Rent Control-Pro Essay, Research Paper
Rent Control-pro The Detrimental Effects in Changing the Rent Control ActIn a just society, the ruling authority must decide what is right whenallocating wealth to its individual citizens. The same ruling authority does this byintervening with the inner workings of a marketplace to uphold its fundamental valuesand ideals. The aim of government intervention is to create a just society that willreflect the people s values. Governing bodies do this by establishing laws that enforcefairness or equity . The Ontario government passed the Rent Control Act in 1975. Thelaw levels the playing field between landlords and tenants. New units are exempt fromcontrols for their first five years after which the controls are put into place. Thecontrols put a ceiling on annual rent increases. Under current law, a landlord may onlyincrease a tenants rent by 2% plus inflation.1 As with all other markets, the housingmarket is based on supply and demand. If the nature of the market were allowed to takeits course, then the price of housing would become unaffordable for most citizens. Anunfair situation would be created where power and money would be disproportionatelyappropriated to land owners. Rent control laws were established by previous governmentsto protect society and its people from inflated and uncontrollable housing costs. TheHarris 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 srent laws. Conservative legislators plan to pass the proposed Tenant Protection Act in the fall. The omnibus legislation will rescind the Rent Control Act, the Landlordand Tenant Act, the Rental Housing Protection Act, Residents Rights Act, the Land LeaseStatute Amendment Act, the Vital Services Act.2 The most objectionable change allowsthe act to lift controls off vacant units. The 3.2 million renters in Ontario are veryconcerned about the changes.3 The housing ministry will accept written submissionsfrom the public until August 30. Public hearings are also planned in hope that they willease the transition. However, most people are indignant towards the idea. Changing therent control laws would be detrimental to society as they threaten citizens positiveright to affordable housing, harm their mobility rights and increase the gap between therich and the poor. The proposed Tenant Protection Act assaults peoples right to affordablehousing. If people are to adhere to a basic standard of living, then the cost of theirhomes must be affordable. But what exactly is affordable? The Ministry of Housingreleased 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 isunaffordable if they are paying more than a quarter of their gross income in rent. Thisis an alarming thought since some renters are paying 70-80% of their gross income inrent.4 The problem of high housing costs is combated by rent control to allow peoplea minimum quality of life. Housing like medical care is not normal good or service. Itis a basic need. Renters need to buy more than landlords need to sell. If the renterdoes not get a place to live, he is on the street. If the landlord has no tenant, hejust has an empty apartment. In short, there is a mismatch of power in the rentalmarket. The laws of supply and demand are unfairly applied against the buyer. Thuscontrols came into being precisely because the market does not work. Lifting controlswould hurt people s ability to bear the cost of housing without serious harm. Thegovernment justifies this action by arguing that something must be done about Toronto sapartment shortage. Because apartments are offered below their market value, they aresold faster new ones can be created. Toronto has a vacancy rate of .8% with only twentynew apartment units built in Metro last year.5 Currently, two thirds of renters moveonce in five years. Since controls are lifted off vacant apartments, the governmentbelieves that after a few years, most apartments will be decontrolled and the supplyproblem would be solved. In truth, areas that are already decontrolled are not seeingnew apartments. Instead of building moderately priced, modest apartments, developersfind it far more profitable to build condominiums. Clearly, condos do not fall underthe category of affordable housing. Yet, the province is making it easier to convertapartments 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 ifdevelopers 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 theymake is wrong. With the price of vacants skyrocketing, and a notice that a tenant’sapartment 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-ophousing, the Ontario Housing Corporation manages 1200 of these publicly funded housingprojects across Ontario. On these sites 84,000 units were sold to the low end of thehousing market. They are provided to ensure affordable housing. Someone who cannotafford a condominium can easily take up residence in a moderately priced co-opapartment. This would solve any claims to affordable housing rights that people wouldbe scared of losing under the proposal. Unfortunately, soon after taking office, theConservatives decided that they would no longer support the building of non-profithousing, and withdrew funding for 70% of planned non-profit projects. The totalreduction in funding to the O.H.C. was $82 million. This was done in light of a waitinglist of 40,000 people. Funding needs to be increased, not reduced. 1228 units need tobe built each year just to keep up with the exigency.6 How are positive rights toaffordable housing supposed to be upheld after such a drastic cut? The governmentexplains that they expect the private sector to support the low end of the housingmarket through the continuance of the Shelter Allowance Program. This encourageslandlords to build and maintain affordable housing. In 1994 the government funding forthe program reached its peak at $2.4 billion. This favoritism of landlords was fiercelyprotested by the Coalition to Save Tenants Rights. Why was the responsibility ofaffordable 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 rentalproperties, 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 shortfallsand everyone for the GST. These too, are a form of government subsidies. Yet, FRPOpersuaded Mike Harris that the government shouldn’t be in the housing business becausethe subsidies are too high. Ah, we get it! Subsidies are okay if they’re being shoveledinto the pockets of private landlords. But they are a bad thing if they’re going tonon-profit community groups that build affordable housing. Money spent on co-ops isused far more efficiently than the shelter allowances wasted on landlords. 9In addition to subsidies, landlords say they will not build affordable housing unlesstaxes 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 higherrents, which will result in more evictions. An altogether vicious circle. As more andmore sources of affordable housing are disappearing, basement apartments may become theonly ones left. It is not known for certain, but estimates number the amount ofbasement apartments in metro to be in six figures. Many people rely on basementapartments for a home simply because of the affordability of the unit. To their comfortBill 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 theirfavor. To their dismay, Bill 20 was passed as the Land-use Planning and Protection Acton November 20, 1995. Bill 20 gives municipalities the choice of weather or not to allowthe building of any new basement apartments. Bill 20 which was passed by theConservatives, is only a foreshadowing of what is to come. The proposed Tenant ProtectAct declares all basement apartments illegal again. The gains made for peoples positive right to affordable housing would be lost. Declaring a potential supply ofsmall apartments illegal would worsen an already bad shortage. This shortage ofapartments will not be solved by lifting rent controls. This would only result in thefurther development of lucrative condominiums. With a reduction to public housing andthe 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, butis a persons right to be able afford himself shelter. All of society is hurt when itscitizens can not allow for basic living expenses. By ending affordable housing, the repeals to Ontario s rent laws would harm itspopulace 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 unitto be decontrolled will have to force tenants out. This will create class war oflandlord-tenant relations. Because landlords have the upper hand in the housing market,tenant rights would be jeopardized. This mismatch of power would result in landlordsharassing tenants, withholding repairs, and eventually, evictions. Landlords have had ahistory 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 totake their complaints directly to the Ministry of Housing, and file a lawsuit to besettled 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 wouldput an unbearable strain on the legal system. In the anticipation of the overload, theMinistry of Housing has established a complaint line. The 24 hour message system will bebrought up to screen less important tenant problems and to declog the Tenant ComplaintOffice.7 Leach also plans to create a quasi-judicial tribunal. Complaints would bediverted from courts to the tribunal for everything from increases to evictions. Bothparties would be given a short time to present evidence and make their case. Shortlyafter, a judgment would be made. Since there are no appeals, both parties would beexpected to abide by the decision. If one party complains that the other has breachedthe ruling, the tribunal would send out their anti-harassment unit to investigate andslap fines. Drive-thru justice? One-stop shopping? This Band-Aid solution to theproblem of tenant harassment will in no way protect tenants. Striping their legal rightto 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 assaying: We intend to keep them out of the courts as much as we can. 8 Tenants caseswould be rushed through to keep the line moving. Although efficient, this does not dojustice to tenants concerns. Even if tenants were to receive a fair decision that wouldask 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 toldthe C.S.T.R. that it will protect tenants by doubling the fines for harassment. Finescould be quadrupled and it still would not matter because they are flawed in theirapplication. C.S.T.R. states: Given that the Tories are slashing workplace health and safety inspections, foodinspectors and virtually every other kind of enforcement of public interest laws you canthink of, what makes you believe their promise to enforce anti-harassment bylandlords ? 10Anti-harassment laws under the proposed Tenant Protection Act are unenforceable andineffective due to budget constraints. Harassment protection afforded to tenants wouldbecome nil and an open season would be declared on them. The first thing that landlordswould do to pressure tenants to move would be to deprive them of repairs. This sort ofbehavior is frowned upon by the government. Under the proposed changes, they shall showtheir displeasure by doubling the repair fines. Nonetheless this change, like theharassment fines, is an empty threat. Sixty percent of Ontario apartments are greaterthan 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 watchas 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 timebefore 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 thelandlord does not want to see his unit degrade for the sake of higher rent, there areother options available to him. He can scare the tenant out of his home. Landlordsinfamous for using strongmen for this purpose. Washed out boxers or thugs looking tomake a quick buck are a landlord s best friend. Tenants are told to move, or else. Ifthey do not get the message the first time, then the strongmen would reinforce theirpoint. What is worse than no repairs, or the threats of an enforcer? Eviction. If atenant does not leave because of the slumlike conditions or intimidation, he will beflat out thrown out. Landlords do not like to resorting to this, because of its expenseand the time needed for the legal process. Evictions can take up to four months. Butif the changes are passed, eviction may prove to be a landlord’s pastime. The ResidenceRights Act was passed by the N.D.P. government in 1994. This made tenants far moredifficult to evict. Under the proposal, eviction laws under the Residence Rights Actwould be repealed. Landlords would be given much more discretion in evictions. Thetime 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 theywill not be able to afford to move, but insult would be added to injury in thatlandlords would not let them stay. Where would they go?They would end up on the streets. Repealing rent control would make the richricher, and the poor, poorer. If controls are lifted, the inherent mismatch of power inthe 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, whilethose who can not foot the increases would be deprived of a home. The forces in themarket would cause tenants to be caught up in an affordability gap . This is becausethe cost of building housing has increased at a higher rate than average tenant incomesfor 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 donot deal with affordability. Since 85% of renters fall on the bottom third of incomeearners, empty apartments would come from those who could no longer afford them.14 Ifthe Tenant Protection Act is to pass, rent supplements should be worked into theproposal. Supplements would help tenants fill in the affordability gap created bylifting controls. This is not the case under the proposal. Lifting controls wouldseriously harm many people. Toronto s city planning and development department blamesthe affordability gap for the increased usage of food banks. They say that if controlsare lifted, people will not have enough money for food. This will result inunmanageable lines at the food bank.15 Alternative housing is another housing programthat 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 wouldbe otherwise homeless without it. The Residence Rights Act protects special-caretenants from eviction. The proposal would repeal the R.R.A. to give landlords of carehomes the power to enter homes without notice to perform bed checks. They would also beable to flash evict abusive tenants who fail to pay rent or damage property. Thisworries 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 pooreconomy, the number of metro residents that were evicted doubled from 1990-1995.17 Thecombined effect of lifting controls and more powerful eviction laws can only worsen thesituation. Those who are forced out of their homes to get their controls lifted andcannot 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 becomingOntario s homeless. Such was the case for Irwin Anderson. Irwin Anderson was one ofthree street people who froze to death last winter. The inquest involved linked thedeaths to a lack of affordable housing in Toronto. In particular, Anderson had beenevicted for non-payment of two months rent. But he had previously paid rent in hisapartment in the subsidized complex for five years. An arrangement for repayment couldhave been worked out. Instead, he was evicted. The frightening truth is that thiscould happen to anyone, even the well educated. Mirsalah-Aldin Kompani, another of thethree 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 thecold would be confinement to a crowded hostel. These may be no better than the streetsthemselves. The Toronto Coalition Against Homelessness states that people loathe theseplaces and that affordable housing should be the central focus since hostels only offera superficial solution to the real problem.18 Consequently, because of theaffordability gap, cuts to alternative/public housing and flash evictions, repealingrent 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 itsmiddle class and its ability to keep people off the streets, the proposal should berejected. For these reasons, the proposed Tenant Protection Act damages society as itattacks Ontarians appanage to affordable housing, restricts their movability and erodesthe middle class. The change would take away positive intervention and let the natureof the markets decide a redistribution of wealth. Many would live on the land owned byan elite few. This is not equitable so government intervention in the markets mustremain. When the majority of peoples happiness and values are protected against theadvantageous elite, then that is a sign that a society is just. Endnotes1 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.