1. - People who might be willing to build new units (large real estate developers, small homeowners who want to rent out part of their house, etc.) will decide "my profits are limited building rental units, so I will find something else to do with my money". And existing units will be taken out of circulation, if building owners think "I can earn more profit if I take these cheap rental units and convert them to condos, or retail space".
2. - If an investor DOES decide to build rental units, they will focus on higher-end units, where they can get premium rents (even overcharging for what they build), which of course means low-income renters will have trouble finding something affordable.
1. This implies that profits will not be pursued even if they are there. This same point was made by the Conservatives when ending rent control the first time. "more profit" ? then go for it. There was profit in renting even when rent control existed.
Companies do not just want to earn a profit, they want to MAXIMIZE profits. (Its a natural outcome when people have freedom... I will seek a higher wage if I have the choice of 2 similar jobs. I will pick the restaurant that has the cheaper food, if everything else is the same.) If I can make $1 building a residental rental property, or $2 building retail space (everything else being equal), why exactly would I chose the path where I make less profit?
2. If the 'market' doesn't work
Actually the market is working... just not in a way that you seem to understand.
then the solution isn't more market, it's to kill the market or at least scare it.
Brilliant idea... take a situation where people are being harmed (i.e. can't find housing) and scare the people away who might have been willing to do something about it.
License private companies to run social housing under contract, then.
If you want to suggest expanding low cost subsidized housing, then fine. But that in itself becomes problematic. (Waiting lists for available units, neglect by governments when priorities change, etc.)
Nationalize housing.
Do you mean ALL housing? Government takes over ALL housing? Brilliant... lets have the government seize all property in Canada (that won't worry investors at all!) so that they can dictate who gets to live where.
Oh, and don't forget, not ever landlord is some huge corporation run by greedy investors. Some are simply middle-class people who may decide to turn their basement into a granny-suite for some extra cash to help with the mortgage. Or perhaps people approaching retirement who want to buy a small multi-unit building for them to survive on after they stop working. Now you're going to seize both of these people's property. Brilliant!
Talk about solutions other than "loosen the rules for the investors".
Are we scared yet ?
If you want to collapse capitalism let it go wild and wait a bit...
You do realize that even if they get rid of rent controls, you're still not going to get "runaway capitalism", right?
Rental companies will still have to follow building codes and zoning bylaws. Contract law will prevent landlords from breaking agreements with tenants. Taxes will still be paid (and if a renter is earning a large profit, they'll be paying more in taxes.)
Yes, it will suck if you are some minimum wage worker trying to make rent. But better to have them in a situation where they can still find a place (even at a higher rent than ideal) than to have no place because a potential landlord decided "I can earn more building a store than an apartment building". If you want to help those people, try addressing from the finance side... increase tax deductions for low income renters. Improve city infrastructure (e.g. public transportation) so that they have more options for places to live.
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