The Hamilton and District Apartment Association says the extension of provincial rent control policies to all rental units built post-1991 will negatively impact Hamilton's rental market.
On Thursday, the Premier announced new measures to curb raising housing and rental prices in the Greater Toronto-Hamilton Area.
In an email to their mailing list, the HDAA writes "Hamilton was expecting to see several new buildings over the next few years, but that is now at risk" due to rent control. "[R]ents in new buildings today are not enough to cover costs and the risks involved in development projects. The expenditures out weigh the income for many years during and after construction."
The full HDAA email statement is below:
1991 Rent Control Exemption: The government has expanded rent control to ALL private rental units in Ontario, including those built after 1991 effective on April 20th 2017. This ensures increases in rents will only rise at the rate posted in the annual provincial rent increase guideline. Under these changes, landlords would still be able to apply vacancy decontrol and seek above guideline increases where permitted.
The post 1991 rent control exemption that the government has removed, was working. Removing rent control on all new buildings, spurred more rental developments; new construction in Ontario is the result. Economists agree that rent control is not beneficial to tenants in the long run. If you are looking only at the short-term impact of unexpected rent increases then the knee jerk reaction would be to bring in rent control. If you instead take a long-term view of the industry, (the way many companies view their investments) then you will see that rents in new buildings today are not enough to cover costs and the risks involved in development projects. The expenditures out weigh the income for many years during and after construction. The implementation of the exemption was an important driver for the development of new, badly needed purpose-built rental housing. Hamilton was expecting to see several new buildings over the next few years, but that is now at risk. We feel the recent announcement will stop the construction of thousand of units over the next few decades. Today's new housing may be expensive but it will be the affordable housing 30 - 50 years down the road.
We will be voicing our concerns on many more items in the Fair Housing Plan. Items like the proposed changes to the above guideline increases and the development of a standard Lease Agreement will be addressed.