenants fill in the

affordability gap created by lifting controls. This is not the case

under the proposal. Lifting controls would seriously harm many people.

Toronto s city planning and development department blames the

affordability gap for the increased usage of food banks. They say that

if controls are lifted, people will not have enough money for food.

This will result in unmanageable lines at the food bank.15 Alternative

housing is another housing program that is going to come under attack

by the changes. Also called special-care housing, this program is the

only thing keeping 47,000 people across Ontario off the streets.16

Alternative housing puts up single mothers, seniors, the disabled and

people who would be otherwise homeless without it. The Residence

Rights Act protects special-care tenants from eviction. The proposal

would repeal the R.R.A. to give landlords of care homes the power to

enter homes without notice to perform bed checks. They would also be

able to flash evict abusive tenants who fail to pay rent or damage

property. This worries many because these are the people who are at

most risk for homelessness. Special-care tenants are not the only ones

in danger. Because of this decades poor economy, the number of metro

residents that were evicted doubled from 1990-1995.17 The combined

effect of lifting controls and more powerful eviction laws can only

worsen the situation. Those who are forced out of their homes to get

their controls lifted and cannot afford a decontrolled unit, will slip

through the cracks and onto the streets. There would be more evictees

with a greater proportion of these people becoming Ontario s homeless.

Such was the case for Irwin Anderson. Irwin Anderson was one of three

street people who froze to death last winter. The inquest involved

linked the deaths to a lack of affordable housing in Toronto. In

particular, Anderson had been evicted for non-payment of two months

rent. But he had previously paid rent in his apartment in the

subsidized complex for five years. An arrangement for repayment could

have been worked out. Instead, he was evicted. The frightening truth

is that this could happen to anyone, even the well educated.

Mirsalah-Aldin Kompani, another of the three who froze last winter had

an engineering degree from the University of Kentucky. At this point,

tenants would not be shouting about their right to affordable housing,

they would be fighting for their basic right to a home. Their only

refuge from the cold would be confinement to a crowded hostel. These

may be no better than the streets themselves. The Toronto Coalition

Against Homelessness states that people loathe these places and that

affordable housing should be the central focus since hostels only

offer a superficial solution to the real problem.18 Consequently,

because of the affordability gap, cuts to alternative/public housing

and flash evictions, repealing rent laws would split Ontario s middle

class into two, putting half up in condominiums, while incarcerating

the others in hostels. Since the strength of society depends on its

middle class and its ability to keep people off the streets, the

proposal should be rejected.

For these reasons, the proposed Tenant Protection Act

damages society as it attacks Ontarians appanage to affordable

housing, restricts their movability and erodes the middle class. The

change would take away positive intervention and let the nature

of the markets decide a redistribution of wealth. Many would live on

the land owned by an elite few. This is not equitable so government

intervention in the markets must remain. When the majority of peoples

happiness and values are protected against the advantageous elite,

then that is a sign that a society is just.

—

Endnotes

1 Ministry of Housing, The 1996 Rent Control Guideline, p.1.

2 Toronto Star, Critics fear pending bill will strip tenant rights ,

June 26, 1996, p.A7.

3 ibid.

4 Toronto Star, High rents leaving no money for food, March 31, 1996,

p.A6.

5 Toronto Star, Province plans to protect tenants, June 25, 1996,p.A1.

6 Toronto Star, Ontario prepares to scrap rents controls, September 9,

1995, p.A3.

7 Toronto Star, Tenants get special line to snitch on a landlord, June

24, 1996, p.A7.

8 Toronto Star, Rent controls not scrapped, Leach says, June 7, 1996,

p.A10.

9 The Tenant Bulletin, C.S.T.R. fights rent control reform, July 26,

1996, p.1.

10 ibid.

11 Toronto Star, Province plans to protect tenants, June 25, 1996,

p.A1.

12 Toronto Star, Tenants get special line to snitch on a landlord,

June 24, 1996, p.A7.

13 D. Edwin and R.Vogt, Basic Economics, p.56.

14 Toronto Star, High rents leaving no money for food, March 31, 1996,

p.A6.

15 ibid.

16 Toronto Star, New tenant law could hurt most vulnerable, May 28,

1994, p.L6.

17 Toronto Star, Anguish of Eviction Day, July 7,1996, p.A1.

18 Toronto Sun, Aid homeless, Harris told, June 25, 1996, p.15.

—

Bibliography

Dolan, Edwin G., and Roy Vogt. Basic Economics. Toronto: Holt,

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What is Maximum Rent? August, 1994.

Rent Control and Tenants. August, 1994

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Information About An Order Prohibiting a Rent Increase. Fact sheet.

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The 1996 Rent Control Guideline. August, 1995.

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A free rental-housing market is not a level playing field . June 27,

1996.

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Critics fear pending bill will strip tenant rights . June 26,

1996.

Halfway measures in rent controls . June 26, 1996.

Province plans to protect tenants . June 25, 1996.

Tenants get special line to snitch on a landlord . June 24, 1996.

Helpers for homeless seek role at inquest into freezing deaths . June

19, 1996.

Rent controls not scrapped, Leach says . June 7, 1996.

Minister of non-housing rethinks position . June 2, 1996.

High rents leaving no money for food . March 31, 1996

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Aid homeless, Harris told . June 25, 1996.