In major markets where rent is increasingly unaffordable, we need a reality check – a way to ensure owners see ROI while renters see rents they can afford.
Let’s face it, we’re a capitalist country. Business owners are in business to make money. But we also value the essential needs of Canadians. In the rental market, this means that we recognize the right of property owners to make a healthy return on their investments, while we watch out for the weaker and more marginalized segment of society, creating affordable housing programs and income supplements for the cost of living.
Right now, the system is broken.
Real estate has become so expensive – such a hot commodity in markets like Toronto and Vancouver – that the provincial governments have had to step in and cool things off. Of course property owners are unhappy with rules like the foreign homebuyers tax in Vancouver and Ontario – and rent control from the Rental Fairness Act, 2017 in Ontario; while renters are unhappy that new rules don’t go far enough in keeping rental housing affordable.
So what’s reasonable?
Scenario A: We can create an environment where capitalists can play. But when the lowest wage earners can no longer afford to live close to work, who will be doing those minimum wage jobs and filling those casual or part-time positions? Without a large and very relied-upon segment of the population living in the city, where will we draw that labour force to keep the city moving? We can’t all be lawyers and movie producers and politicians. We certainly all don’t have six-figure incomes.
Scenario B: We create an environment with affordable housing for all. But we can’t create an environment where we dictate a limit as to how much profit property owners can make. The tighter the profit margins, the less likely we will see money put into improvements, let alone regular upkeep. This results in poor housing conditions and little additional supply in rental housing, since there isn’t a significant return on investment.
Scenario C: The middle ground. But the middle ground hasn’t been discovered yet. People want to live where they work – but they don’t want to spend most of that income to maintain that home close to work. Some people can accept a long commute, living further in order to afford a home; however, numerous studies have proven that increased commutes affect your health, your mood and your lifestyle.
As cities in Canada continue to grow, the infrastructure isn’t keeping up. Cities need more rental as the demand rises. Without the necessary supply, the demand causes crushing market rent increases. Roads, highways and transit congestion are on the rise with city traffic increasingly impacting commuters.
We can keep legislating bandaids, but the solution isn’t in legislating rental pricing, it’s in creating enough rentals in high-demand markets to ease the pressure on supply which, in turn, will ease the near record-lows in vacancy rates in the country’s most expensive rental markets, and help level off the cost of rent.