Author Topic: Ontario Housing market - Stronger rent controls coming  (Read 66 times)

Offline segnosaur

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Ontario Housing market - Stronger rent controls coming
« on: April 20, 2017, 11:08:03 am »
Looks like the Ontario government is taking a few measures to deal with increasing housing costs:

- A tax is being placed on foreigners who buy property (but don't live there) in Toronto and the surrounding areas. (In theory its supposed to cut down on real estate speculation.)
- Rent controls are to be expanded. It used to be that all units built after 1991 were exempt, but now rent control will apply to all units.

http://www.cbc.ca/news/canada/toronto/kathleen-wynne-housing-market-home-prices-rent-control-1.4076283

I am actually quite worried about the imposition of rent controls. Although they may be popular in the short term, in the long term rent controls can greatly restrict housing supply. So while current renters may be happy, in a decade people are going to have significant problems finding places to live.

http://www.economist.com/blogs/economist-explains/2015/08/economist-explains-19

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Offline SirJohn

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Why would you worry? This is the Ontario LIBERALS, after all? It's not like they lack economic expertise or any sense of how a market economy works. Why, already in their announcement, they've anticipated the way private sector construction of rental housing is going to plummet by proclaiming the need for more government funded affordable housing.

What could go wrong?

Offline Moonlight Graham

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They should tax on all buyers of residential homes and condos who don't live in the homes, unless a relative lives in it.
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Offline SirJohn

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They should tax on all buyers of residential homes and condos who don't live in the homes, unless a relative lives in it.

That would certainly make it less profitable to buy condos and rent them out. But then, there are tons of rentals available anyway, right?

Offline wilber

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I agree. With the average person being priced out of the housing markets in Toronto and Vancouver, if anything, government should be encouraging rentals.

Offline Moonlight Graham

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I agree. With the average person being priced out of the housing markets in Toronto and Vancouver, if anything, government should be encouraging rentals.

But because of the hot market many speculators, including many people within the city itself, are buying houses/condos simply as investments and then renting out those houses/condos.  If speculators weren't buying up these places, they'd be more affordable to buy for people who actually are going to live in them.
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Offline segnosaur

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But because of the hot market many speculators, including many people within the city itself, are buying houses/condos simply as investments and then renting out those houses/condos.  If speculators weren't buying up these places, they'd be more affordable to buy for people who actually are going to live in them.
Buying a house (even if speculators are taken out of the mix) is a huge undertaking for many people, especially those on a limited income, and many simply will not be able to afford to purchase a house. Remove the ability to rent out a house/condo at a reasonable profit and instead of making thousands of houses available to the low-wage worker, you will probably just end up with a housing slump, as potential landlords don't want to buy/build to rent out, and tenants can't afford to buy on their limited salaries.

The other issue is dealing with multi-unit apartment blocks... there you have an owner who is renting out multiple units. If your plan is to punish landlords who don't live in the buildings they own, then what happens to those apartment blocks?

Offline Moonlight Graham

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Buying a house (even if speculators are taken out of the mix) is a huge undertaking for many people, especially those on a limited income, and many simply will not be able to afford to purchase a house. Remove the ability to rent out a house/condo at a reasonable profit and instead of making thousands of houses available to the low-wage worker, you will probably just end up with a housing slump, as potential landlords don't want to buy/build to rent out, and tenants can't afford to buy on their limited salaries.

"Remove the ability to rent out a house/condo at a reasonable profit..." I'm saying you tax them.  That isn't removing the ability to rent out for a reasonable profit.  They should tax at such a rate that buying a house/condo to rent out is still profitable and sees reasonable  real estate value growth per year (ie: the province/country average), but not at the levels of 20 or 30% growth like we're seeing now, which is what's driving the speculation market.  Landlords will still derive profit from paid rents and from increasing property value like every other landlord in the country..

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The other issue is dealing with multi-unit apartment blocks... there you have an owner who is renting out multiple units. If your plan is to punish landlords who don't live in the buildings they own, then what happens to those apartment blocks?

See my answer above.
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Offline SirJohn

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"Remove the ability to rent out a house/condo at a reasonable profit..." I'm saying you tax them. 

Why on earth would you think they don't already get taxed? All business gets taxed.

Offline wilber

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The alternative to not being able buy and having nowhere to to rent is being homeless. Rental's are an important part of housing. A majority of Germans rent their homes.